How will AMP6 and AMP7 impact customers, suppliers and stakeholders?

12th February 2016 10:00

This blog was written by Ali Sims, Research Director (pictured)

The Water Industry Forum’s seminar on how AMP6 and AMP7 will impact customers, suppliers and stakeholders provided me with much food for thought on what the future research needs of our clients in the sector will be in the run up to PR19.How Will AMP6 and AMP7 impact customers, suppliers and stakeholders?

PR14 saw a change in how companies consulted with their customers as the regulator encouraged more customer engagement. Over a quarter of a million customers were consulted and the consensus across the sector was that this was a marked improvement on PR09. The success of PR14 will pave the way for PR19 and whilst OFWAT will be opening a further consultation on customer engagement and outcomes in October/November this year, we already know the following:

With the open market for NHH customers fast approaching, there will be a separate price controls for NHH and HH customers

OFWAT is currently consulting on whether the HH market should open in 2020 – the outcome of this consultation and Government’s ultimate decision on this matter will impact on future consultation with HH customers

Customers’ needs and expectations are constantly changing and the previous approach of only researching customers’ needs and willingness to pay once every 5 years is no longer viable – the marketplace could look very different in 2020-2025. The emphasis now needs to be on continuous engagement with customers using traditional research such as trackers, more modern online research approaches and making more use of internal data e.g. the analysis of customer contacts, complaints and social media. While SIM has always benchmarked water companies against each other, the SIM of the future may benchmark them against other service providers in the UK such as John Lewis or Apple. And whilst it is likely that stated preference will still play a part, it may be that revealed preference and other forms of monitoring customer behaviour and needs will also be encouraged.

So the message coming out loud and clear from this week’s seminar is that whilst the story of AMP6 has been flat bills and customer affordability, AMP7 will see companies needing to invest to keep abreast of not only customers’ changing expectations but also the changing environment e.g. the growing population, climate change, aging assets and environmental legislation. The Story of AMP7 is likely to be one of innovation, but who will pay for it is yet to be decided.

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