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MAJOR WATER USERS: persistent problems continue to blight the business retail market, three years on
April 2020
MEUC Water Policy AdviserKarma Loveday
The MEUC supports the vision of the water retail market, to provide choice, more value and better service to business customers, including our members.
As well as supporting major customers in the market, the MEUC also seeks to provide useful information and constructive feedback to policy makers, retailers and wholesalers, and to facilitate debate across the sector.
We would be unable to do this without the input, insight and experiences of our members. We would like to thank them for their continued support and willingness to share their challenges and concerns, to find solutions and help shape a water market fit for the future.
TO OUR MEMBERSTHANK YOUFIRSTLY
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165. RECOMMENDATIONS TO IMPROVE THE MARKET
4.4 Letters of Authority
4.3 Eligibility
4.2 Water Efficiency
4.1 Retail Margins/Cost Allowances
144. ADDITIONAL/SPECIFIC ISSUES TO ADDRESS
3.3 Inconsistency and Inefficiency in the Market
3.2 Wider Customer Service
3.1 Meter Reading and Bills
93. ISSUES MEMBERS NEED ADDRESSED AS A PRIORITY
2.3 Change over time
2.2 Satisfaction
2.1 Engagement
62. MEMBERS ARE ENGAGED - BUT SATISFACTION IS MIXED
41. INTRODUCTION
CONTENTS
THREE YEAR STATEMENT
4.5 Administrative Burden
5.1 General Recommendations
5.2 Specific Recommendations
6. NOTES 20
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Large and multi-site water users are the customer groups most commonly cited as the
main beneficiaries of the introduction of competition in the English business retail water
market. The Major Energy Users’ Council (MEUC) represents only such customers and
– three years on from market opening in April 2017 – can report that the market is not
working well for all our members. Some have benefited and are satisfied, but many
others continue to have poor experiences and are disappointed the market has not
delivered the benefits they were told would follow from retail competition.
Water is far less of a priority for MEUC members than energy, largely because of its much
lower cost. The market must be made easier to use and yield more benefit if the interest
of large customers is to be maintained.
The MEUC had always planned to make a position statement on behalf of members in
April 2020, at the three year mark of market operation. This follows a report¹ we published
in autumn 2018, charting members’ experiences 18 months in, and continues our ongoing
work to ensure the large customer voice is heard as the market evolves.
In the event, we find this month, April 2020, in the grip of a global pandemic, with the UK in
lockdown. We welcome and appreciate the moves² made by market partners and trading
parties to support businesses through this difficult time. We appreciate that in the short
term, the impact of Covid-19 will inevitably worsen some of the pre-existing problems our
members experience, including meter reading shortfalls and slow service delivery.
More positively, we also note that, in contrast to the usual slow pace of change in the
water market, regulators, market authorities and trading parties have collaborated to
deliver helpful changes very rapidly in the face of this crisis.
We urge everyone involved to use this landmark moment, when changes are being
INTRODUCTION1
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made to the market anyway out of necessity, to be as willing to collaborate to drive rapid
improvements to ‘business as usual’ arrangements. The aim should be for all large users
(the MEUC does not speak for other customer types) to benefit in an enduring way from
the policy decision to open the retail market to competition.
Situations and sentiments such as those expressed by this member are simply not
tolerable any longer: “I still remain very neutral on the pros and cons of the open water
market. Far from the excitement of new technology and reduced bills, I have had three
years of appalling customer service (invoicing / billing) and communication breakdowns
within [Retailer] leading to bailiffs arriving at our general office…followed by hollow
apologies and more broken promises.”
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The Major Energy Users’ Council is a membership body for industrial and commercial
energy and water customers. This includes manufacturers, infrastructure providers, power
generators and national multi-site businesses. Many of our members are household
names.
We support competition and backed the policy to give business customers a choice
of water supplier. We have worked concertedly for around five years now to provide
our members with all the information and contacts they need to take advantage of the
opportunities the market presents.
2.1 Engagement
An online survey³ open to all members, conducted in January and February 2020, found
our members to be highly engaged with the market. 59% of respondents had contracted
with a retailer(s) rather than relying on default arrangements. 42% had switched supplier,
with the most common reasons being to consolidate administration, to get a better level
of service particularly around meter reading and billing, and to save money. A further
17% had contracted with their existing supplier – typically because they were generally
satisfied with the relationship and could secure a small saving and/or lock in service
terms without the hassle of going to market.
16% had engaged with the market but chosen not to act – typically because they couldn’t
find a significantly better deal to make changing worthwhile, or because were put off
switching once they had explored it.
The remaining respondents (25%) covered a mixture of situations. These included those
who were simply not attractive to retailers (for example, “We have had to stick with
[Retailer] as no other entity has shown an interest in our business”); those from buying
groups who acted on behalf of individual customers; those who had not engaged with the
MEMBERS ARE ENGAGED BUT SATISFACTION IS MIXED
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market at all; and one or two who had opted to go self supply.
2.2 Satisfaction
In terms of satisfaction with the market at the three year point, respondents were very
divided. There was a roughly equal split between those who were:
Satisfied – factors cited included having one retailer to deal with and good service, some
with issues having been overcome. Some comments:
• “Service has been good, but not without a few bumps in the road.”
• “After an initial period when the invoicing went haywire, we have now settled
back into normal service.”
• “We have to deal with only one retailer for all queries.”
Dissatisfied – factors cited included incorrect/complex bills; service issues; lack of
transparency; and little added value. Some comments:
• “Endless delayed and incorrect invoices…Constant supplier changes of
personnel have resulted in numerous account managers over a three year period,
which in turn has led to a lack of follow up to the many invoicing complaints.”
• “Poor inaccurate infrequent billing, with no added value services.”
• “Not enough engagement from retailer and feeling of distance from individual
suppliers when dealing on e.g. trade effluent discharge consents.”
• “Complex billing, lack of transparency and poor customer service.”
• “[Retailer is] incompetent.”
Neither satisfied or dissatisfied – factors cited included that nothing much has changed;
and that experience has been mixed.
2.3. Change over time
While the MEUC appreciates that market actors are taking actions to improve the way the
market works4, most respondents to our survey said their satisfaction with the market had
stayed about the same over the past 18 months, with a minority saying it had increased
and a minority that it had decreased. Some comments:
• “There has been no change to our water / wastewater services in the last three
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years, certainly no improvements and nothing in the way of initiatives to help
reduce water use.”
• “[Retailer] promised a lot and continue to fail to deliver.”
• “The wholesaler and retailer do not communicate, we are very much ‘piggy in the
middle’ when it comes to any discussion. Billing from [Retailer] has been utterly
appalling, with every possible excuse given.”
• “Becoming a self supplier has given us clarity on our spend and usage.”
• “There are still significant problems with all retailers, the level of service is
improving at a rapid rate though.”
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There are three broad aspects of the market that members have identified as in need of
urgent improvement. These are ‘basics’ that must be addressed if the market is to stand a
chance of fulfilling its potential to benefit customers.
3.1 Meter reading and bills
Meter reading
Meter reading is a basic requirement for large business and public sector customers. It
is needed to ensure the consumption element of bills is accurate and for customers to
efficiently manage their usage. There continues to be a shortfall in the number of meter
reads customers expect to be taken, and MEUC members report metering is significantly
better in the energy market. Among the problems cited in water are:
• Wholesalers are not particularly interested in helping customers sort out metering
issues, such as locating meters or fixing broken meters, even if the retailer is
supportive and helpful.
• “Black box” meters which cannot be logged (notably being installed by Thames
Water) are totally unacceptable to customers.
• Some report retailers are “choosing not to do it” [read meters] in some cases; that
“retailers are not doing the job” even where meters are accessible. One member
reported re-contracting to reduce the frequency of reads by its retailer, purely
because it was pointless paying more for more frequent reads that were not being
delivered (only just over half of its meters were being read at that time).
• Where reads are not taken, customers are billed on assumed volumes, which can
be wildly inaccurate and produce bills that customers won’t pay.
• The AMR process so much simpler in Scotland; it can take five months for an AMR
application in England.
Billing
Customers just want an accurate bill, based on correct data and actual consumption
ISSUES MEMBERS NEED ADDRESSED AS A PRIORITY
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not estimates. This is another basic that the market must get right to stand a chance of
serving all customers’ needs, even in the most fundamental way. Among the problems
members are currently experiencing are:
• Estimated bills – sometimes there is no evidence of what these are based on;
sometimes it just seems to be a random number.
• One member reported two years of incorrect bills; this was painful and, for
instance, included the retailer chasing payment for bills it had never sent the
customer. Last summer, the member took action by commissioning its bill validator
to calculate bills from scratch and give a spreadsheet to the retailer setting out
what the customer should have paid. The retailer adjusted the account and started
billing on this new basis last September.
• Some customers receive payment chasing letters literally every day. This is
wasteful and pointless as customer situations don’t change on a daily basis.
Aged debt
Members reported experiencing ‘tennis’ between wholesalers and retailers over aged debt.
A typical example is a wholesaler telling the retailer the customer has old debt; the retailer
passes that on to the customer but can’t provide any details; it then passes the querying
customer back to the wholesaler; who tells the customer they must deal with the retailer.
Customers can’t trust such requests without evidence because payment allocation and
billing in the market is poor. Also retailers add interest every day to the amount.
3.2 Wider customer service
Beyond the specific core issues of meter reading and billing, MEUC members desperately
want a better level of service to be provided across the board. Some feel regulators and
other market authorities have overly focused on the experience of switching, neglecting to
give adequate attention to the more routine service customers experience in the market.
While some members have had good experiences of service from their retailer over the
past three years, many haven’t. Few report good experiences from wholesalers.
‘Business as usual’ behaviours fall far short of what you might expect in a competitive
market. For instance, five hour call out windows are not uncommon, and customers can
be on the phone trying to sort problems out for hours. One noteworthy comment here
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is: “There are very few players in the water market who have the faintest idea what true
customer service is. I think I can only point to two or three individuals across the water
market who are truly helpful, knowledgeable and ‘customer-centric’. Even where new
account managers have sprung up, some have made it clear they’re disinterested in [an]
ongoing relationship as they’re fixated in simply grabbing new business – that’s sales not
customer service. Others, including so-called ‘account managers’ are utterly useless if not
unhelpful (in some cases).”
In terms of specific problems, some members’ experiences have been horrendous. For
instance, one member trying to get its wholesaler to fix a valve problem on a safety-critical
fire sprinkler system suffered a catalogue of errors and upwards of four abortive visits
where no progress was made.
Large customers simply want better service to be the norm in water as it is in other
competitive markets they buy from: good account management, better communication,
more engagement and faster response times. Members have shared the following about
wholesalers and retailers.
Service from wholesalers
• Wholesalers described as being “in the dark ages” and poor across the board rather
than variable company to company.
• Service Level Agreements are too long; 30 day SLAs described as “incredible”.
Response times “pretty awful”; new connections in particular take a long time and
have been described as “tortuous”.
• [Wholesaler] described by one member as “profiteering” from ‘black box’ meters,
which can’t be logged, and where customers have to pay “an arm and a leg” to
access the data.
• Examples of bad service from wholesalers include: inaccessible meters can take
months to get read; one wholesaler continuing to charge for a site three years
after the meter had been removed; and surface water concessions for community
buildings are hard to access and patchily applied.
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Service from retailers
Retailers have differentiated themselves more than wholesalers over the past three years.
Some receive really positive reports from MEUC members, while others crop up time and
time again in disputes and complaints.
Good service
• Some customers are happy and satisfied with improvements driven by the market
– including consolidated bills, key account management, administrative savings,
and small cost savings of up to around 5%. Some identify improvements over time
since 2017 too – for example, that billing and service are better now than they
were two years ago. One member said in years one and two, the market was “not a
nice place to be” – but now it’s getting there and there is “the potential to do good
things”.
• There are reports of really good service from individual retailers.
• There are some reports of retailers acting on customers’ side to hold wholesalers
to account.
• Customers have to be proactive and engaged – with a well constructed contract
and tight KPIs, they can get good service (from switching or renegotiating). On top
of that, customers need to hold suppliers to contract terms. Different suppliers
perform differently for different customers, according to the contract negotiated.
• The switching process itself remains fairly painless.
Poor service
• However, there are also reports of very poor service – particularly where customers
haven’t switched. They can get “a very ropey level of service,” even those with
massive spend.
• Concerns expressed by some customers over retailer consolidation – particularly
from customers who had switched away concertedly from a retailer, only to find
that retailer had purchased the retailer they switched to. Some felt they may be
forced to switch again.
• Service has been so bad in some instances that customers have been driven to
switch, even if there is little financial to gain from moving.
• Reports that once a customer has switched away from a retailer, that retailer is not
13Major Energy Users’ Council (MEUC)
always interested in helping with transfer issues, addressing problems and so on.
It is therefore hard to tie up loose ends. For example, nine months after switching,
one member still had outstanding debt/credit to be resolved with its former retailer.
Another reported it took six to nine months to tie everything up, even though both
retailers involved cooperated.
• Some call centre staff appear to know little about the market.
• Even for huge customers, account management is not a given and can be very
patchy.
3.3. Inconsistency and inefficiency in the market
What one member described as “huge inconsistency and disparity” is prevalent across
the market. The wholesale aspects are the most problematic. Policies, practices and tariff
structures as well as actual tariffs can vary enormously wholesaler to wholesaler, making
it extremely difficult for customers to navigate the market and check through retailer
offers.
On price in particular, one member commented that having 15,000 tariffs available for
four products just “doesn’t make sense”. Tariff complexity and differentiation has also
made it extremely difficult for business customers to get a handle on how the PR19 final
determinations will impact their bills. We note the narrative around the price review has
all been about bill cuts across 2020-25, but that does not seem to apply to all types of
businesses in all areas. Ahead of the new financial year starting, it was virtually impossible
for business customers to transparently see what they would be paying from April,
without relying on the analysis of their retailer or paid-for third party services.
The lack of standardisation also piles cost into the market and contributes to inefficiency.
Differentiated service among competitive retailers is to be expected, but even here there
is unnecessary variation. Members report that retailers’ service often comes down to the
integrity of the individuals involved in providing it, rather than company policy.
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Beyond the three broad issues of metering/billing, customer service and inconsistency
that need urgent attention, members highlight the following:
4.1 Retail margins/cost allowances
• Retailers in England don’t have sufficient bandwidth to provide good account
management, especially to complicated portfolios. There is a “night and day”
difference between margins in Scotland (c20% margin) and England.
• Low margins also reduce choice for customers in encouraging retailer
consolidation for economies of scale. A number of smaller retailers have already
become insolvent.
• Savings on the table are so small it’s not worth doing a tender for many customers,
unless there are other drivers (e.g. to get a better level of service).
• However, one member said he had no sympathy with companies on margins
as they fail to chase up outstanding payments effectively and do not run their
businesses efficiently.
(We note that Ofwat has relaxed retail margins for the largest customers from 1 April and
await to see how this affects members’ experiences).
4.2 Water efficiency
• Water efficiency must start with good quality data; the conversation must start with
fixing the basics of meter reading. One member whose company has ambitious
water goals already in place noted these are hard to work towards without accurate
consumption data.
• Customers will struggle with water efficiency while bills are inaccurate.
• It must be easier and more transparent for businesses to save water – the market
needs to be more standardised and supportive.
• Customers are interested to reduce consumption to save money and support wider
ADDITIONAL/SPECIFIC ISSUES TO ADDRESS
4
15Major Energy Users’ Council (MEUC)
corporate sustainability goals.
• Little innovation has been seen on water efficiency – or other aspects for that
matter. “Where are the innovations that were lauded up to the opening of the
market?” one member asked.
4.3 Eligibility
Clarification on the eligibility of some premises is needed. Examples include care
homes, university accommodation and residential or semi-residential development
sites (developers are businesses but the properties they build come to be lived in fully
or partially by households).This is a huge issue in London and other growth areas. It is
daunting for developers to have to navigate all the problems this lack of clarity presents.
Wholesalers are currently interpreting the guidance in varying ways.
4.4 Letters of Authority
Some retailers demand LoAs direct from customers, rather than from consultants
working for customers. But large customers do not have time to write multiple LoAs; they
want to write one for their consultant to use with retailers on their behalf. LoA practices
employed by some retailers slow down the market. Also there is inconsistency on this
matter retailer to retailer.
4.5 Administrative burden
Market administrative demands are outdated and inefficient – for example, there is a
requirement to physically sign and send paper copies of certain documents. This is slow,
old fashioned and wasteful of natural resources.
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5.1 General recommendations
5.1.1 More proactive regulation
Now, at the three year stage, more “push regulation” from Ofwat is needed to encourage
higher standards and more standardisation. Water wholesaler performance is
consistently poor and needs action in particular. Members have referenced improvements
in the energy market after Ofgem took this line – for instance, on performance standards
for connections.
5.1.2 Involve the customer directly in decision making and policy choices
The MEUC has had a good level of engagement with MOSL and Ofwat over the years.
The regulator and market operator have shown consistent interest in touching base with
members and listening to member views. However, it is unclear how this information
is used in practice. Problems consistently flagged by members persist. Outside of self
suppliers, actual customers do not have a seat at the table when choices and decisions
about the market are made.
The market would benefit from more direct customer involvement – for instance,
balanced working groups involving regulator, market operator, customers and trading
parties could be formed to work on persistent problems. Again members report
successes in the energy market borne of such activities.
One particular matter concerns renewed government interest in business water efficiency,
to contribute to regional and national resilience goals. Large customers must be involved
with this work from the outset, if opportunities to save water in commercial markets are
to be maximised.
RECOMMENDATIONS TO IMPROVE THE MARKET
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17Major Energy Users’ Council (MEUC)
5.2 Specific recommendations
5.2.1 Meter reading
• Explore whether meter ownership and reading arrangements need to change –
either to shift meter ownership to a third party, as in gas and electricity, or to shift
meter reading responsibilities to wholesalers who own the meters.
• If the current ownership arrangements do not change, verified meter reads should
be accepted, whatever their origin (wholesaler, retailer, customer, third party).
• If retailers end up left with meter reading responsibilities, the incentives on them
need to be overhauled as they are not working sufficiently to meet customers’
needs.
• The installation of ‘black box’ meters, which cannot have AMR units fitted, should
be stopped and, where necessary, reversed. Consumption data should not by
hoarded by wholesalers for profit.
5.2.2 Billing
• Customers have lost patience with persistent poor billing and want to see more
intervention to ensure retailers get this right. Suggestions we have received from
members include: fines for not producing accurate and regular bills; legislation to
ensure retailers cannot re-bill more than once; and retailers forfeiting their right to
payment if they bill incorrectly and do not correct it within six months.
• Retailers need to substantiate aged debt with evidence. They have bought or
willingly taken on that debt as a retailer, and should evidence any money owing
from customers before trying to recoup it. They must present detailed invoices.
5.2.3 Market data
Market data needs to continue to be improved and be made more easily and more widely
available. Consultants working on behalf of customers and customers themselves should
have access to the market database.
5.2.4 Customer service
• Wholesaler and retailer teams dealing with customers need to wake up to the need
to provide 21st century customer service. This will require cultural adjustment
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across the sector, including through staff retraining; ensuring any high level
management objectives translate to execution and are embedded in working
practices; and robust tests to measure progress and scrutinise promises.
• Set KPIs for wholesalers that are more in line with business needs, particularly
shorter time limits for services.
• ‘Journey map’ key customer processes and share that transparently so everyone
(customers, trading parties, regulators etc) can see who is supposed to do what
and when – and when this isn’t happening, make sure customers have a clear ‘help’
button to press.
• Clear up confusion over whether customers can talk direct to their wholesaler
on wholesale issues or have to go through the retailer. Take action to prevent
customers being passed back and forth between wholesalers and retailers when
there is an issue affecting both trading parties.
5.2.5 Standardisation
• Ofwat / the market must find a way of forcing wholesalers to behave in the same
way (or at least more consistently) in terms of policies, allowances and tariff
structures, to make the market slicker and easier for customers to navigate.
• Could CMOS automate wholesale tariff optimisation for customers so they need
rely less on retailers?
• Some other specific aspects that would benefit from standardisation include LoA
policy (specifying the customer can empower its agent with a single LoA which
retailers must accept) and billing formats.
• Paper processes need to be modernised/digitised – for more efficient operation,
customer convenience and to conserve natural resources.
5.2.6 Eligibility
Ofwat should update its eligibility guidance now we have three years of market experience
and some cases to learn from. Wholesaler interpretation of the updated eligibility
guidance should be standardised.
5.2.7 Water efficiency
• The basics of meter reading and billing must be fixed to enable large users, who
19Major Energy Users’ Council (MEUC)
could contribute significantly to regional or national consumption reduction
ambitions, to consider concerted action.
• More information could also be provided to customers on what ‘good’ looks like
in terms of water consumption – for instance, benchmarking data on typical
consumption by customer type could be made available.
Keep CalmStay SafeFight CoronavirusIt’s business as usual at the MEUCFor all things energy and water, MEUC is here to help, guide, voice your concerns and provide that ‘peer’ network with your fellow members.
We are creating a series of interactive, practical and educational webinars to help support you.
If there is anything the MEUC Team can assist with, please get in touch.
We will continue to keep you updated.
MAJOR ENERGY USERS’ COUNCIL
Call 0203 432 0333 or email [email protected]
For details of our events visit www.meuc.co.uk
20
Sources
We have drawn on a number of channels of engagement and sources of information in
researching this paper. These include an online survey open to all members in January
and February; views expressed by members in a focus group hosted by Ofwat in March;
ongoing interaction with members; and face to face engagement at MEUC meetings in
December and March. In light of this range of approaches and sources, the information
contained in this report is intended to give a flavour of the experience and opinions of our
members only. It is not academically rigorous or quantitative in any way.
Note
We have replaced references made by members to individual companies in this paper
with generic ‘wholesaler’/‘retailer’ references. Our intention here is to raise matters of
market wide interest/concern, rather than to target any individual companies.
References
1. Time to get down to business – MEUC, October 2018
2. Measures include marking closed premises as temporarily vacant so charges are
not accrued; and suspending disconnection and payment chasing.
3. Short survey, distributed online to all members via MEUC channels.
Response rate = 15% of member companies.
4. For example, the work detailed in MOSL’s most recent business plan, the work of
the Retailer Wholesaler Group, adjustments made to market incentives to deliver
better outcomes, and the introduction of R-Mex from 1 April.
Contacts
Karma Loveday, Water Policy Adviser | [email protected]
Robin Hale, Chief Executive | [email protected]
NOTES6
Keep CalmStay SafeFight CoronavirusIt’s business as usual at the MEUCFor all things energy and water, MEUC is here to help, guide, voice your concerns and provide that ‘peer’ network with your fellow members.
We are creating a series of interactive, practical and educational webinars to help support you.
If there is anything the MEUC Team can assist with, please get in touch.
We will continue to keep you updated.
MAJOR ENERGY USERS’ COUNCIL
Call 0203 432 0333 or email [email protected]
For details of our events visit www.meuc.co.uk
Major Energy Users’ Council (MEUC)8 Fenchurch PlaceLondon EC3M 4AJ
020 3432 0333 | [email protected] | www.meuc.co.uk