Customer Challenge Group suggested terms of reference

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Customer Challenge Group - Suggested Terms of Reference1

Background

Customer Challenge Groups2 have developed from the quadripartite groups and the
Wales PR09 Forum following Ofwat’s decision3 to establish local groups with a
formal role at future price reviews.

Each local group brings together organisations4 involved in the water sector in
England and Wales to help ensure water industry decisions take account of
consumers’ views, particularly on issues which may impact on standards of service
or the level of bills.

In performing this role the Groups will recognise and take account of both the legal
quality requirements faced by companies and the views of consumers. Consumer
research and consultation mostly conducted by the water companies will be a key
way for the local group to understand consumers’ views and will be used to make
sure they are reflected in decisions.

These Terms of Reference propose a framework for the groups to encourage
consistency of approach in their work across England and Wales. The Terms of
Reference outline how the groups could operate, but take into account the need
for discretion and flexibility within each local group, and particularly in Wales.

The Terms of Reference draw directly on content from the Wales Water Industry
Forum’s terms of reference and Ofwat’s illustrative terms of reference for the
Customer Challenge Groups.

The Wales Water Industry Forum brings together key organisations involved in the
water sector in Wales. It is run under its own Terms of Reference and is organised
by the Welsh Government. Their Terms of Reference are available at Appendix A.
The water companies in Wales may work in a Welsh Government PR14 Forum, with
Customer Forums from each company feeding into the process. The companies/or
the Welsh Government could consider these terms of reference. As there could be
potential duplication with the Wales Water Industry Forum, these terms may need
some significant adaptation for use in Wales.

Aims of the Customer Challenge Group

The aim of the forum is to:
    Engage key organisations in planning the strategic direction for water
      management and/or sewerage services;

1
 In Wales these Terms of Reference will need adaptation to reflect the existence of the Wales Water Industry Forum who
have their own Terms of Reference.
2
  Ofwat have named them Customer Challenge Groups/ some companies are calling them local water forums.
3
  In August 2011 - Involving customers in price setting – Ofwat’s customer engagement policy statement
4
  Defined later in the ‘membership’ section

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        Facilitate open discussions on all aspects relating to the strategic
         management of water/ or sewerage in the local area; and
        Engage in the water price setting process and report to Ofwat on the local
         water company’s consumer engagement and business plan.

Role of the Customer Challenge Group5

1. Lead to a better understanding by all interested parties of the main obligations,
   issues and priorities in the delivery of water policies.

2. Advise and challenge the water company as it strives for best practice when
   planning its consumer engagement and research with its customers to gain an
   understanding of the main obligations, issues and priorities that need to be
   addressed.

3. Advise and challenge the water company to develop customer supported, long-
   term strategic and business plans that will deliver the agreed outcomes. These
   include meeting statutory quality obligations, and meeting outcomes based on
   customers’ priorities and willingness to pay, as well as being a good deal for the
   customer.

4. Provide a way to discuss and resolve conflicting priorities (through trade-offs)
   as they arise, including an understanding of the costs and benefits of any
   proposals – increasing the consumers’ influence in these negotiations. These
   actions should include advising and challenging the company and other
   regulators to consider:
    the opportunities for using innovative or sustainable means of delivering the
      required or desired outcomes;
    the scope, justification and cost-effectiveness of the preferred delivery
      mechanism; and
    phasing delivery or outcomes to maximise the affordability and acceptability
      of the company’s overall business plan.

5. Provide a report to Ofwat on the company’s engagement process and the
   company’s strategic and business plan. Ofwat’s illustrative terms of reference
   provided more detail on what this report should comment on at Appendix B.

6. Discuss the longer term planning to meet aspirations for drinking water quality,
   environmental water quality and customer service.

7. Inform the policy and decision making of water companies on key issues that
   affect customers’ water bills or services at price reviews and for issues such as
   compulsory metering, social tariffs and on surface water drainage concessions.

8. Provide a mechanism to raise any issues and increase mutual understanding
   among group members.

5
  The role and aims described here are largely based on the Terms of Reference for the Wales Water Industry Forum and on
Ofwat’s Illustrative Terms of Reference for the Company Customer Challenge Group - Appendix 2 – Involving Customers in
Price Setting – link above

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9. Facilitate an open, no surprises approach to water-related issues.

The Chair

1. The Chair should have a reasonable knowledge of the water industry to
   facilitate group participant’s challenge of the water company.

2. The Chair’s role will be to facilitate the group’s discussions and make sure
   every group member has a fair chance to:

            contribute to the discussions;
            challenge the company on their customer engagement plans/methods
             and on their strategic and business plans; and
            challenge the regulators.

Membership

The group should comprise of core members who have a key interest and statutory
remit in the water sector:
    Consumer Council for Water
    Drinking Water Inspectorate
    Environment Agency
    Natural England/Countryside Council for Wales

Local groups can extend membership by inviting to all or some meetings:
    A neighbouring water or sewerage company
    Business customers and their representatives
    Key local interested parties such as local authorities or community
       representatives
    Representatives of customers with particular needs, such as Age UK,
       Citizens Advice.

Groups could also consider inviting other organisations or interested parties to
support relevant agenda items and discussions applicable to their area of
expertise.

Ofwat will attend some meetings to give technical input, but will not be a full-
time member of the group.

Governance

The chair should ensure the company can be challenged effectively, to give
proportionate assurance to Ofwat.

The company will provide secretariat and administrative support and costs.
Members will pay for their own expenses, unless agreed otherwise by the group.

The group’s work programme and approach will be agreed with its members.

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Agendas and other materials will be provided in a timely and accessible way –
consideration should also be given to placing the agenda and papers on the water
company’s website before the meeting to allow consumers and interested parties
to feed in their thoughts.

Minutes will be kept and made publicly available after being signed-off by the
organisations at the meeting.

Members may choose to take it in turns to host meetings.

Timeframe of meetings

Meetings should be convened when a need arises to discuss important policy
developments. Each local group will agree its need for and schedule of meetings.

During price reviews, there will be key stages when the group will need to meet.
The key meetings are likely to be:
    To give input as the local water company develops its consumer develops its
      consumer engagement and research plans;
    To assess and make suggestions on consultation materials, research
      questionnaires and supporting other material;
    To review the findings of the consultation and research;
    To challenge the scale, scope and delivery of obligations and to challenge
      the overall business plan, where necessary;
    To agree a joint report to Ofwat on how the water company has interpreted
      customers’ views in its business plan, whether the plan is a good deal for
      customers and whether it meets statutory quality requirements.




Version 6 – 11 October 2011


Any questions on these suggested Terms of Reference should be directed to:
Jenny Suggate
Jennifer.suggate@ccwater.org.uk




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Appendix A

Wales Water Industry Forum - Terms of Reference

Background

The Wales Water Industry Forum will bring together key organisations involved in the
water industry in Wales. Establishing the forum is one of the key objectives of the
Welsh Government’s Strategic Policy Position Statement on Water.

Aim

The aim of the forum is to:

      Engage key organisations in planning the strategic direction for water
       management and sewerage services in Wales; and
      Facilitate open and frank discussions on all aspects relating to the strategic
       management of water in Wales.

Role of the Forum

Specifically the Forum will:

      Discuss the longer term planning to meet aspirations for drinking water
       quality, environmental water quality and customer service in Wales
      Inform policy and decision making of the Welsh Government and the water
       industry water regulators whose remit cover Wales
      Provide a mechanism to raise any issues and increase mutual understanding
       among Forum members
      Facilitate an open, no surprises approach to water issues in Wales
      Lead to better understanding by all parties of the main obligations, issues and
       priorities for the delivery of water policies in Wales
      Provide a process for highlighting and discussing conflicting priorities as they
       arise, including an understanding of the costs and benefits of any proposals

Timeframe of meetings

There will be a minimum of two annual meetings. In addition, interim meetings will be
convened as need arises and in agreement with Forum members to discuss
important forthcoming policy events.

Membership

The Forum will be chaired by the Welsh Government and will comprise of core
members from the following key water industry organisations who are involved in the
delivery of water services in Wales. In Wales, these key stakeholders are:

      Consumer Council for Water Wales
      Countryside Council for Wales

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      Dee Valley Water
      Drinking Water Inspectorate
      Dwr Cymru Welsh Water
      Environment Agency Wales
      Water Services Regulation Authority (Ofwat)
      Wales Local Government Association (WLGA)

Additional organisations and stakeholders may be invited to attend Forum meetings
to support relevant agenda items and discussions applicable to their area of
expertise.

Role of each Member

Members of the Forum will be responsible for:

      ensuring suitable, senior level representation of their organisation to enable
       meaningful discussion of strategic issues at Forum meetings
      providing timely and accurate information to aid Forum discussions
      communicating and coordinating any actions arising from the Forum on that
       organisation.

Organisations will be asked to lead on certain subjects at meetings, appropriate to
their respective areas of expertise.

A key aim for the forum is to discuss the strategic issues and priorities facing the
water industry in Wales. Agenda items to support these areas will be put forward for
consideration by the Welsh Government. Agenda items from Forum members will
also be actively encouraged to be put forward for discussion.

Output from the meetings

The papers, actions and minutes from the forum meetings will be published on the
Welsh Government’s website.




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Appendix B

Ofwat in their Illustrative Terms of Reference for the forums, say they must
produce a report for Ofwat which comments on:

a) The company’s engagement process
    the effectiveness of, or any concerns with, the company’s engagement with
      its various customers and with the local customer challenge group (taking
      account of the characteristics of good engagement set out in chapter three
      of their Ofwat’s policy statement on customer engagement, and
      any further advice Ofwat provides to the group); and
    whether the level of engagement and assurance is proportionate to the
      materiality of the company’s business plan proposals.

b) The company’s strategy and business plan
    whether the plan delivers the required legal outcomes;
    whether the company has actively considered the opportunities for more
      innovative and sustainable approaches to delivering the required or desired
      outcomes;
    whether the company’s longer-term strategy and business plan is an
      appropriate response to customers’ views;
    whether the company’s business plan strikes a reasonable balance between
      the views of different customers and stakeholders, highlighting any areas
      where particular segments of current or future customers are likely to have
      outstanding concerns;
    whether the company has explored the range of cost-effective solutions and
      phased delivery of its various outcomes to maximise acceptability to
      customers; and
    whether the company’s overall final business plan appears likely to be
      acceptable to a majority of customers, highlighting any areas of concern.




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