Barber: Putting citizens at the heart of business

Utility companies should consider customers as citizens as well as consumers and put their needs central to business decisions, according to Yorkshire Water’s chief executive.

Speaking at Utility Week’s Customer Summit, Liz Barber outlined how the company is finding opportunities in facing the challenges ahead and suggested updates to regulatory frameworks to allow businesses to achieve better outcomes in their regions.

Barber said the past year had highlighted the importance of a business’ duty to citizens within its region, not just customers or consumers and therefore the importance of serving the region not only supplying water.

“The pandemic also highlighted that customers are placing a greater emphasis on organisations they can trust to do the right thing not just trust in the service itself,” Barber said.

She suggested that existing regulatory frameworks will not allow water companies to be run in a way that provides the greatest benefit to wider society.

The older outcome-based, low-risk approach to delivering services needs updating to meet the challenges of climate change and the wider contributions customers expect from water companies in their regions, Barber said and suggested more flexibility to allow novel solutions.

“We need to change the way we go after some of the issues we’re facing on behalf of our customers and citizens. We need to get the right risk balance between consumer protection and less certain outcomes but using techniques that will deliver far better impact to our regions.”

She highlighted the benefits of joining up investment cycles by regulatory bodies agreeing on key challenges upfront and allowing the legal requirements and investment cycles to line up. “This would allow everyone to focus on the big-ticket issues and get the right investment at the right time.”

The company has trialled joined up investment on a regional basis in Sheffield where it works with the local authority to utilise the networks to create a smart city.

Sharing investment strategies with democratically elected bodies gives them an input to infrastructure plans, which Barber said would play an increasingly important role but not replace existing regulatory structures.

Part of the regulatory approach should include attitudes that ensure a stable environment that encourages ongoing investment in critical national infrastructure.

Key to a revised approach, Barber said, was examining whether investment is at the right level now to futureproof the businesses against future failure. This was a staple argument in Yorkshire’s appeal against Ofwat’s PR19 final determination. She said the cost of failure around flooding and water quality were concerns of Yorkshire’s citizens and therefore a responsibility of the company.

Barber said the strategy for the future stemmed from a “deep review” that followed debate about nationalisation. Yorkshire engaged with stakeholders, customers, citizens, consumer and colleagues to come up with a purpose for water’s role in enhancing the region.

Adding long-term resilience and considerations about impacts on its region to the company’s business as usual approach has, Barber said, brought a mindset change.

“There was a shift from being a purely corporate organisation into one that provides a public service that happens to be privately financed,” she explained. “That change in approach made us feel much more comfortable in a natural role we should be taking as an anchor institution here in Yorkshire.”

This involves partnering with other regional institutions including utilities, local authorities, educational groups and NGOs to collaborate where possible, find common ground in investment plans and delivering services.

“We are looking to be able to demonstrate to citizens of Yorkshire not just customers of Yorkshire Water that every pound spent provides the very best value.”

Yorkshire’s strategy includes fresh approaches to social capital, natural capital and intellectual capital. To achieve this the company is undertaking research into how citizens can be involved in the solutions to future resilience challenges, which Barber described as an example of citizens helping the company to help them.

Devolution in Yorkshire has led to increased collaboration between public authorities and necessitates more involvement in the water company’s strategic plans. “We are moving from a stakeholder engagement approach towards more structural alignment on our investment plans to make sure they all join up.”

She said harmonised investment plans include working with Northern Gas Networks and local authorities to communicate when roads need to be dug up and minimise the disruption in the area.

“It’s a simple thing to do but it may have a big impact bearing in mind our commitment to consumers and citizens in the region,” Barber explained. “In time we may even share assets or people, but that would need a much more open mindset around how we deliver services.”