Utility Week Live

UtILIty WEEK | 16th - 22nD JAnUAry 2015 | 17 SUPPLY Energy suppliers are public enemy number one, with politicians, the media and consumers lined up against them. The challenge for company bosses is to recapture brand acceptance and manage stakeholder relationships back to a healthy place. NETwORkS Network leaders have spent decades driving down cost, sacrificing research and development and innovation where necessary. This whole approach must now be transformed as networks meet the challenge of a smart future – but without losing the focus on value for money. waTER as the retail side of the water business prepares to face competition, com- pany leaders must be decisive in setting their strategy. For those companies that remain vertically in- tegrated, leaders will need to manage two cultures: the newly competitive retail arm, plus the mono- poly, engineering- focused wholesale business. TOP ChALLEngE HOw DiFFERENT UTiLiTY SECTORS MUST RESPOND "You had to take the whole thing back and say, what does it take to run a water com- pany? How would you organise it, what would matter? I realised you had to treat customers as if they had a choice – customers were fed up with things not being resolved. I called it 'R cubed' – reliability, responsibility and reso- lution. It was a fast and furious programme." ofwat chairman Jonson Cox on his time as chief executive of Anglian Water "We took possession of Central Networks on April Fools' Day, which was a Friday. On the Saturday I terminated the contracts of all eight directors. We didn't need them. It wasn't a comment that they were good, bad or indifferent. I didn't need them and I wanted to make sure the people there realised I'm in charge." Western Power Distribution chief executive Robert Symons recalls consolidating Central networks How I transformed my business S P E C I A L R E P O RT: PA RT 1 / JA N U A RY 2 0 1 5 All change in water? W ith the conclusion of PR14, the pressure is on for water com- pany leaders. Ofwat has been outspoken in its concerns that companies have been riding the wave of the economy, making money on the back of higher gearing and financial outper- formance. Speaking at Utility Week's recep- tion to mark the 25th anniversary of water privatisation in November, chairman Jonson Cox said: "I still worry if we've seen enough of what good management skills can do to improve a network business." That will change as the sector moves into AMP6, which has been deliberately struc- tured in such a way that companies will only make money through sound per- formance and keeping their customers happy. The price review has borne down heavily on investor returns, setting the cost of capital at just 3.74 per cent, com- pared with 5.1 per cent in the previous regu- latory cycle. This means investors will be turning up the heat on management teams and, with a flurry of merger and acquisition activity expected, some are bound to fall. Ofwat chief executive Cathryn Ross gave a strong hint of things to come when she told Utility Week Jonson Cox and Robert Symons will be speak- ing on business transformation at Utility week Live, see www.utilityweek-keynote.com in November: "I'll be quite interested to see how particularly the investor community responds to a lot of the information we put out in PR14. We have done transparency like never before in this review, there are thou- sands of pages out there and a lot of what those pages are telling you is about the qual- ity of company management." "THERE aRE THOUSaNDS OF PagES OUT THERE aND a LOT OF wHaT THOSE PagES aRE TELLiNg YOU iS aBOUT THE qUaLiTY OF COMPaNY MaNagEMENT." CAthryn roSS, ChIEf ExECUtIvE, ofWAt "If customers trust us to deliver high qual- ity, reliable services that are good value for money, they are much more likely to respond to calls to play their part in water efficiency and environmental protection." Colin Skellett, executive chairman, Wessex Water ● UtilityWeekLive www.utilityweek-keynote.com In association with:

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