La efectividad predictiva de Mindfulness

13.3.1 Because customers are not able to choose another company to supply their water, it is imperative that companies are incentivised to find out what their customers want, and that they act on this information to improve customer satisfaction levels. Recent consumer

research commissioned by Ofwat and CCWater92 _{shows that household customers generally}

have a high level of satisfaction with the water and sewerage service they receive, with 90 per cent reporting that they were satisfied, and not more than 10 per cent reporting dissatisfaction with any single aspect of the service. Seventy-three per cent of customers were satisfied with the value for money they received from their water and sewerage services.

13.3.2 While complaints to companies reduced last year, they have almost doubled in the past five years. Future incentive mechanisms need to be ambitious and must penalise companies who are not performing well in resolving and reducing complaints, in order to mimic the effect of poor performance in a competitive market.

13.3.3 Ofwat has recently consulted on the introduced the new Service Incentive Mechanism (SIM) which replaces the Overall Performance Assessment (OPA). It is designed to encourage water and sewerage companies in England and Wales to improve the quality of the service they provide. Responses to the interim report showed general agreement that the OPA needs

revision, and support for the new SIM.93

13.3.4 Service standards and safeguarding of basic service levels will continue to be monitored by the regulators. Ofwat will publish regular performance information on how each company performs on these key service attributes. Current standards of service will therefore be maintained, and the new SIM will strengthen the quality of service aspects. The SIM will be based on two consumer experience measures.

94_{www.ccwater.org.uk/upload/pdf/r7508_final_report.pdf}

13.3.5 The financial incentive and penalty for the SIM will remain the same as for the OPA, at +0.5 to -1.0 percentage points. This is used when setting new price limits to make a positive or negative adjustment to each company‘s price limit based on their past performance. Price adjustments will initially be based on a comparative approach, because the data measures are new; thereafter, consultation on Ofwat‘s approach to price adjustments will take place when consulting on draft determinations.

13.3.6 In order for customer experience to carry real weight, it is important to have the correct balance of incentives and penalties, and that Ofwat uses the whole range. Companies that perform poorly should be penalised more heavily. Research carried out by Ofwat and

CCWater94 _{showed that 4 per cent of customers would switch suppliers because of poor}

service; this can be compared with the 3 per cent loss in market share British Gas experienced following problems with its billing systems, and it demonstrates the effect of poor customer service in a competitive market. The Cave review recommended a penalty of -3 per cent and a +3 per cent incentive associated with negotiated settlements to encourage high performance levels. However, a potential +/-3 percentage rise could raise bills for customers in a way that would not be appropriate under a regional monopoly system. A -1 per cent to +0.5 per cent range and the reduced operational costs of avoided complaints arising from better customer service should deliver this incentive in a more appropriate way.

13.3.7 The results of the SIM only affect companies in the next price control period. Companies need to respond to their customers on an ongoing basis. Ofwat should therefore continue to report on companies‘ performance against both quantitative and qualitative measures. Responses to the interim report expressed some concerns about increasing the regulatory burden if further reporting is required. There were also concerns about comparing customer satisfaction between companies; where metering programmes are underway, for example, unwanted customer contacts are likely to increase. In this case, there should be an appropriate appeals procedure in place that allows companies to explain any particular situation affecting their customers‘ satisfaction levels. CCWater would like to see the publication of league tables at six-monthly intervals, allowing companies to deal with potential issues as they arise and to consider their position in relation to the performance of other companies. The review team believes that more frequent reporting would be helpful to customers and companies, particularly as the SIM is linked to the 5 yearly price review process. This information should be presented in a way that clearly shows the comparative performance of companies and the likely financial impact of their performance if it continues. All such reporting must be readily understood by customers.

13.3.8 The review team recommends that Ofwat, CCWater and companies should publicise

and explain information about companies’ performance against the Service Incentive Mechanism (SIM) on their websites and through other appropriate channels. Ofwat should publish six-monthly ‘league tables’ based on quantitative and qualitative information and survey results from the SIM to allow customers to assess the performance of their water and sewerage companies, and companies to monitor their progress in relation to other companies and the requirements of the assessment criteria. embly nefits ssary), ailable ments. atives taken ts are asis, a ormal o the where d the mmon r, it is d that sumer nerally th 90 orting omers and st five s who ect of (SIM) water e they needs ed by mpany re be will be

13.5.3

13.5.4

Frequ 13.5.5

13.5.6

95_{Review of Water Company Bills – CCWater Good Practice Guidelines on Bill Design and Layout, October 2005}

Information for Customers

13.4.1 The review team recognises that much work has already been done to provide customers with better information. CCWater offers the industry ongoing advice and has best practice

guidance detailing essential and desirable bill contents;95_{Ofwat also reviews the provision of}

information to customers as part of its annual reporting process. There are certain regulatory requirements which govern the contents of bills, but consumer research has suggested that because of space limitations, too much information on bills can be counter-productive. Companies welcomed new ideas on improving information on and with bills and the review recommends that research and trials continue in this area. The review team welcomes Ofwat‘s suggestion that it will hold a workshop to share best practice on billing and engagement with harder to reach customers.

13.4.2 Companies showed in their responses that they understood the importance of good engagement with consumers, particularly harder-to-reach and vulnerable consumers, but their lack of customer data can hinder successful engagement with consumers. New provisions in Chapter 12 on named customers will go some way towards helping companies to identify their customers and the review team expects that companies will make full use of these powers to engage with their customers in appropriate ways.

13.4.3 The Ofwat and CCWater joint consumer research96 _{showed that customers‘ priorities}

include: • clear bills;

• ease of contact; and

• relevant, timely information.

Billing

Efficiency, Affordability and Debt Information

13.5.1 Responses to the interim report confirmed that companies want to retain their local corporate approach to billing and the review team agrees that this should be the case. However, the review team notes two key areas where it is important that every company makes efforts to improve its communications: water efficiency, and affordability and debt information.

13.5.2 Water efficiency information should be personalised to the household and tied in to the local company‘s water efficiency strategy. Metered households should receive comparative consumption and meaningful information related to their individual use; for example, the volume of water used compared to the previous year, comparisons with other local customers or similar households, or the cost of a bath or shower would all be useful. Annex 10 shows an example bill from a smart billing trial, showing the sort of information the review team thinks should be provided on bills. Companies should also provide information to households on water efficiency methods and advice, although not necessarily on bills.

13.5.3 Affordability and debt information and advice, including what help is available and how the customer can access it, should also be provided with water bills, particularly where the customer could benefit from an alternative tariff or qualify for WaterSure. Companies have a key role to play in promoting WaterSure and any other assistance they provide on debt and affordability. They should ensure that their customer-contact employees such as billing and call centre workers are aware of what is available, and that they can give accurate advice on eligibility and help customers process their applications. Companies need to provide accessible information on schemes that help low-income earners who want to stay out of debt, providing more publicity on water debt advice and help, and making greater use of third-party advice organisations. Bills should clearly indicate methods of payment, provide contact details for third-party debt advice agencies and be written in plain English.

13.5.4 The review team recommends that companies should ensure that water efficiency,

affordability and debt information and advice are provided to their customers in accessible formats, either on and with bills or through any other appropriate methods.

Frequency of meter reading and metered bills

13.5.5 Clarity, transparency and accuracy of billing are all important in maintaining a successful relationship between a company and its customers. Water is effectively the only utility where leakage can have a long-term but undetected impact on customers‘ bills, and yet it is currently the utility with the lowest frequency of meter reading and standard billing frequency. Energy customers can often read and submit their own meter readings with relative ease, which is more difficult for metered water customers whose meters are located in less accessible locations. In the responses to the interim report, respondents identified that the uncertainty caused by moving to metered charging can be a deterrent to opting for a meter for households that could benefit from lower bills. Some customers, especially those on lower incomes, prefer a predictable bill, even if it is higher, than an annual bill they find difficult to budget for. Uncertainty is higher in the first year that a household is charged by volume, as the majority of customers are not aware of how much water they use or how

much they can expect to pay per unit used.97 _{Another concern is the possibility of leakage}

on customers‘ supply pipes leading to an unexpectedly large bill when it is not detected quickly due to infrequent meter readings.

13.5.6 Although there is no legal requirement on meter reading, Ofwat collects this information under the DG8 indicator. Companies aim to read meters once a year and at least 99.85 per cent of meters are read once every two years. The total cost of meter reading partially depends on the frequency that meters are read. The cost and benefit assessment in Annex 6 is based on meter reading costs related to reading meters twice a year, which is more frequent than current industry practice. Increasing the frequency of meter reading would increase costs but the review team believes that this cost could reduce over time, by reducing customer contacts as well as giving water companies an increased incentive to adopt more efficient and cheaper meter reading processes. However, there is currently no evidence on costs and benefits of more frequent meter reading. Companies should also consider allowing customers to submit their own meter readings where this is practicable.

97_{CCWater, Living With Water Poverty, June 2009.} omers actice ion of latory d that uctive. eview comes g and good s, but New panies use of orities local case. mpany debt e local rative e, the local Annex n the mation lls.

13.7.3 13.5.7 Most companies bill unmetered customers annually and metered customers every six

months, although practice varies. Customers are also usually able to pay in instalments of varying frequencies from weekly to annually. The review team believes that while potentially increasing costs to the companies, more frequent meter reading and billing will ultimately reduce customer contacts as a result of fewer disputed bills, increase customers‘ awareness and consideration of their water usage and efficiency, allow customers to budget more effectively and provide early detection of any large leak on the customer‘s supply pipe. As discussed in Chapter 12 greater billing frequency is also likely to have a positive impact on

revenue collection. The review team recommends that metered customers should

receive at a minimum twice-yearly bills based on a minimum of twice a year actual meter readings.