News OfWat’s going on

Every 5 years, the UK water regulator Ofwat does a price review which sets limits on charging and sets expectations about what customers get for those prices. The next price review will be in 2019, known as “PR19”. The timetable includes a final methodology statement from Ofwat by the end of 2017, and UK water companies submitting their business plans by September 2018 for review by Ofwat, so the industry is already gearing up for the process.

Ofwat's Chief Executive, Cathryn Ross, has taken to YouTube to talk about PR19 to set the tone both by identifying four key themes and, one presumes, by using a modern medium for that.

Ofwat has 4 key themes for PR19:

1. Customer service
2. Resilience
3. Affordability
4. Innovation 

Innovation

i2O embodies innovation. We spend more than £3m per annum on enhancing and adding new solutions. We too are focused on affordability – we have been driving down the cost of our solutions and sharing those benefits with our water company clients; and we have been improving customer service by extending the hours during which we provide it, increasing the number of people in our technical support team, increasing the number of languages we cover, and tracking satisfaction with the service. We have improved our resilience with the support of long-term committed investors in the company. Our product strategy is, happily, aligned with Ofwat’s themes and offers opportunities for water companies to deliver on the objectives Ofwat is setting for them, making us an ideal PR19 partner.

Resilience

Ofwat is looking for water companies to demonstrate service resilience in the long-term and in the face of shocks; to anticipate shocks, respond to them, recover from them, and mitigate impact on customer service. It is also looking for financial resilience.

i2O’s oNet solution can be used to significantly improve the handling of the risk of drought by:

1. Enabling pressure to be stepped down pre-emptively to conserve water. This affects open tap demand (showers, taps, sprinklers, hoses, etc.) and reduces leakage. It therefore delays the requirement for restrictive measures.
2. Enabling intermittent supply, if it were to be needed, to be managed much more effectively:
   • Remotely
   • Without the use of standpipes
   • To timings which can reliably be communicated in advance

i2O’s oNet solution has already been deployed in the UK for just such a purpose. In the face of a drought, and with hosepipe bans having been introduced in March 2012, South East Water deployed oNet across its network. The weather gods approved of the risk mitigation and it started raining almost immediately. But oNet delivered burst, leakage and operating cost reductions in any case, making the cost easy to justify. oNet is also used globally to manage drought including by Air Selangor in Malaysia who have used it seasonally for many years to address water shortages in Kuala Lumpur.

Affordability

Ofwat wants water to be at an affordable price, value for money, supply costs to be reduced, water companies to be as efficient as possible, and operating costs to be reduced.

A good example of an i2O solution that helps deliver this objective is the Advanced Module of iNet which provides PRV condition monitoring. Instead of servicing valves on a risk/time basis, maintenance can be scheduled according to the valve’s condition. That condition is inferred from data provided by permanently deployed communicating pressure sensors. Not only does this reduce the amount of time spent maintaining valves which had nothing wrong with them (which is estimated to be >60% of the time), but it also reduces the risk created by touching the network. It also ensures that maintenance is performed in a timely fashion to prevent customers being impacted, and to ensure small problems don't escalate into catastrophic failures.

Customer service

Ofwat says it is seeking a step change in the standard of services provided, referring to current practices as an “analogue service in a digital age”. The words seem to be carefully chosen: “the standard of service customer can expect from their monopoly provider” could be read as a veiled threat that if there isn’t a step change in the standard, then competition will be used as a tool to drive up standards, as is already happening for most commercial and industrial customers from April this year.

i2O has just started development of its new solution vNet which will be released later this year. We are working in collaboration with our clients to develop software that will enable water companies to deal with incidents more effectively. The ingoing hypothesis is that water companies are very good at handling major incidents, but that there are many more minor incidents and that major incidents often start out as minor incidents before they escalate. We are looking at combining network data with other data sets (e.g. customer services, works management, GIS, modelling) to find ways of identifying issues earlier, handling them more quickly and more effectively, and communicating with customers better throughout.

i2O hasn’t directly influenced Ofwat. We didn’t get a sneak peek at their themes when we were developing our product roadmap. But we’re pleased to see that Ofwat’s agenda and i2O’s solutions are well aligned.