Utility Week Live

In January, Ofwat summoned the great and the good of the water sector to central London to Launch its new overarching strategy, Trust in Water. The strategy aims to encourage water companies to focus on trust, but also to build better trust between the regulator and companies. Many of those assembled were used to such occasions involving reams of paper, stuffed with minutiae. This time they were treated to a colourful animated video accompanied by rousing speeches from some of the water regulator's most outspoken critics. The strikingly out of character approach was a deliberate move to make the strategy launch stand out. Hot on the heels of PR14, it's a strategy built on trust and confidence, according to speakers at the event. Trust in water has some high level priorities, which were set out by Ofwat chief executive Cathryn Ross at the launch event. These aims comprise: delivering the reforms set out in the Water Act (including setting up non- domestic retail competition); maintaining investor confidence; developing how performance is monitored; and ensuring Ofwat has the skills to back up the new strategy. Largely, though, Trust in Water is about promoting principles-based regulation rather than prescriptive command and control. It's designed to build better trust between companies and their customers, suppliers and investors. It's also designed to encourage more trust between companies, the regulator and government. UtILItY WEEK | 20th - 26th FEbRUARY 2015 | 15 "The CMA inquiry is the most important element in the industry's battle to regain trust. It must come out with a set of rules that work, and which the public believes are fair." iain mcCaig, chief executive, First Utility In association with: S P E C I A L R E P O RT: PA RT 2 / F e b ru a ry 2 0 1 5 It's not just suppliers who need to consider how their actions impact on public trust. The regulator too has a role. In March 2014, Ofgem took a landmark decision to refer the UK's electricity market to the Competi- tion and Markets Authority (CMA) for an investigation of its com- petitive practices. It was a move prompted by rows over transpar- ency and the dismal levels of trust in the energy sector. Companies and commentators were invited to submit evidence and comment to the CMA over the second half of 2014 with further hearings ongoing throughout February and March this year. The factors determining trust in the electricity market continue to provoke debate. The rights and wrongs of vertical integration are at the centre of the mire, but the role of the regulator in destabilising trust is also a popular theme. Among the papers submitted to the CMA by energy suppliers last year, that from EDF Energy lent notable space to the impact it saw Ofgem having on public trust in the energy market. Below are some excerpts: "It is not only suppliers that can help to rebuild consumer trust. It is incumbent upon all stakeholders to improve the current situation. The actions of the regulator, media, politicians and consumer groups all contribute to the overall perception of suppliers' trustworthiness by consumers." "EDF Energy is concerned that Ofgem's approach to media inter- action has at times been unhelpful in terms of its impact on consumer trust. For example: (a) Ofgem publishes estimated retail profits (the supply market indicator) that overstate profits when compared with the segmental accounts; (b) Ofgem uses the term "big six" despite its inaccurate sugges- tion of homogeneity; and (c) Ofgem's press releases have, at times, been unhelpful in terms of the language used. For example its statement on 12 June 2013 stated: 'Ofgem's proposals will break the stranglehold of the big six in the retail market.' "EDF Energy recognises that the decline in trust has many drivers, including the behaviour of energy companies themselves. Nevertheless, many stakehold- ers assume that Ofgem has an authoritative command of the facts and as a result many are likely to pay particular attention to Ofgem's statements and data." W hen I was an ombudsman in the public sector I worked in Scotland, and one of the local authorities there had, by head of population, higher complaints than any other. Automatically, many would assume that there must be something particularly poor about that coun- cil, but in fact the opposite was true. They had the high number of complaints trust is a two-way street ThE ROLE Of ThE REgUL ATOR Viewpoint "Complaints are an integral part of the process of building trust." because they had proven they handled them well. They had a trusted system for taking complaints in, handling them carefully, and communicating with the complainant so that they understood the response. In short, people knew that if you complained to this particular local author- ity, you would be taken seriously and some- thing would be done. The complaint level was not because that local authority had poor service, but because it was good at dealing with com- plaints and was, therefore, more trusted. Organisations should be wary of play- ing a numbers game when it comes to how they handle complaints. It misses the point that complaints are an integral part of the process of building trust – they are also an invaluable way of learning about things that are going wrong. As Bill Gates once said: 'Your most unhappy customers are your greatest source of learning'. Lewis Shand Smith, chief executive, Ombudsman Services Trust in Water ofwat'S new Strategy for regULating water CompanieS

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