In the fourth and final article in the series, Mark Powles, Chief Executive of Business Stream, discusses what needs to be in place on 1^st April 2017 when the non-household sector opens for competition – and whether the water companies in England will be ready for it.

 Q. So in retail, what’s going to happen on 1^st April 2017?

 Mark Powles:

The introduction of retail water competition to Scotland in 2008 has delivered significant benefits to non-household customers, including lower water bills, improved customer service levels, greater water efficiency and a range of innovative solutions. The Water Bill, if implemented properly in 2017, will enable customers in England to reap these same benefits.

 Q. How much needs to be done in terms of raising business customers’ awareness of the options open to them in 2017?

Mark Powles:

We as retailers will do that and we’ll promote the benefits of a competitive market. I think you’ll find it’s a big enough market to get entries from a lot of participants and some will focus on SMEs, others will focus on food and drink…and so on. Not everyone will go for every type of customer.

We’ve built a capability in Scotland – we can deal with everything from a corner shop to a big processing plant. As I said earlier, over time I think companies will refine and focus on a particular sector. I think awareness is a big thing – if you look at energy, there’s still low awareness amongst certain sectors. Inertia is a big issue and its not just confined to energy and water. I’ve seen it in other markets as well but it’s down to retailers like us to have a ‘killer proposition’ that makes a customer switch. Some of that is price, some of it is service and some of it is innovation.

Q. Do you think prices really will come down? Or will they just be held?

Mark Powles:

All I can tell you is what’s happened in Scotland…

We’ve had an RPI-minus model now for two determination periods, which has helped deliver stable prices. More than 65% of customers are now off default tariffs onto something more suitable for them. I think that’s pretty good – they’re benefitting from discounting, whether via a direct debit discount or an e-bill discount – but they’ve chosen to engage with us in a different way.

We've saved customers £35 million by lowering their real consumption and we’ve offered around £70 million-worth of discounts to the market. In water efficiency terms, that’s 16 billion litres of water and 28,000 tonnes of carbon removed. So on all scores it’s worked in Scotland. I don’t see anything structural in the English market that says you couldn’t get the same sort of effect in England. And if you think that the English market is between 8 to 10 times bigger it’s a massive saving, a big prize. The Water Bill now needs to go through both Houses and get onto the statute books, while Ofwat needs to finish the Price Review.

The industry needs to get behind this because whilst there are some that are embracing competition, there are others who are dragging their heels. And that can’t happen – because it’s customers that are asking for change.

Q: Is that because they regard it as a threat to their business model?

Mark Powles:

If you look back over the twenty years since the industry was privatised, competition has reared its head a number of times. When it bubbles up, water companies hire account managers and talk about innovation, then when it disappears, that push disappears with it. I think people are starting to recognise this is real now, the Bill is actually going through the parliamentary process so they need to start doing something. But others are thinking it might not happen or even that because it’s still four years away that they don’t need to worry about it yet.

All I’d say to them is that’s fine, I’m quite pleased if you do that, because I’m ready to take up the slack. And there are others that will do the same so I think it’s a really exciting time for the industry - this is the first time you talk to customers in England and hear back from them that they’re feeling the real prospect of being able to take control. They’ll call the tune a bit more and that’s helpful in any market.

Q. But if they’re saying that, won’t that require a huge behavioural change and cultural shift on behalf of the water company, let alone the customers?

I can’t sit here and tell you that Business Stream is perfect but the threat of competition forces you to up your game because you’re looking over your shoulder. I’m definitely a sufferer of paranoia– that someone’s going to beat me to something, someone’s going to do something I haven’t thought of. It’s that same type of paranoia that drives us as a business - I’ve got 300 people behind me that feel the same way. Cultural change has taken time – but there’s 3 ½ years to get ready for it in England.

Q: Do you think they’ll get there?

Mark Powles:

You’ll have to ask our competitors – I’d imagine that some will, some won’t and if they don’t start now they’ll be late to the party.

Q: So what are your prospective customers saying to you?

Mark Powles:

I think it’s important to remember that customers need to be at the heart market reform. Customers have an appetite for change – they want reduced water bills, better customer service and more innovative services. That’s the message that we consistently receive.

Q: What’s your background?

Mark Powles:

I started in food retailing – where I learnt my craft from trainee to area manager. I then went into the ferry industry post-privatisation and I joined Sealink when it was sold by BR. From there I moved into the rail industry post-privatisation. My career’s been all about industries and companies that needed change but also needed to focus on the customer.

I came to Business Stream on the basis that I’ve taken what you can describe as staid, traditional non-customer-focussed industries and moved them on. What we’ve tried to do at Business Stream is to be a little different – to be a retailer and not a water company, that’s the difference.

Our tag line is: ‘Put the customer at the heart of everything we do’. Saying and doing it can sometimes be different things. I’m not saying we’re perfect but everyone comes in to work in the morning and talks about what can we do to make the customer more loyal, and how we can be more efficient.

Q: So do you have ongoing stakeholder engagement as part of this? Everything for PR 14 is stakeholder led.

Mark Powles:

We measure customer satisfaction on a quarterly basis and we do lots of temperature checks on an even more frequent basis too. This is done independently so we get the real view. We’ve also got a large customer experience team and a team of dedicated account managers working with our large customers so we get real day-to-day feedback.

A lot of our customers have Head Offices in England. What I’ve tried to do is build a team that can service customers wherever they are in the UK. I try to get out and see customers as much as I can too.

And again, sometimes the customers tell you what you don’t want to hear – if you’ve dropped the ball or something has gone wrong. We get things wrong like everybody else – it’s how you respond to it that’s important. And the difference between us and a regulated monopoly organisation is that if we drop the ball, the customer can go elsewhere. If you’re a regulated company and you drop the ball, your only sanction is the regulator.

Q There was a bit of a debate between the panel at the Water Event as to whether or not the UK water companies have got enough time between now and 2017?

Mark Powles:

They’ve got a lot more time than we had to do it. But industry data has suffered and we’re on a huge mission now and have been for five years to improve that

During the debate at the Water Event one of the other panelists didn’t think three and a half years was long enough to prepare for market opening. I disagreed and there was quite a reaction in the audience. We’ve got to remember that it’s the customer who wants change and they want it as soon as possible.

England’s got the chance now to get ready for when the market opens – three and a half years is a long time.

You can change the world in that time – it’s not beyond the wit of man to get behind this and start making it happen.