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RIIO-2. What does “strengthening the consumer voice” really mean?

What does strengthening the consumer voice mean, and do you know the best way to do this? Are you reaching the end user?

 

RIIO-T1 and RIIO-GD1 price controls are due to end in March 2021 with RIIO-ED1 ending in March 2023. Ofgem recently launched the framework review for RIIO-2 which marks the beginning of the consultation process for setting price controls for the network companies running the gas and electricity transmission and distribution networks in the UK.

The publication of the open letter[1] by Ofgem sets out the context for the development of the new price controls and seeks views from stakeholders on:

  • the overarching objectives for RIIO-2
  • the key principles that should be considered
  • Ofgems approach to stakeholder engagement including timetables

The central principle to the framework review is ‘Giving consumers a stronger voice in setting outputs, shaping and assessing business plans.’ In this article we will explore what strengthening the consumer voice really means and how this can be achieved throughout the business planning process.

Consumer panel vs. constructive engagement – what is the end result?

With clear direction from Ofgem that consumer engagement needs to be core to RIIO-2, organisations now need to scope out the methods, tools and solutions to engage with customers and stakeholders.

The water sector adapted through business planning periods PR14 and PR19 to ensure they captured customer and stakeholder views through the use of customer forums. The aviation sector is well known for creating engagement channels through constructive engagement. Both are well established routes and there is shared learning that can be applied.

Customer forums and constructive engagement frameworks reach segments of customer representatives and stakeholders, but neither approach captures the views of the end user. This is where you need to work with an independent expert.

 

Engagement - Panels or framework

 

Explain has worked within the utilities sector for two decades, working in contracted partnerships with several of the UK’s biggest and most respected suppliers and distributors. These relationships have allowed Explain to develop an in-depth understanding of the importance of customer and stakeholder engagement, ensuring we engage with the end user to deliver insights that support and are aligned to business planning.

 Why Explain:

  1. Independent: You can be confident that our advice will be impartial, open and focused on delivering robust insight to support business planning throughout RIIO 2
  2. Bespoke solutions: Offering a range of research methodologies from the traditional to the innovative, always focussing on the best approach to deliver robust insights ensuring we engage with the end user
  3. Research that unlocks insight: Delivering a range of research solutions through a mix of methodologies to deliver insights including: business planning strategic reviews, stakeholder research, customer research, vulnerable customer research, brand awareness and perceptions and public consultation.

Our team at Explain Market Research are experts at putting in place research programmes identify and support business planning priorities within the utilities sector.

 Contact us today to find out how we could support you and get in touch with our team to understand more about the solutions we can provide.

 

 

[1] https://www.ofgem.gov.uk/system/files/docs/2017/07/open_letter_on_the_riio2_framework_12_july_final_version.pdf


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Staying ahead of the curve – insights unlock value in the new Water Retail Market

The new water retail market is open for business; on the 1 April this year it became possible for businesses in England to choose which company they would like to supply their retail water services.

The move had been in the pipeline since 2011, when the government set plans for a new competitive market outlined in the Water for Life White Paper. With a focus on improving customer service, promoting protection of the environment and increasing competition in the industry, it is one of the most significant changes the industry has faced, bringing with it a range of new challenges.

The open retail water market will work much in the same way as other utility services, with wider utility markets now also being able to offer water services.  It is believed this will deliver around £200 million of overall benefit to customers and the UK economy by separating out retail services from wholesale activities.

What does this mean?

In simple terms it means that for an additional 1.2 million eligible businesses and non household customers they now have a choice – the customers are in the driving seat.

Customers can decide who they would like to provide their water, their wastewater services, or both. They can change at any time, for any reason, without penalty, and all this can happen in less than a month.

For licensed water retailers it means they are now competing against each other and have the freedom to tailor services and packages for customers to contend in the open market. The market will provide growth opportunities for existing regional water companies, and brand new companies. Initial investment will be required to set up independent retail businesses, ensuring fair competition, and once established driving a return on investment will be a key focus.

Insights will unlock value

The open retail market is a new market; with that comes limited transactional history or operational trading knowledge. There are no clear market leaders and the market is open to competition.

The good news is willingly engaging with and understanding customers’ and stakeholders’ needs and concerns could be a key differentiator in a new competitive market and will provide those forward thinking water retail companies with a competitive edge.

Staying ahead of the curve

The ability to benchmark, track and evaluate service through customer engagement will deliver a significant return on investment for water retailers.

For over two decades, our team at Explain Market Research have been innovating, developing and delivering research programmes in the utility sector, our main objective always being to deliver actionable insights for our clients. Read our case studies for some great examples of our work in the sector.

We have developed innovative methodologies to deliver insights in a competitive market. We specialise in engaging with customers including embedding behavioural research, trust and confidence, and the engagement of vulnerable and hard to reach customers into our utility sector research projects.

Research and engagement will enable water retail businesses to get closer to their customers to identify the issues they are experiencing at any given time and co-creating to find solutions that improve their experience.

Research will also be important to understand the ideal balance between price and service to enable retailers to shape their service offering. Measuring and tracking customer experience as well as customer advocacy will allow retailers to measure performance as well as areas for service improvement, enabling continuous improvement over time and high levels of customer retention for getting it right.

Contact us at Explain Market Research today to find out more about the solutions we offer. Take a look at our accompanying infographic below.

Water Retail Market Infographic V3