Consumers are to be given a louder voice in a monopoly business
In Scotland, a new customer forum has been established to help shape the water industry for the 21st century.
This ground-breaking initiative will, for the first time, give people a say in setting water prices and what the big priorities should be when reinvesting these water charges. The first of its kind in any UK utility, the forum will independently negotiate with the water provider on behalf of customers.
Water is an essential service that we all pay for. And in Scotland, all our public drinking water and sewerage services are provided by one public utility, Scottish Water. That’s why it is absolutely vital that people have a say in how much it costs and what exactly they are paying for.
The voice of the customer will now, for the first time, be part of the official process which sees the water industry’s economic regulator assess how much money Scottish Water needs to ensure fresh, clean drinking water flows from all of our taps and rules on whether Scottish Water’s investment priorities are right.
In 2007, Scottish Water was given the green light to upgrade Scotland’s largest treatment plant in Milngavie at a cost of £120m. However, in the past, the customer has had little say in decisions like these.
The Customer Forum, established six months ago, is designed to change all this and will ensure that the customer’s voice is part of the regulatory process and at the heart of key decisions. In 2014, it will report its findings of what customers want to the regulator for the next five year water pricesetting period, 2015-20.
Chaired by Peter Peacock – the former MSP and Scottish Executive minister – the work of the forum is guided by nine members with expertise across business, academic, the public and third sectors.
“It’s an entirely new approach in the UK utilities sector, to involve customers and give the customer a voice in what is a monopoly provider,” said Peacock. “In Scotland, the water regulator has a statutory responsibility for setting the price of water and agreeing the level of investment by Scottish Water.
“The regulator felt that there wasn’t enough of a customer dynamic between Scottish Water and its customers. So the regulator, Scottish Water and Consumer Focus Scotland, sat down together and discussed setting up what has become The Customer Forum.
“I wouldn’t say it’s a sign of a failing on the part of Scottish Water; I think it’s a natural evolution. They are only ten years old; a relatively new company which inherited significant challenges when they took over and they have made some big improvements.
“Scottish Water have embraced the initiative with enthusiasm and have genuinely bought into the process because they recognise that the better attuned they are to their customers, the better they will deliver services in the long term.
“The Customer Forum will be a voice for both consumers and businesses. But while businesses in Scotland do now have some choice in water providers, the public are essentially dealing with a monopoly so the normal customer dynamics don’t apply; you can’t take your custom elsewhere.
“So it’s about getting more of a customer dynamic in determining Scottish Water’s priorities but also about heightening awareness among consumers that water is something they pay for and that it’s an important and valuable commodity.”
Peacock is enthused by the expertise and depth of research that will inform The Customer Forum’s work and recommendations: “We have a range of skills on the board. As well as my previous work with Citizens Advice Bureau, as a councillor and MSP, we have people who’ve also been involved in customer-facing organisations, in environmental science and international water law, policy development, and three representatives from business.”
The Customer Forum will draw on research and customer insights from Scottish Water as well as conducting its own studies. Although conceived by the regulator, Scottish Water and Consumer Focus Scotland, it will operate as an independent organisation. But its remit does not extend to the politics of water company structure or ownership.
“Our objective is to achieve the best service for customers at the fairest possible price. As Scottish Water formulate their plans, we will be asking are they in the best interests of customers. It will involve many issues such as drinking water quality, carbon footprint, flooding, affordability and so on.”
Peacock believes that The Customer Forum could also drive radical approaches to resource management such as households being encouraged to think more about how they dispose of waste, such as oil and fats, house builders integrating waste treatmentat- source technologies in new homes and the pharmaceutical industry reducing the amount of chemicals in household products.
The bottom line, said Peacock, is that not only do current behaviours have an impact on the environment, it also costs to treat waste water and provide a fresh, clean supply. With changing economics and demographics in terms of employment and an ageing population, cost is an increasing factor.
“There is a wider job to be done,” he said. “There are new European directives dealing with end-point treatment but we need to get further ‘upstream’ with that.” Scottish Water itself is looking at what it can do to ensure better resource management, such as the detection and reduction of water loss in pipes and the reuse of waste residues in such things as fertilizer and building materials.
Peacock is keen for The Customer Forum’s work to proceed apace: “We are on a timetable for 2014, in time for when the new price comes into effect the following year. The key thing is to engage with customers, test ideas, make sure they are valid and get a clear sense of how the best service can be delivered at the fairest possible price and, long term, what Scottish Water’s investment priorities should be.”
Later this year, Scottish Water will publish a 25- year vision statement of how it perceives the direction of fundamental issues such as the economy and climate change. It’s a significant timeframe on which to work but it will be vital in identifying investments over forthcoming five-year intervals that will be consistent with a changed world a quarter of a century hence.
“It’s quite a challenge,” said Peacock, “but, again, we’ll be involved from the customer’s view and Scotland is leading the way in that approach.”