Challenges for customer challenge groups

Roger Darlington explores the contribution and limitations for customer challenge groups during PR14 and suggests a framework for the future of customer interaction with water companies.

“Ofwat should consider the creation of a standing Customer Advisory Panel.”

Roger Darlington will speak at Utility Week’s Water Customer Conference 2015 on 21 January at the Holiday Inn, Birmingham City Centre. His presentation will explore the future of customer challenge groups after Ofwat’s final determinations in greater detail.

For more information about this event go to: www.uw-watercustomer.net

The publication of some 7,000 pages of documents by Ofwat for its Final Determinations effectively means that Price Review 14 is now over bar the shouting (aka a reference to the Competition and Markets Authority). So what has it all meant for customers and where do we go from here?

PR14 has been good for customers, ensuring they get more for less. It has included an agreement to commit to £44 billion of investment and 522 performance obligations with an average five per cent fall in bills in real terms and a million more customers receiving assistance with bills.

It is widely accepted that customers have been at the heart of this particular price review to a greater extent than ever before and this customer focus needs to continue with the implementation of the ambitious business plans now approved by Ofwat and accepted by companies. 

During PR14, the customer voice within the regulator was expressed through the Customer Advisory Panel. But this panel was not used as effectively as I believe it should have been and it has now been stood down.

Ofwat should consider the creation of a standing Customer Advisory Panel. I know from my eight years as a member of the Communications Consumer Panel at Ofcom that a body internal to the regulator can have earlier and more influential conversations than is possible once the regulator has gone public with a consultation.

Meanwhile the customer voice outside the regulator continues to be CCWater which has played an effective role in PR14 and committed considerable resources to it. But the future of CCWater has been in doubt almost from the moment of its creation and this needs to be resolved.

There is a strong case for a sector-specific voice for water customers – I do not believe that the demise of Postwatch (on whose council I served for its last three years) and Energywatch has served well the customers of those sectors. However, if government decides that a sector-specific body for water customers is not to be retained, then the natural home for this work would be the Consumer Futures component of Citizens’ Advice.

What was totally new for PR14 was Ofwat’s effective mandation of the creation of a customer voice embedded with the companies themselves.  

The Customer Challenge Groups (CCGs) were chaired by a mixture of CCWater regional chairs and externally recruited individuals and brought together representatives of the Drinking Water Inspectorate (DWI), the Environment Agency (EA), Natural England or Natural Resources Wales, CCWater, domestic and business customers, environmental organisations, and the like.

These CCGs worked with the companies which conducted an enormous amount of customer research and engagement to ensure that the business plans they submitted to Ofwat reflected the views of local customers. At a recent Ofwat workshop with CCG chairs, Sonia Brown, chief regulation officer at Ofwat stated “It has been a game changer”.

There is no doubt that for CCG members this whole process was much more time consuming and much more complex than was envisaged when the bodies were set up almost three years ago.  But it has been a really worthwhile process and we now need to migrate a version of this process into the actual implementation of the business plans.

All the water companies have committed to some kind of post-CCG customer body that will monitor fulfilment of the commitments in the business plan and especially the Outcome Delivery Incentives (ODIs). It is understandable that in recent months the focus of companies has been on the Final Determinations, but each company now needs to move quickly to appoint a new chair for the new customer body and the chair will need to agree new terms of reference and new membership.

For PR14, CCGs effectively had an agenda and timetable determined by Ofwat, but the post-CCG bodies will have more flexibility about how they work. This will make it more sensible than ever for the chairs of these bodies to work together.

For PR14, all the CCG chairs only met when convened by Ofwat, but the chairs of the post-CCG bodies will need to organise themselves and create new channels with the likes of Ofwat, CCWater, Water UK and DEFRA.

I have enjoyed the challenge of chairing the South East Water CCG for the past three years and I have agreed to chair the company’s successor Customer Panel for the next two years. I look forward to working with other chairs and all those in the sector committed to the improvement of customer service. 

All this is happening in a changing landscape where customers are expecting rising levels of service from retailers and suppliers and are increasingly comparing experience across sectors.

Twice each year, the Institute of Customer Service conducts sampling for its UK Customer Satisfaction Index (UKCSI) and for some time now customer satisfaction levels have been falling. This might be because customer expectations are continuing to rise and their needs are evolving more rapidly, with convenience, ease of doing business, and speed seen as particularly important.

The utilities sector consistently scores lowest in the 13 sectors examined in the UKCSI, although recently there have been some signs of improvement. There is much work to do.