Evidence based on engagement with billpayers was used more in PR19 than any other price review but Ofwat’s chief executive has insisted some companies still didn’t go far enough.
Meanwhile, consumer watchdog CCW has claimed that neither business plans nor the regulator was clear about how such evidence was used.
In a keynote speech as part of Utility Week’s Build Back Better Forum, Ofwat chief executive Rachel Fletcher said the level of customer engagement must increase for the next price review.
Fletcher said the regulator would be publishing a discussion paper in the next few weeks on the requirements for customer engagement for PR24.
“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.
Mike Keil, head of policy and research at watchdog CCW, noted a “step change in both the quality and quantity of customer research and engagement” but said it was often unclear how such evidence had been used by companies or Ofwat.
He said it was difficult to identify the extent to which consumer voices are being acted on in the Competition and Markets Authority (CMA)’s interim determination for Anglian, Bristol, Northumbrian and Yorkshire.
Keil told Utility Week that the CMA’s decision to raise the cost of capital and remove the gearing outperformance sharing mechanism “tipped the balance in favour of shareholders over customers” and did not appear to have considered the potentially damaging effect it could have on customers’ perceptions of the sector.
“A lack of transparency over the impact these changes will have on customers’ bills also leads us to question how far consumers are really being considered. Bill profiles are important because they allow customers to understand how the decisions made by the CMA will affect them in practical terms – what’s my bill going to look like next year compared to what I pay now? Basic, yet important, information for consumers,” Keil said.
“This lack of transparency over the real impact on customers’ bills will add to their financial worries at an extremely uncertain time. We are very concerned about the affordability of these increases given the impact of Covid-19. These bill increases, coupled with annual inflation, could be a tipping point for some struggling households.”