CMA cases informing PR24 approach to engagement

Ofwat has said it is reconsidering how customer engagement is used to inform future price reviews, citing submissions to the Competition and Markets Authority (CMA) as inspiring the approach.

From the next price review onwards, Ofwat said its approach to customer engagement will centre around understanding people’s views as citizens and as customers separately. It said the approach to engagement will increase transparency, foster collaboration and enable companies to be responsible for customer relationships.

Despite greater emphasis on customer engagement during PR19 than ever before, some companies argued that evidence gathered from billpayers was not given enough weight in the final determinations.

It was a central theme of the ongoing appeals to the CMA by Anglian, Bristol, Northumbrian and Yorkshire which differed on where and how billpayer’s money should be spent.

Chief executive Rachel Fletcher previously told Utility Week’s Build Back Better Forum that some companies did not go far enough to engage with billpayers.

“Companies will need to be more connected than ever before about what is important for customers,” Fletcher said and added that although great improvements had been made in this area, the sector had work to do to hold its own against the best practice seen in other industries.

Ofwat is now reflecting on the most useful ways for engagement to be carried out and used to develop business plans.

Examples of research raised questions over the validity of methods and the extent to which customers can reasonably be expected to comment meaningfully on complex technical matters or evaluate between different alternative plans.

CCW previously advocated for a nationally aligned approach to customer engagement. Although it said companies should continue their own engagement, it recommended introducing a complementary centrally managed approach for consistency.

Others have supported the suggestion, including Yorkshire in its CMA submissions. Ofwat stressed that nationwide research would be in addition to companies engaging and drawing insights from day-to-day interactions at a local level, which C-Mex incentivises.

Increasing the use of consumer engagement has led to what Ofwat described as a culture change across the sector with many companies reporting they can better view issues through a customer lens, something that the regulator expects to mature in future price reviews.

Ofwat is inviting input from the sector and wider stakeholders until the end of January and anticipates publishing its findings in May next year.