The consumer watchdog for water has recommended introducing a centrally managed approach to customer engagement for companies writing their PR24 business plans.
The report on lessons learnt from PR19 highlighted areas for improvement including a comparable way to measure householders priorities in different parts of the country.
Steve Hobbs, senior policy manager told Utility Week the report was designed to open dialogue and encourage sharing approaches to engagement.
A flaw the watchdog noted was the inconsistency of evidence gathered by different companies. Hobbs said the value of comparison is important for challenging the value and weight of the customer engagement.
This is something the group is keen to change for PR24 with the introduction of a centrally-managed nationwide approach, but it would require buy-in from every company and Ofwat.
“We are keen to explore a way to measure priorities across the country and the acceptability of business plans and Ofwat’s determinations,” Hobbs said. “This could give comparability in a way that has not been done before.”
He stressed this should not detract from locally undertaken research and would require universal support.
He said CCW was encouraged by the level of on-going engagement seen in PR19.
“Gone are the days that it only happens every five years, it’s a never-ending process,” he said. “By the time of writing business plans, companies should have years of data to build upon.”
He noted a shift towards gathering data from different sources, including focus groups, surveys, immersive techniques that detail how consumers interact with water and feedback from regular customer contact.
“It’s important to track opinions over time and how these change for households. Covid-19 and economic problems related to it may change people’s opinions on a lot things, including their water company.”
The group also found that engagement was less meaningful when it came to technical and regulatory topics that consumers had only a limited understanding of.
“These subjects put people off and, with the best will in the world, become a box-ticking exercise that isn’t meaningful. Customers need to understand what they are being asked and then shown how their views are used in the plans.”
He said CCW is keen to get best practice “out there”, adding: “Smaller companies may have more limited resources to carry out engagement, but all companies could benefit from successes and failures.”
PR19 plans featured the most comprehensive engagement seen to date, which CCW said should be built upon for the next review. The watchdog is keen to see clearer identification of how the evidence gathered was used to justify business plans and in Ofwat’s determinations.
This point was also raised by the CMA in its redetermination of Anglian, Bristol, Northumbrian and Yorkshire’s business plans. It noted that in some cases it was unclear how customers’ views had influenced decisions.
CCW called for greater clarity in Ofwat’s methodology of how billpayer views are used, but noted that must be weighed against technical evidence and cost.
Another point highlighted by CCW was for price controls to be viewed against a longer-term context in light of climate change and resilience challenges
“In some cases it was unclear to us what the strategic plan was,” Hobbs said. “A longer-term view would give stakeholders an idea of whether the business plan is ambitious enough and what work would be needed in the future.”
Hobbs said the regulator was “in a listening mood” as it prepares its methodology for the next price review.
“They are taking a step back and listening to discussions about how engagement can be improved.”
Over the autumn CCW will publish more details on its review of engagement in PR19; a framework for PR24 based on best practice, and a re-examination of ways to incentivise companies.