Northumbrian Water recently hosted a first-of-its-kind 'innovation festival' which brought together industry figures, regulator representatives and members of the public to address some of the major challenges which face the water industry. Northumbrian Water chief executive Heidi Mottram speaks to Utility Week about PR19, innovation in the water sector, and what the festival hoped to achieve.

What are your reactions to the Ofwat’s recently published PR19 draft framework?

The four themes Ofwat has come up with are spot on.

We’re all going to be incredibly focused on good customer service. There is an ongoing message of affordability and making sure the industry is good value for money and doing the right things. Resilience is a new duty for Ofwat, but that’s not to say that it wasn’t there anyway. This is an industry in perpetuity. And finally, innovation. If we are going to do the first three, in an industry that already performs well, then we have to continue to find innovation to take it on to the next level.

We all know how the world is moving faster, technology is changing, customer expectations are changing. Anybody that’s in any kind of customer-facing business has got to be much more innovative than they used to be. I’m very positive about it, I think it’s a great opportunity.

How innovative do you think the water industry is, compared with other sectors?

I think that’s always an interesting debate. Some observers would say we are behind, but then there are plenty of things that you could point to where the industry is really pushing things forward as well.

What we’re trying to do [at the festival], is demonstrate that there is already a huge amount of innovation going on, that was going on before. We have people in our company who will invent things in their garage to improve their working environment and bring them to work. That is a wonderful level of innovation, passion and creativity that you get which you might say is incremental or low-level.

What we’ve learned is that, as a company, we can’t possibly have all the ideas on our own. That would be ridiculous. What we wanted to do with the festival was bring as many brains in as we could.

There is something about collaboration and co-creation with customers – those are where ideas come from, because people are looking at things from a different perspective. And we have to combine that with speed. Because these days, you have to move at pace.

What can the regulator do to drive innovation in the industry?

The regulator made the biggest move on that, and again it was one that we were really supportive off in the last price review – switching from inputs to outcomes. If all that we are measuring is the success of what is delivered to the customers or the environment, and it doesn’t matter how its delivered, then people are going to try lots of different methods.

That gives us freedom. I don’t think it’s very easy for regulators, and I don’t think it would be successful, to create some direct mechanism to stimulate innovation, what they need to do is create an environment which makes it possible.

The [PR19] review that’s been published, is going to encourage innovation by allowing people to earn incentives if they have done something that gets a better outcome through innovation. That’s a really good thing. It’s not a direct regulatory mechanism, but it creates an environment where innovation is celebrated.

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