Water companies’ use of customer engagement in their PR19 redetermination statements to the CMA
Research and engagement with consumers have been vital and valuable parts of PR19. The consumer evidence collected by companies, where this has been done well can help to identify people’s needs, shape the outputs of the price control and justify specific programmes of investment or service delivery. But it is much harder for this evidence to say what the return and cost of that investment should be. We were concerned with the way some companies used consumer evidence in their appeal submissions in arguments around the fairness of returns.
Citizens Advice commissioned Sustainability First to carry out a review of the use of consumer evidence used by companies and Ofwat in PR19. This review highlights the value of the consumer research and engagement that companies carried out, and makes several recommendations for the CMA to follow in their redetermination.
Using consumer evidence is not always straightforward and weighing up consumer evidence alongside other research types has challenges. In our view, there are areas where Ofwat could have been more transparent about the way it used and weighted consumer evidence. Again a key factor is the impact of COVID-19 and the extent to which consumer appetite for spending and services will have changed as a result of the crisis. It will be important for the CMA to consider how it can best understand this, reflecting the “spirit” of consumers’ views while reflecting the changed circumstances.