Wave chief executive Lucy Darch was hired to lead the non-domestic water retailer through market opening and beyond. She wants the company – currently the third-largest in the competitive English water market with an 18 per cent share of supply points – to “act like a new entrant”, and she has a few ideas about how to make that happen.
There is no pretention surrounding our meeting at Wave’s Durham offices. Upon arrival, Darch shows Utility Week around the unostentatious building. The only way you’d know it belonged to the company is by the handmade sign in the reception area, which still reads: NWG Business. “We didn’t want to spend money on a fancy sign when we knew we would be rebranding soon after moving in,” she says, referencing the brand evolution following a joint venture between NWG Business and Anglian Water Business.
The whole place has a decidedly informal feel. The room names are inspired by Harry Potter – The Ministry of Magic for the boardroom, and the Room of Requirement for a previously empty wing.
But don’t let the cottage industry feel fool you. Wave is a force to be reckoned with in the new water retail market. The joint venture with Anglian Water Business, announced last year and due to complete this spring, transformed NWG Business in more than name. Its employee base ballooned from around 50 to around 250. And the emerging business, Wave, has more than a quarter of a million customers and a combined turnover of more than £500 million.
Between Anglian and NWGB it felt like we had everything
Boasting around 419,000 supply points, Wave is one of the biggest players in a market officially made up of 25 retailers. Darch tells Utility Week scale was the main reason for the joint venture. However, she adds, there were specific reasons NWGB chose Anglian, which had a “longer track record in the market”, having entered the Scottish market in 2008. “We are very complementary businesses. Anglian has a lot of water retail expertise around service and billing in a newly deregulated market. Whereas NWGB has more of a focus on the tech side – building a web and telephony capability that was integrated.
“Between Anglian and NWGB it felt like we had everything. We didn’t have much duplication because NWGB was so new. There were lots of areas where we didn’t have the experience and expertise that they had in Anglian.”
However, Darch maintains that she wants Wave to look like a new entrant, both in terms of its culture and the way it grows – organically. The company may have its associate portfolios, but it is now actively acquiring business. “Our total SPID count is 422,622, which means we are net growing in the English market – we are around 810 SPIDs up,” she tells Utility Week. Her pride is not without merit, as other big incumbent players struggle to retain supply points.
Where there’s a challenge, there’s also a lot of potential enjoyment
Like many water retail bosses, Darch is a deregulation pro, having been there at the birth of the gas and electricity markets in the 1990s. She was approached by Northumbrian Water chief executive Heidi Mottram – Northumbrian Water was one of the three creators of the market operator, along with United Utilities and Anglian Water – and asked to lead the company’s business retail arm. For Darch, the opportunity was too tempting to pass up. NWG Business was already set on using a billing system provided by New Zealand software company Gentrack. Darch had prior experience with the system and appears dedicated to it, name-dropping it throughout the interview.
The use of the system may have been a big reason Darch joined NWG Business – then still part of Northumbrian Water – in October 2015. However, she admits she was also drawn to the buzz of being in “rapid fire” mode, with just one-and-a-half years to go until the market opened. “Where there’s a challenge, there’s also a lot of potential enjoyment because it feels very rewarding to go through the steps to take you into the market, and with a small, very agile team.”
How is the process of integrating NWG Business and Anglian Water Business going? Darch says it is currently in the “design stage”, with pre-migration development due to commence in April.
It’s been a great opportunity for the experts across the business to come together
The company is running a series of 30 workshops to ensure the processes AWB currently uses are translatable into that new Gentrack system. Where there are any gaps, Darch says, the company will make sure that the system can address these before migration begins. “It’s been a great opportunity for the experts across the business to come together,” she says. “It’s been a nice stage, getting to know everybody in both businesses, and it’ll probably take us a few months to get that done.”
Beyond optimising IT, how does Wave plan to make its mark on the market? “It’s quite simple,” she says. “Our vision is to be the most customer-focused utility delivering value and efficiency.”
Darch lays out three strategic goals that will allow the company to get there. The first is to excel in engagement with employees, and ensure Wave is somewhere rewarding to work so that staff stay and provide excellent customer service. “We have a good track record in that space,” she says.
The second is to be leading when it comes to net promoter score and customer experience, where the measure that matters most to Darch is “would you recommend us”. “These two things will lead to us growing,” she says, “which is happening already.”
Finally, Darch’s plan is to “build a great reputation” for Wave in the market – both as a retailer and as an efficiency partner. In this area, the retailer has got off to a good start. Since April 2016, AWB has delivered £2.7 million savings to customers, made up of £2.4 million of consumption savings and £300,000 of charges reduction.
Wave plans to gain further prestige in the market by offering a multi-utility service. Before the announcement of the joint venture, AWB partnered with business energy supplier Corona Energy to offer business customers a tri-utility supply of water, gas and electricity. Darch says this partnership is still very much alive. “Corona is working with Wave, offering a white label service. The company is offering a good level of service.”
It is early days, and it is unclear what the level of customer take-up will be, but Darch says Wave is seeing demand from its SME (small and medium-sized enterprise) portfolio for multi-product bundles.
In the utility market in general, there’s a bit of catch-up going on in terms of service
Will Wave be branching out into other markets? Telecoms perhaps, or broadband? Darch doesn’t rule this out, but for now, she says, it is too soon to tell.
Darch believes passionately that retailers need to improve the level of service that customers experience. “In the utility market in general – gas, electricity and water – there’s a bit of catch-up going on in terms of service,” she says. But her plan is for Wave to offer customers a refreshingly good experience. “We’ve built into our architecture, so we feel very much that we can deliver at a level that a customer may not have experienced before.”
In the past, the process for providing a duplicate bill has taken five days. However, Darch says, at Wave, they can email a copy of a bill to a customer while they’re on the phone. “There are lots of efficiency gains we can give to customers,” she says. “Customers want things solved there and then. Utility companies often talk about first-time resolution – if you can deliver on that, you are delivering a notably better experience.”
Darch’s concerns about the market as a whole are in keeping with those of other senior water retail executives. Namely, a lack of standardisation in wholesaler policies and bilateral communication with wholesalers. She also says unmetered charges are a problem. “I guess it’s my background in energy, but I struggle with unmetered charges a little bit.” She insists there is a need for more metering in water to make things “more transparent” for customers. “There’s some work to do there.”
Darch hopes the industry can “continue to evolve”. “It’s understandable that not everything was solved on day one, but we need to challenge ourselves to keep going and make things better.”
And who’s responsibility is it to solve the issues? “I think the aligning of wholesaler policies is one we need regulatory involvement in,” says Darch. “Whereas the bilateral communications is probably one we need to group together and solve.”
I think it was a really great achievement for the water industry that the market opened on time
She praises MOSL for doing a “great job” getting the central system ready for the market. “I think it was a really great achievement for the water industry that the market opened on time and with reasonably good levels of customer experience.”
However, now that the market is in full swing, participants cannot expect MOSL and Ofwat to “solve everything”. “We need to group together and make sure we keep a conversation going to try and push the industry to improve.”
Looking ahead, Darch believes household competition is coming – it’s just a question of when.
The government first mooted the idea of domestic competition in 2015, when it proposed the market should open by 2020. Since then, few updates have been given on government’s thinking about the proposal, causing some to speculate that it has been quietly dropped by the new administration. “It has gone quiet,” Darch agrees. “And I guess Brexit is, quite rightly, taking priority.”
However, she says, “it would be, for me, rather strange if the household market didn’t deregulate, because I think there will be things about the non-household market that it is positive for customers”. “For me it’s a question of when. I don’t think it’ll happen any time soon.”
If and when household competition does come in, Wave may look to participate. But for now, the company’s attention is squarely on growth and success in the non-household market.
Lucy Darch will be speaking at the Future Retail #1 conference in London on 23 March.