CCW urges firms to rethink PR19 ODIs and go further on affordability

The Consumer Council for Water (CC Water) has urged water companies without demonstrable customer support for the rewards or penalties proposed in their business plans for 2020-25 to make changes while there is still time.

With less than two weeks to go until Ofwat grades water company PR19 business plans, the customer watchdog highlighted a series of shortcomings at both industry and company level.

On Outcome Delivery Incentives, policy manager, James Mackenzie (pictured),

said: “What is of greatest concern is where companies have applied ODI rewards with little or no customer support, and it’s important that companies re-think this in the coming months while changes to business plans can still be made.”

CC Water also identified some industry wide problems with ODIs. Mackenzie said there was inconsistency “with some companies bidding for significant rewards for performance levels that aren’t particularly stretching”.

Furthermore, overall “business plans have failed to evidence strong industry-wide customer support of the concept of ODIs…the evidence shows that some customers do not support the concept of paying rewards for improving performance, or did not support the specific package of ODIs companies developed.”

He also cautioned that customer expectations on price based on the way plans have been presented will not in many cases be met in reality. “Contrary to the reductions implied by business plans, customers of all but three companies will see their bills increase once an assumption of 2% per annum inflation is taken into account. Once inflation is added, some customers could even see bills go up by as much as 10% over the five-year period.”

Meanwhile, the watchdog said companies had shown greater ambition than in the past on affordability, but that this didn’t go far enough and some companies in particular could do more. Policy manger Gemma Domican: “While we estimate that the current social tariff and WaterSure schemes have the future potential to support around 750,000 households, this would still leave around three quarters of those who need help without any support at all.”

She urged firms to go the extra mile on three fronts: a wider range of options; meaningful help; and contribution.

• A wider range of options

Many companies are offering a suite of diverse options including payment matching, payment holidays and affordable payment plans. “Not all companies however, have plans for such a diverse range of options.”

• Meaningful help

“Many companies have put in proposals which significantly increase the amount of help they will offer, but there is still scope to increase this for some companies. We also want companies to be making a real difference to those they are helping. It’s no good just reducing a customer’s payments if they still can’t afford the payment plans they are put on. Any help given needs to be meaningful and the level of assistance given currently varies across the industry.”

• Contribution

Companies should be putting in their own money to assist those in need. “Our research shows that customers are more willing to give additional money to help those that are struggling to pay if the company is also making a contribution. There are very few companies who currently do this. If the companies were to match customers’ contributions from their own profits, this would significantly increase the number of customers who could be helped.”