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

3Major Energy Users’ Council (MEUC)

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

5Major Energy Users’ Council (MEUC)

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.”

9Major Energy Users’ Council (MEUC)

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

3

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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

11Major Energy Users’ Council (MEUC)

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

5

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 info@meuc.co.uk

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 | karma.loveday@meuc.co.uk

Robin Hale, Chief Executive | robin.hale@meuc.co.uk

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 info@meuc.co.uk

For details of our events visit www.meuc.co.uk

Major Energy Users’ Council (MEUC)8 Fenchurch PlaceLondon EC3M 4AJ

020 3432 0333 | enquiries@meuc.co.uk | www.meuc.co.uk