Annual Report 2018-19

Promoting better outcomes for water customers

We conduct price reviews for all Victorian water businesses. We also monitor and report on the performance of the water sector, and specify standards and conditions of service that water businesses must meet.

Our year in review

Our water pricing framework delivered on its objectives. 

In June 2018, we released our final pricing decisions for 17 water businesses under our new water pricing framework. These decisions led to most Victorian water customers benefiting from flat or falling water prices and improved services.

We engaged FarrierSwier in late 2018 to undertake an independent review of the framework and how well it delivered on its objectives. The final report was published and delivered to the commission in April 2019.

The report highlighted that the framework: 

• contributed significantly to delivering better outcomes for customers
• provided incentives for water businesses to deliver better value for money to customers, either through lower prices or better services
• emphasised customer engagement, leading to price submissions that better reflected customer views.

We helped water customers experiencing family violence

In 2016–17, we updated our customer service codes and required water businesses to implement family violence policies by 30 June 2018.

In 2018–19, we checked that water businesses were implementing family violence assistance for customers. 

We started by checking their customer charters reflected their family violence initiatives and that water businesses had family violence policies in place. We’re also evaluating the effectiveness of the work program overall by interviewing front line service providers about the outcomes for their family violence clients. 

We are continuing to work with the water sector to identify emerging better practice and plan to publish an update of our better practice guide in early 2019–20. 

We surveyed 5,800 water customers on their water businesses

Over 2018–19, we surveyed 5,800 Victorian water customers on their perceptions of their water business. The survey focused on four key themes and the scores customers gave them (the following ratings covered March 2018 to February 2019): 

• Value for money: 5.8
• Reputation in the community: 6.3
• Level of trust: 6.2
• Overall satisfaction: 6.4

We published our first set of quarterly results in April 2019. On average, businesses scored between 5.8 and 6.4 out of 10 across the four key themes.

Progress report, 2018–19

Evaluate our new approach to water pricing and identify opportunities to improve it.
Status: Complete

Outputs  

Engaged FarrierSwier to undertake an independent review of our water pricing framework, and how well it delivered on its outcomes.

Published and delivered FarrierSwier’s final report to the commission in April 2019.

Presented the findings of the report to water businesses at a launch in April. 

Outcomes

Confirmed our new water pricing approach has delivered better outcomes for water customers, provided strong incentives to deliver better value and promoted stronger emphasis on customer engagement.

Prepare for several water price reviews and complete annual tariff approvals for all water businesses. 
Status: Ongoing

Outputs   

• Issued our draft and final guidance to Western Water, South Gippsland Water and Goulburn-Murray Water in October and December 2018 respectively.
• Continue to prepare our draft guidance for Melbourne Water’s 2021 price review.
• Approved 2019–20 prices for all regulated water businesses

Outcomes

• Provided support for water businesses to prepare high quality price submissions by following the requirements set by our guidance.
• Ensured 2019–20 water prices were consistent with the requirements of our price determinations.

Conduct an audit on water business family violence policies.
Status: Ongoing

Outputs

• Approved changes to customer charters to include family violence provisions offered by water businesses and presented our findings directly to the sector. 
• Continued to develop the better practice guide for the water and energy sectors. The release of this guide was deferred to 2019–20 to align with changes in the Energy Retail Code.

Outcomes

• Ensured all water businesses have implemented family violence policies consistent with our code.
• Victorian water customers who are experiencing family violence can access safe and secure services and referrals.

Introduce new approaches to our performance reporting for the water sector.
Status: On track

Outputs    

• Developed and implemented a new outcomes framework with water businesses to report their performance against their own commitments to their customers. 
• Continued to simplify our performance indicators to ensure we capture relevant data for sector comparisons.

Outcomes

• Ensured water businesses are directly accountable to their customers for the services they provide and their performance against their own targets.

Review the payment difficulties framework as it applies to the water sector.
Status: On track

Outputs

• Continued to review the payment difficulty framework currently used in the energy sector. We may update our customer service codes to reflect our findings on the review in 2019–20.    

Outcomes

• Continued to provide appropriate protection for customers experiencing payment difficulty.

Start reporting on survey of customer perceptions of water businesses. 
Status: Complete

Outputs        

• Completed a 12-month trial to confirm that our survey questions would produce results that could be tracked over a long period of time.
• Published our first quarterly customer survey results for March 2018 to February 2019 in April.

Outcomes

• Published results provides greater incentive for regulated water businesses to deliver better value to customers and ensure customers’ views are always front and centre in decision making.

Measuring our success in 2019–20

Goal	Objective	What outputs do we intend to produce?	What outcomes do we intend to achieve?
Goal 1	Approve new prices for Western Water, South Gippsland Water and Goulburn-Murray Water, to take effect from 1 July 2020.	Produce the following documents for the three businesses: draft decisions final decisions price determinations customer fact sheets. These documents form the 2020 price review for each water business.	Prices that reflect customer engagement and outcomes, and reflect prudent and efficient costs.
Goal 1	Complete annual tariff approvals and review regulatory accounts submitted by water businesses.	Approve 2020–21 prices for 17 regulated water businesses. Review and approve all water businesses’ regulatory accounts.	Businesses are: transparent and accountable for future price submissions operating within the requirements of our regulatory codes consistent with our requirements of our price determinations.
Goal 1	Release family violence better practice guideline.	Publish the second iteration of the commission’s better practice guide on family violence initiatives adopted in the water and energy sectors.	Water businesses are improving their practices on family violence over time.
Goal 3	Prepare price reviews for Melbourne Water.	Issue draft and final guidance for Melbourne Water’s 2021 price review under our new water pricing approach.	Melbourne Water prepare a high quality price submission by following the requirements set by our guidance.
Goal 3	Monitor and report on how customers rate their water business.	We will publish quarterly reports on how customers rate their water business on four key areas: value for money, reputation in the community, level of trust and overall satisfaction.	Water businesses continue to ensure customers’ views are always front and centre in decision making.
Goal 3	Release the 2018–19 urban water performance results.	Produce an annual report, water business profiles and performance data.	Customers and stakeholders are informed on water business performance, covering customer bills, customer service, network reliability, water quality and environment.
Goal 3	Release the first outcomes report.	We will publish water businesses’ self-report on their performance against their own outcomes along with our perspective on how businesses are performing.	Water businesses are directly accountable to their customers for the services they provide and their actual performance against their own targets.
Goal 2	Evaluate the effectiveness of our family violence work program.	Report on outcomes from customers of the family violence work program in the water sector.	Victorian water customers and staff of water businesses are benefiting from the family violence assistance provided by their water business.
Goal 2	Release family violence better practice guideline.	Publish the second iteration of the commission’s better practice guide on family violence initiatives adopted in the water and energy sectors.	Water businesses are improving their practices on family violence over time.

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Environmental factors

There are several environmental factors influencing our work, including:

• a community focus on affordability and cost of living
• government policy in relation to responding to family violence, and government expectations for Victorian water businesses
• the expectation we will continue to improve our approach to engagement through social media and communicating with remote water businesses
• technological change and disruption.

Cost of our water industry activities

In 2018–19, the total cost of our water regulatory activities was $2.53 million. The cost includes the direct costs incurred by the team plus an allocation for overhead costs.

‘The new [water pricing] framework was highly innovative and really pushed the water corporations to change the way they thought about regulation and ... the way they engage with their customers.’ Anonymous stakeholder response in our reputation survey 2019