Ofwat has revealed it will “soon” be designing pilots for its new incentive measures – the Customer Measure of Experience (C-MeX) and the Developer Services Measure of Experience (D-MeX), which will be introduced as part of PR19.
Speaking at Utility Week’s Water Customer Conference in Birmingham yesterday (17 January) John Russell, Ofwat’s senior director of strategy and policy told delegates the regulator would be designing pilots for the schemes and “running them later this year”.
He said this will allow Ofwat to ensure the measures are “sufficiently robust” to use as financial incentive mechanisms before 2020.
In his talk, which provided an update for Ofwat’s vision of PR19 and what it expects from water companies Russell, said: “For PR19 we are developing C-MeX and D-MeX, new measures of residential customer experience and developer services customer experience.
“Both measures incorporate financial and reputational incentives to challenge companies on the quality of their customer service and measure overall customer satisfaction.
“Unlike its predecessor, SIM [service incentive mechanism], C-MeX will link financial incentives to the performance level of the best performing companies in all sectors. This will prove especially impactful because we know that customers don’t compare their water services with those provided by other water companies.”
C-MeX will take account of where water companies stand with regards to customer service “in comparison to big players”, Russell explained, citing examples including John Lewis and Amazon, “who are renowned for their excellent customer experience.”
He added: “Developer services customers are also an important customer group and in the past they haven’t always received the most seamless, efficient service from water companies.
“For that reason, for the first time, through D-MeX, PR19 will test the developer experience.”
Russell reinforced Ofwat’s view of “current and future customers” being at the heart of the regulator’s long-term vision for the water and wastewater sector.
He said Ofwat’s final methodology for PR19, published last month, “really emphasised the need for companies to deliver more of what matters to customers and our expectation that they should receive a great service, at least comparable to the service they get elsewhere.”
“That document made it clear that in this price review excellence will be the new normal. Companies are going to have to go further than ever before to achieve exceptional status, he added.
In his speech, Russell also referenced the importance of trust and discussed how the legitimacy of the water sector has found itself “under increased public scrutiny”.
“Complex ownership structures, recent infrastructure failures and the role of the private sector in provision of utility services have all been highlighted in the media in recent months,” he said.
But echoing former chief executive Cathryn Ross’ words, he argued “companies can meet the legitimacy challenge head on by going much further in putting customers at the heart of their business plans.”
He concluded: “We’re raising the bar on what we expect from companies. PR19 will challenge companies to really stretch themselves, driving innovation to deliver more for less for customers.
“We will reward those companies who set new standards for the sector. In their business plans, companies will need to deliver against our four themes; great customer service, resilience, affordability and innovation.
“But importantly they’ll need to evidence that they’ve put customers at the very heart of those business plans and engaged with their customers in every aspect of their decision making. Each of our themes will offer benefits for customers by driving forward the efficiency frontier so companies can deliver more for less and ensure resilient, reliable services for the long-term.”
Russell said Ofwat will be launching an innovation channel on YouTube next month to accompany PR19.
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