The aim of scoring business customer satisfaction with their water wholesalers through a regulated incentive scheme has moved closer to becoming a reality with the publication of a report from Europe Economics.
The report on how a new system could measure end consumer satisfaction with non-household water providers has set out recommendations to Ofwat that may inform PR24 thinking, or the future shape of the Market Performance Framework (MPF).
Europe Economics, commissioned by the regulator, concluded that a B-MeX incentive could “fill important gaps” in the existing regulatory framework and that such a scheme should focus on qualitative services from wholesalers to customers.
The report analysed whether the score should be based on companies’ performance relative to one another or against a set of benchmarks. It suggested relative measures of performance should be the default as it would continually push competition.
Ofwat had mulled the addition of such a measure when C-Mex and D-Mex were introduced for rating customer and developer satisfaction in the domestic and non-household sectors, which came into effect at the start of PR19.
It recommended using complaints data from CCW to design such a model saying that complaints would highlight the issues that are important to customers. However, it advised against such data being used to determine the actual B-Mex scores, partially due to potential of too few written complaints being available.
The report suggested running a pilot version of the B-Mex incentive mechanism from April 2022 ahead of implementation at the next price review in 2024. However it noted the an incentive could sit within PR24 or be incorporated within the existing MPF.
It also proposed that reputational incentives should be used during the pilot ahead of any financial incentives devised in time for PR24. It urged the industry to collect additional information to refine the incentive mechanism and determine what would be appropriate as financial incentives.