Customers

I am the customer: Tony Smith

“We need more assurances about open water market”

Most eyes in the water sector have been fixed on the opening of the non-household retail water market in England on 1 April. But if you blinked you might have missed the news that we will have to wait until at least the end of this parliament before the government decides whether to give households the same choice. We welcome this delay, which suggests ministers – much like CCWater – need more assurances.

Many water customers like the idea of choice and we believe an active marketplace could deliver tangible benefits. But there remains a gulf between what customers expect to save and what the retail water market is likely to deliver. A large majority of customers tell us an annual saving of £10 from retailers would not be enough; most expect to pocket at least four times that amount.

Even bundling water with other utilities, which could potentially shift savings closer to customers’ expectations, would fall short of the £200+ that has previously failed to tempt many energy customers. Bundling would also add to the Pandora’s box of policy issues, such as disconnection, that need to be addressed.

We can now learn valuable lessons from the non-household water market that can help shape a more watertight case for pursuing, or abandoning, household competition. It will also be useful to see if initiatives arising from the CMA’s review of energy improve customer engagement.

By monitoring the experience of small businesses from 1 April, we can understand if choice can deliver what households want.

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Customers

I am the customer: Tony Smith

“Failure to be transparent could look like a con trick”

With just seven months until Ofwat sets water prices for 2015-20, there is plenty to encourage us that PR14 will deliver what most customers want.

Many water companies have listened to their customers and submitted price proposals at or below inflation.

Ofwat’s challenge on the cost of capital should reduce bills further and result in a better deal for customers.

But if the legacy of PR14 is to remain a positive one for customers, neither Ofwat nor companies can afford to ignore customers’ strong opposition to the proposed regulatory financial incentives package for water companies.

We can understand Ofwat’s objective on incentives. But the strong weight of evidence from research by CCWater and a number of water companies is that most customers do not agree with the principle of water companies being rewarded for “doing the day job” for which customers will end up paying more.

Water companies should reflect their customers’ views on incentives and penalties in their revised plans and not seek to bid-up their returns – nor present this to their customers as something that is being imposed by the regulator. Ofwat should also recognise customers’ concerns on incentives.

Failure to be transparent on this issue could look like a con trick to customers and critical industry observers. It could also undermine the credibility of a price review that set out to be customer driven.

Tony Smith, chief executive, Consumer Council for Water

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