One of the more telling arguments in favour of a retail competition framework is that customers would be able to deal with a single company. At a couple of my meetings with companies, there was a suggestion that they could join with other appointed businesses to serve and bill these multiple-site customers.
There may well be a Competition Law issue that would need to be considered, particularly as there is a 2003 water supply licensing (WSL) framework. There are new entrants under the WSL who, it might be reasonable to expect, would want to have a say in how these customers were served. Would incumbents be excluding such new entrants from the market? For the sake of this blog, let’s make the heroic assumption that Competition Law would not be a barrier.
Consolidated billing would be a new additional activity. Presumably, it would have a cost. Would the customer have to pay more? I think not. It is not credible that we ask customers to pay more because they cannot choose to opt for a single supplier. So costs would have to be shared between those incumbent companies whose bills are to be consolidated.
Who does the customer pay? One would assume that the customer pays the bill consolidator, who would then have to forward the proceeds to each of the other companies who had sites of this customer in their area. It would seem likely that this would increase the length of time that industry receivables would be outstanding. Again, such a cost would ultimately have to be borne by the participating companies.
And what would happen if there were a dispute about a part of the consolidated bill? Who would handle the query? Perhaps one of the most telling difficulties would be the management of reputational risk for the company actually issuing the bill. Having thought about this issue only a little, I can see no sensible way of managing such an eventuality.
In my view having a single supplier across the country is not just about convenience in billing – it is about the opportunity to take strategic steps to reduce both a carbon and a water footprint. This is now a service frequently offered in Scotland to multi-site customers and involves comparisons of consumption between sites and the fitting of loggers to meters. It is not clear, who, in a consolidated billing initiative would offer additional services. And would each of the companies have to agree to these services and harmonise their billing periods?
If we develop this thought a little further, let us take an example of a supermarket. It realises that the service it receives in one area has led to an unusually high level of consumption, but a much lower level in a neighbouring area. Who would provide water efficiency advice? Is it credible that the supermarket has to pay the company whose comparatively poor service has resulted in the original outcome?
The functionality of the CMA in Scotland is broadly similar to what would be required to produce an aggregated bill across England. As such, I would expect that the set up costs required for a consolidated billing initiative would be broadly the same as that required for a retail competition framework similar to that in operation in Scotland.
A final challenge to those who would advocate joint consolidated billing is to define the limits of it. Is it just for the truly national operators like the major retailers or the Royal Mail? Or would it be available for regional customers? It is worth noting that a company operating just in Essex could have to deal with five suppliers. Similarly, Kent County Council also has to deal with five different companies.
Some have argued that retail competition is a sledgehammer to crack a nut. So, help me out, what is bigger than a sledgehammer?