Southern: Bill hikes require visible performance improvement

The only way to stop public anger at bill rises is through visible and sustained performance improvement in areas that matter most to customers, Southern Water has told Utility Week.

It comes after the company faced a public and media backlash to leaked proposals to raise bills to fund future investment needs.

A leaked part of Southern’s PR24 business plan – shared with PA News by a consumer group participant – showed the company is considering raising customer bills by 73% to £759 per annum.

Nick Eves, head of consumer insight at Southern, explained that it is just one scenario that the firm is considering.

He added that a story like this coming out was inevitable, but it opens up the conversation about improvements customers want to see from the sector.

“Customers ultimately want to see us improve services in areas like the environment and the use of storm overflows, and leakage,” Eves said. “They tell us they want us to invest to fix those.”

The leaked image was one of many scenarios from the planning process, which Eves explained was an upper limit spending proposal.

“It’s unfortunate, but something like this was always going to happen,” Eves said. “The other water companies are all doing exactly the same thing.”

Following the negative reaction, he said the company has plans to ramp up how it communicates bill increases and help customers understand how money is spent.

He said the social media reaction to the leaked image will actually help with that. “We can see what’s being talked about so we can engage with customers and stakeholders.”

He said costs are central to all dealings with regulators, the board, and other stakeholders.

Eves added: “Every conversation starts with: ‘how are we going to keep things affordable’. It’s what we’re talking about day to day. So the fact it’s been discussed by our customers early for where spending should be going based on what we are planning is absolutely central to what we’re talking about.”

Affordability concerns vary between households and billpayers, with Eves’ research indicating that water bills are “quite cheap in the overall scale of bills”. However the company recognises headlines will continue to be made by the rate of increase.

Eves added that perception will only shift with performance but accepted it would not be a quick change.

“There are segments of people who are particularly angry with the industry as a whole and there are things they fundamentally don’t agree with,” Eves said. “So we’re probably not going to change those opinions easily or quickly, but those voices need to be heard.”

However, through improvements work, Southern is starting to see more positive reaction in the tracking the company does of its reputation. “It’s slow to start with but we’re starting to see the green shoots of recovery.” He explained the turnaround plan focused on performance is what the company needs to deliver on.

“As we show real tangible improvements on the things that really matter to customers, that will really ease the pressure,” Eves said. “The whole industry needs to do that.”

Sukhvinder Kaur-Stubbs who chairs the independent customer challenge group for Thames Water customers also believes that communicating costings to billpayers is essential.

“There is an appetite amongst customers to want to invest more now rather than kicking the can further down the road and burdening future generations,” Kaur-Stubbs said. “But most people have not got to grips with how much of a gap there really is for the level of investment that’s required.”

She said even meeting the requirements of the Water Industry National Environment Programme (WINEP) will be “a big ask” at a time when households are struggling.

“In that context, its hard to engage with people, but it’s really important for water companies to engage and to take customers views in to account”. However, Kaur-Stubbs warned there was a limit to how the amount of understanding a focus group can be expected to comprehend about financing decisions, prioritisation and how bills would be impacted.

She urged companies to engage customers on an ongoing basis to build understating and value of water as a resource and how it is supplied. Building better relationships with customers would allow more effective engagement in a “more informed way than customers see in news headlin

“Enhancing the environment and the resilience of our water and sewerage services will require substantial investment and we know that could lead to very large bill rises,” Emma Clancy, chief executive of CCW, said.

“That makes it all the more critical that water companies communicate with their customers now – and throughout the five-year period – about why this investment is needed, what they will get in return for their money and how it aligns with people’s priorities. Government and regulators should be talking to bill payers too given that much of the investment relates to the statutory programme.”

CCW urged that investment at the scale proposed should come with a strong safety net for households that cannot afford their bills. Clancy added: “We want to see all companies support our call for fair and consistent support to replace the existing postcode lottery of financial assistance.”