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Water customers need the tools to manage their usage

3 March 2010

It's great news that Southern Water is planning to change its tariff structure so that the price is higher in the summer when water is scarcer. We are facing drier summers in the future, and with them the possibility of more frequent water use restrictions. In the past, many customers responded to calls to save water and had no reward, but the new tariff will mean that those who do respond (and are metered) will see a financial ­benefit. This can only be good news. Southern Water has promised in its new tariff structure that those who don't use more water in the summer will find that their bills are similar to the current level. Slightly disingenuous, as many people use more water in the summer than the winter to water their garden if it's dry. But nevertheless, a clear and simple message and one that places the incentive on water saving right where Southern Water - and the population as a whole - needs it to be. It's not the only innovation around in water tariffs. Wessex Water has won an argument over potential cross-subsidy when it showed that placing struggling customers on a low tariff (known as Assist) increased the amount of revenue collected. That innovation is being closely watched by other companies as the legal prohibition on cross-subsidy has begun to soften. This, we hope, is the start of a trend of innovative tariffs in the water industry. The industry wants customers to take control of their water usage and reduce it where possible, and has done a great job of sending out specific messages along with handy bits of kit such as cistern hippos. But at the moment too few of those customers have the tools that will help them save water effectively. Many people still get six-monthly bills from their water company, which means that it seems at the same time expensive, not at all urgent, and entirely detached from usage (even if it is not based on rateable value). Change is needed. From a customer point of view, choosing from a range of tariffs can be annoying. Not everyone is the kind of customer who wants to hunt through a host of options to find one exactly tailored to their usage, as the energy industry, with its thousands of tariffs, can testify. And it doesn't always mean that customers get the best deals. But it does mean that customers have to be actively engaged in the purchase. Some will simply go for the cheapest, but others will see the opportunity to save water and lower their bills. The water industry has been engaged with its customers in the past, but this has been on something of a "public service" level. It has asked customers to save water for the public good. The switch to more extensive metered supply will enable the industry to have a different kind of conversation with its customers, as it will have something it can offer to "good" users. What is the downside in this vista of engagement? Those who do not or cannot have a meter could feel themselves disadvantaged. In the long term that may mean that increasing numbers of them will take the meter option. But in the short term it means companies must be proactive about explaining how the tariffs work and how the interests of metered and ­unmetered customers are balanced. Innovative tariffs will help give metered customers the tools to change, but water companies must explain that ­equally to their unmetered neighbours. Janet Wood
Source: Disconnector

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