This is the start of an exciting year which sees new opportunities in the water market and an increased focus on getting it right for customers.
Throughout 2016 we’ve been setting the scene for the changes ahead. And in three months’ time we’ll see the retail market start to open up. The introduction of competition for business, charity and public sector water customers has been heralded as the biggest change to the water sector since privatisation over 25 years ago and will create the largest market of its kind in the world.
The aim is to drive down prices, improve water efficiency and customer service and encourage innovation. For the first time, eligible business customers, public sector and charity organisations will be able to choose their water retailer – the provider of their billing and metering services – to suit their needs.
To achieve these aims, we all need to build customer trust in the market. Via the Open Water website people have access to reliable, impartial information and guidance to help them make decisions. We know from the recent national customer awareness survey, commissioned by Ofwat, that protection in the market is key for customers; they want to be confident there are measures in place to ensure they are treated fairly and that there are safeguards against poor practice such as mis-selling. Ofwat will be closely watching retailers when the market opens to ensure customers can participate in the market with confidence.
Our regulation of default tariffs provides important price protection, setting a limit on the amount incumbent retailers can charge customers who do not agree a new contract. Where water companies exit the market, transferred customers will still be protected. Our Customer Protection Code of Practice outlines further protections for customers, for example in relation to back billing and cooling-off periods for new contracts.
Although competition will play an increasing role in driving delivery for customers in the business retail market, our regulation of monopoly suppliers will remain an important feature. Working with the sector we have already made great progress in delivering the policy framework for our next periodic review (PR19), and the changes to the licences needed to implement this. In summer 2017 we will be consulting on the methodology for the review and aim to publish the final version in December.
Early this year will see us develop some of the key themes for PR19 – beginning to set out our expectations of what good will look like, not only in terms of business plans but how companies operate. This will include the step change we think companies can make on customer service, taking account of what we learned in our review of the costs and benefits of introducing residential customer competition about the frontiers in customer service in other markets.
It will also build on the recent work by Water UK in seeking to understand more about resilience and looking for genuinely long-term cross-sector solutions. And we will focus too on best practice on affordability and vulnerability. Here, we will build on our reports on these topics last year, recognising these are issues that affect many people in society, illustrated starkly by the finding that half of us will be in vulnerable circumstances at some point in our lives.
We’ll pay particular attention to the importance of innovation in enabling companies to deliver more for less. By opening up markets for water resources, bioresources and direct procurement for customers, we are creating more scope for companies to join forces with others to do things in new and better ways. And we are keen to encourage the sector to continue to innovate in its accountability to customers and society.
The Discover Water dashboard is a great example of this, enabling the sector to provide information directly to customers so they can see how companies deliver for them, the environment and wider society.
So while 2017 welcomes the Chinese year of the rooster, with the continued hard work of the sector and Ofwat, it also heralds a new dawn for the water customer.