What were you doing before you became managing director of SES Business Water?
My background is energy, where I’ve had a variety of roles in power generation, project finance, trading, and then retail – where I was always very always much focussed on emerging issues, such as marketing issues, and I spent some time in the consultancy world as well.
What made you want to join SES Business Water?
I think the real driver was the fact that it was a brand-new market, and I had the opportunity to be in at the beginning of a brand-new market – which doesn’t happen very often. The fact that we’re a small insurgent in that market rather than a big established player made it quite interesting because the challenge is obvious, the challenge is how do we grow to be bigger. Whereas sometimes if you’re part of a large incumbent, as I have been before, the challenges are different, they’re more about hanging on to what you’ve got. The start of the market and the challenge in growing new business is really attractive to me, so that’s why I took the role.
What’s been the best moment of your water sector career?
When the market started and we actually started to engage the customers and sell, that was good. You plan, you prepare, then, when the time for execution comes, it begins to really work – and that’s really heartening, that’s good.
And the worst?
The worst things were actually the things I knew were going to be there, around some of the market interface issues and industry issues. Which nobody realistically thinks are not going to be there, but that doesn’t mean it’s not a bit of a pain. It’s nobody’s fault, it’s just the nature of the beast.
How is market opening going in general?
In general, I’d say well. There have clearly been some issues with data, some issues with the switching processes and the transfer processes. But it would’ve been foolish to have expected there would have been nothing because it’s a brand-new market, and that’s complicated. There has been a significant degree of interest from customers. People are very quick to jump to percentage churn rates, but it’s early days yet. I think we need to be patient as an industry, and I think we’ll see things change.
How is market opening going for SES Business Water?
We had a plan, we’re executing against that plan, we’re doing well against that plan. We’ve had to deal with some of the issues that have come our way in terms of the operational issues to do with market switching, but we knew we were going to have to do that, so we prepared as far as we possibly could for the unknown. But I would say it’s going well, we’re growing, we’re adding customers – we’re very happy.
How do you think awareness of the market is at the moment?
Patchy. Some of the largest customers clearly would be more aware of it than some of the smaller customers, that’s inevitable. I’d say intermediaries are very aware of it, but they’re also a bit uncertain as to how to approach it. The size of water bills and the size of margin that’s available, how to break the conundrum of how much value there is in the market to share between participants – including customers, intermediaries, suppliers – and make it economic is the conundrum we’re all faced with at the moment. Awareness of intermediaries is good, I think for customers it’s not so good, but give it time and a bit of patience, and I think that conundrum will eventually work itself out.
Do you think the government will bring in domestic competition?
I think some government some time will bring it in. I’m not sure the present government has necessarily got it high on their agenda – they have quite a lot of things on their plate at the moment. The fact that the retail proposal for PR19 is only three years long, there may be a hint in there that says after three years we want to do something, but it’s only a hint. I could’ve read that all wrong, who knows.
Should there be domestic competition?
That question only emerges because of the status quo. Ultimately, what is the rationale for what is an unnatural monopoly to continue. I see no reasons why you shouldn’t have competition. I think if you’re going to drive innovation that then drives change across the rest of the value chain. In energy, retail has pushed wholesale and wholesale has pushed retail and they’ve ended up with a very different generation mix than we did 20 or 30 years ago. I think if you don’t unbundle and if you don’t utilise domestic competition, you’re not going to get the innovation you need to really drive efficiency and address the inevitable water issues that are going to emerge over the next few decades. I think it should happen, I see no good reason not to apart from the comfort of the status quo.
If and when it is brought in, would SES Business Water look to compete?
But presumably not under the name ‘Business Water’.
There would be some issue we’d need to address, there’s little doubt about that.
Are there any deals with other retailers in the pipeline?
No, our strategy is to grow organically. And, at the moment, it’s going according to plan.
How many customers do you now have?
We’ve got about 18,000 now. We’ve gone up about 25 per cent since the market started. If you start small, it’s easier, obviously.
What is your vision and strategy for the company?
In many respects, our first job is to grow the water business. We’ve got a plan, we know how to execute that plan, and the vision at present is that. Ultimately, who knows where we’ll go, we’ve got a range of skills in our organisation – they’re from an energy background, from a water background, from an insurance background, a range of different areas. Who knows where we might go in the future. At present, we are very focussed on sticking to the knitting. We’ve got to do what we set out in our plan, execute that, and then that buys us options in the future.