PR19 customer engagement – what’s expected and what’s to gain?

Speaking at a seminar earlier this month, Ofwat chief executive Cathryn Ross sketched out some of Ofwat’s expectations on customer engagement at PR19, and emphasised the size of prize on the table for companies who perform well in this area.

Beyond general expectations, she identified the following specifics:

• Cost factor adjustments – companies’ applications for special cost factor adjustments should be supported by customer engagement. “If customers are being asked to pay more because a company’s costs are higher because that company is in some way different, do customers value that difference?” Ross (pictured) questioned.

• Outcome Delivery Incentives – customer engagement was used at PR14 to shape company incentives. “We expect that to be the case again in PR19, but given that we expect those financial incentives for delivery in PR19 to be greater, that engagement needs to be better.”

• Vulnerability support strategies – “We think customer engagement has a critical role to play in the development and successful implementation of those strategies. Especially, though not only, where customers who are struggling to pay their bills, will effectively receive support that is funded by increasing the bills of others.”

• Methodology and judgements – companies need to use a range of tools and techniques to establish customer insights and “to think about what all the evidence available to them is telling them in the round”.

Aside from the general benefit of being in touch with their customers, Ross said good customer engagement would support fast tracking in business plan assessment (“there is no way that a company that cannot demonstrate excellent customer engagement will be fast tracked) and boost legitimacy. “In the context of a raging debate about the legitimacy of privatised public services, the ability of companies demonstrate not only that they are delivering against customers’ expectations but that they genuinely do know what those expectations are, and have a real connection into the commutes they serve, is more important than ever.”