29 November 2016
Ofwat is asking for views on how to encourage water companies to deliver more of the outcomes, or results, customers want. These outcomes might relate to the quality and reliability of water supply, how well water companies look after their local environment, and how good their customer service is.
By focusing our regulation on the results or outcomes customers receive, it means water companies set their priorities based on delivering what matters to consumers. This approach, which was introduced in 2014, has been successful but we want to improve it for the next price review in 2019.
To make sure companies are on the right track, they all have performance commitments – pledges about how they will reach the desired outcomes for customers. Companies agree their performance commitments in collaboration with consumers.
Companies have reputational and financial incentives to deliver their performance commitments. These are called outcome delivery incentives. Companies report on their performance each year and for some performance commitments have financial rewards and penalties depending on how successful they are in delivering their performance commitments.
In the consultation launched today, we are consulting on four areas:
- how companies’ performance commitments can be made more stretching to deliver higher service levels to customers
- how outcome delivery incentives can be strengthened to encourage companies to deliver on their performance commitments to customers
- how we can better reflect resilience in outcomes to ensure the interests of future customers are taken into account
- how performance commitments can be made more transparent to make it easier for customers to hold companies to account
David Black, senior director at Ofwat, said:
“By focusing on the results customers want, rather than giving companies a prescriptive list of activities, we are putting customer interests at the top of water companies’ thinking and planning. And by getting the right incentives and penalties in place, we keep their minds focused on delivering for customers.
“This approach gives companies the space to innovate, find new solutions and ways of delivering for customers. It has worked well, but we want to hear ideas and thoughts about how we can make it even more successful for customers.”
The closing date for the consultation is 31 January 2017.
Notes for Editors
- Ofwat (The Water Services Regulation Authority) is the economic regulator of the water and sewerage sectors in England and Wales. It exercises its powers in a way that it judges will protect the interests of consumers, promote value and safeguard future water and sewerage services by allowing efficient companies to carry out their functions properly, and finance them.
- Information about how water companies are performing can be found at www.discoverwater.co.uk
Media enquiries to Sharon Robinson in the Ofwat Press Office on:
0121 644 7642 / [email protected]