Northumbrian Water Group leads the way on affordability with commitment to eradicate water poverty by 2030

Following the introduction of the legislation that enabled social tariffs in 2010 we talked to our customers about funding a social tariff through bills.

After receiving strong feedback through the customer research at the time that customers were unwilling to pay more to fund a scheme we looked innovatively at how we could support customers without adding to bills. Northumbrian Water was the first company to introduce a win-win support scheme which was funded via reduced bad debt. The scheme was aimed at those customers who were unable to pay and therefore adding to the bad debt costs that other customers pay for in their bills. It has since been replicated by other water companies.

We then created a scheme that supported these customers to be able to pay their bills by reducing the bill to a value that they could afford. The payments that these customers subsequently made reduced bad debt and essentially paid for the reduction overall. We introduced this scheme back in January 2015, and having demonstrated to customers the overall benefit we have been able to expand our support schemes significantly resulting in our second scheme being introduced in 2017 and launched our pension credit scheme to support those pensioners on the lowest income in April 2019.

Recognising the higher costs of living in our London supply area we have also increased the level of income where a customer can receive a discount into the three London Borough’s we serve. Also of note is that in our Essex & Suffolk supply area, we reduce an applicable customer’s combined water and wastewater bill to below 3% of income after housing costs from our water bill exclusively – despite not receiving income from wastewater provision.

As the first water company to not only recognise, but take on the challenge of eradicating Water Poverty, we at Northumbrian Water believe that improving our customers’ ability to afford our services is one of the most important ways we can help them.

Our engagement with our customers has shown that they support a cross subsidy to expand our social tariff, which offers up to 50% discounts for customers genuinely struggling to pay their water and wastewater bills.

However, social tariffs simply scratch the surface when it comes to supporting customers and we believe a far more innovative, holistic and multi-faceted approach is require to make water affordable for everyone.  Reshaping the ways that we charge our customers and how much they pay, may enable us to reduce the proportion whose water and wastewater bills comprise more than 3% of their disposable income. With National Energy Action in May 2018, we established the national Zero Water Poverty Unit.  Taking learning from work in the Energy Sector on Fuel Poverty, we will explore and model different ways of eliminating water poverty with our customers – this is an adaptive, long term commitment to continuously improve how we take on the challenge of Water Poverty.

We are also building our people’s knowledge to enable us to offer support to community groups as part of our Just an Hour employee volunteering programme. This includes offering free financial advice classes, offering advice on water efficiency and promoting the health benefits of drinking tap water. This is a truly companywide action and demonstrates our wide and ambitious commitment to deliver a ground-breaking change in water and waste water services and for those customers who need the most support.

The commitment, and partnership, was launched by Heidi Mottram in the Houses of Parliament in May 2018.

Water without the Worry is the award winning umbrella campaign for Northumbrian Water’s inclusivity initiatives, services and engagement.

It brings together affordability, bogus callers, special medical needs, access challenges, support for those in crisis or suffering bereavement and many other opportunities together under one roof – linking together services to make sure customers have the worry taken away from water.

Northumbrian Water Group co-created with customers a new Inclusivity Strategy which took at a holistic view at the challenges faced by our customers, alongside the variety of ways we could make a difference in their lives. In seeking to implement this strategy it was recognised that many of our initiatives and services were communicated in differing styles and through varying channels. Research, from both customers and experts in inclusive design, also indicated that our style used was unengaging, occasionally even putting customers off from using our services.

In effect Water without the Worry developed from a desire to not only hit our objectives to eradicate water poverty from our supply areas by 2030, but at the same time make sure all customers who need extra support in the event of disruption in supply, extra notice or mitigation for works due to access or mental health challenges and those worried about everything from water quality to a leak are informed, engaged and have their fears or challenges assuaged. Beyond customers, we also wanted to take our employees on that same journey to linking and referring the variety of services available during any customer interaction.

We looked at best practice from the utilities, charity sector and beyond to bring together a campaign that is bright, optimistic but with solutions to realistic challenges our customers face. In helping us internally and to help our customers relate to others, our campaign revolves around characters that find themselves in circumstances where water can cause them worry – whether it’s paying their bill, a loss of supply, communicating with us or many other areas where they may have a concern.

We also developed practical tools for our employees, such as swing cards, there to enable them to talk to customers, friends, family and neighbours about the services we offer to customers to deliver water without the worry. We challenged every employee to recognise that all of us will know someone who needs a bit of extra support – so from this alone we could help deliver water without the worry to thousands of extra customers. Collectively this is a campaign for our customers most in need of support, designed for their needs and delivered by employees empowered and encouraged to act.

The national debt charity, StepChange, is one of our flagship partnerships who complement our vision, our purpose and creatively work with us to deliver against our customers’ priorities.

We were the first water company to partner with StepChange, sharing this good practice with the rest of the industry.

Our core activity with StepChange is focused around:

• Customer teams receiving specialist training from the charity;
• Directly referring customers to StepChange and giving time for the customer to work with StepChange to achieve an action plan and debt solution;
• Helping customers access support that is far broader than water debt to add the biggest possible difference to their lives and;
• Joint communications to customers.

We continued to expand and develop our activity such as working with StepChange to design our social tariff.

Building on the excellent progress made on Fuel Poverty, this partnership funds research, political lobbying and tactical initiatives by the NEA alongside practical applications across all of our business activity.

This commitment – combining independent research, a focus on the most vulnerable customers and seeking to build a new way of thinking across all utilities – demonstrates the ambition of Northumbrian Water’s plans to benefit our customers, our communities, our regions and the wider water sector.

With a focus on true collocation we are funding the new Water Poverty Unit, to take on the challenge of bringing affordable water and affordable warmth to vulnerable and low income householders. This is a multi-year commitment that will not only help us understand what opportunities there are to help our must vulnerable customers, but also offer opportunities for the wider water, and utilities sector, to take on the challenges set by Ofwat and Ofgem.  The Zero Water Poverty Unit will become a hub for national best practice on engagement with water industry customers and stakeholders on affordability matters, with open learning platforms and dissemination activities to ensure that the whole sector benefits from its work.

This partnership also allows for direct engagement with the All Party Parliamentary Group on Fuel Poverty and Energy Efficiency, which is chaired by Peter Aldous MP, from our southern supply area and who launched the partnership in Parliament.

https://www.nea.org.uk/water-poverty/

Typically the UK water industry have a reliance on credit reference agencies in terms of water poverty data and accessing insight required to make true impacts.

This is inefficient and expensive.

To mitigate this NWG has developed a unique neural network (WEPM). The neural network itself is not a single algorithm, but rather a framework for many different machine learning algorithms to work together and process complex data inputs. Such systems "learn" to perform tasks by considering examples, generally without being programmed with any task-specific rules.

The model is applied to over 2 million existing NWG accounts. Over 30 different variables are used to predict customer groups and individuals at risk and simulate various billing scenarios to calculate the impact of different tariff changes with regards to water poverty.

Testing/validation of the model against known income/expenditure data has provided high confidence levels; the model successfully identified 83.3% of customers in water poverty. That said, WEPM is designed to provide continuously improving accuracy, its algorithms configured to learn over time and accommodate new data sources as these arise to refine trending and the application of optimal affordability tariffs.

Using data science for continual monitoring means we can accomplish our goal of eradicating water poverty by 2030. Historically NWG have estimated volumes of customers in Water Poverty, but without a reliable picture at individual account level; WEPM identified an unacceptable 18.4% of our customer base to be in Water Poverty.  Modelling allows us to detect customers currently in trouble and – significantly – triangulates contributing factors to anticipate when customers may become water poor. Consequently we are able to take pre-emptive measures to support customers before they suffer the stress of falling behind on their water bill.

Bad debt currently adds an estimated £21 p.a. to each customer’s bill. Our modelling enables intelligence-led decisions, stretching our ambition in leading the sector in addressing Water Poverty. By reducing reliance on credit agencies’ data services, NWG will realise sustainable savings of at least £50,000 every year – good for customers and good for the company.

This research was named as the Data Project of the Year at the Water Industry Awards 2019.