RIIO ED2 Stakeholder Engagement Triangulation Consultancy Report Prepared for Electricity North West Prepared by Michael Viveash-Brainch Presented 08 July 2019 Re-issued 14th August 2019 Project No. 0976 0 Table of contents 1 INTRODUCTION 2 1.1 What is triangulation? ................................................................................................................ 2 1.2 Triangulation objectives ............................................................................................................. 2 1.3 Triangulation methodology ........................................................................................................ 3 2 OFGEM EXPECTATIONS 3 2.1 RIIO-2 Business Plan Guidance ................................................................................................... 3 2.2 RIIO-2 Sector Specific Methodology .......................................................................................... 4 2.2.1 Responses to RIIO-2 Sector Specific Methodology 5 2.3 Draft Consumer Vulnerability Strategy 2025 ............................................................................. 6 3 WHAT DOES GOOD LOOK LIKE? 7 3.1 Ofwat’s Seven Principles ............................................................................................................ 7 3.2 Citizens Advice: Strengthening the voice of consumers ............................................................ 7 3.3 AA1000 Stakeholder Engagement Standard (AA1000SES) 2015 ............................................... 8 3.4 Raising the bar for ED2 ............................................................................................................... 9 4 INCLUSIVITY 10 4.1 Customer segmentation........................................................................................................... 13 4.2 Inclusivity and Representation Framework ............................................................................. 13 5 MATERIALITY – HOW OTHER UTILITIES PRIORITISE STAKEHOLDERS 14 5.1 United Utilities ......................................................................................................................... 14 5.2 Severn Trent PR19 .................................................................................................................... 15 5.3 Northern Gas Networks (GD) ................................................................................................... 16 5.4 PR19 determination ................................................................................................................. 16 5.5 ED1 cost (expenditure) and price/bill summaries for all DNOs ............................................... 17 5.6 Shareholder returns ................................................................................................................. 18 5.7 ENWL Performance against plan (ED1 – 2015-23) ................................................................... 19 6 STAKEHOLDERS’ PRIORITIES 20 6.1 Who did ENWL engage during ED1? ........................................................................................ 20 6.1.1 Which stakeholders are seldom heard? 22 6.2 What did ENWL engage on during ED1? .................................................................................. 22 6.3 Are any customers really low interest/low influence? ............................................................ 24 6.4 What did we learn about stakeholders’ overall priorities? ..................................................... 26 6.5 What did we learn from Customers willingness to pay (WTP) for SECV outcomes? ............... 27 6.5.1 Triangulation of willingness to pay (WTP) 29 6.6 What did we learn from customer engagement? .................................................................... 30 6.7 What did we learn from the Incentive on Connections Engagement (ICE)? ........................... 30 6.8 What did we learn from operational data? ............................................................................. 31 6.8.1 Telephony 31 6.8.2 Digital 32 6.8.3 Complaints 33 6.8.4 General enquiries 34 7 INNOVATION 34 8 CONCLUSIONS 35 8.1 National policy guidance .......................................................................................................... 35 Impact Research Ltd, 3 The Quintet, Churchfield Road, Walton On Thames, Surrey, KT12 2TZ. Registered in England No 7245397 VAT No 990 0342 31 8.2 Best practice frameworks ........................................................................................................ 35 8.3 Transparency ............................................................................................................................ 35 8.4 ED2 engagement ...................................................................................................................... 35 8.5 Successful outcomes ................................................................................................................ 37 9 APPENDIX 1 ERROR! BOOKMARK NOT DEFINED. 1 1 Introduction Electricity North West’s (ENWL) next 5-year Business Plan will commence in April 2023, known in the energy industry as RIIO-ED2. ENWL understand the importance of placing strong stakeholder engagement and customer research at the heart of developing the plan and wants to demonstrate that the final plan is fully understood and supported by stakeholders. ENWL commissioned Impact to undertake a pilot triangulation of data sources to inform the RIIO-ED2 consultation. This report and the analysis therein documents the learning from this exercise. 1.1 What is triangulation? Triangulation is not just about validation but about deepening and widening understanding. The validity of research validity is certainly assured by drawing on multiple methods and different types samples to collect data on the same topic However, it is through capturing different dimensions of the same phenomenon that new insights can be found. It is possible to triangulate different methods, time periods, data sources, geographical location, individual investigators (researchers) and theories or hypotheses. Looking at ENWL’s business priorities and performance through different dimensions will improve the overall quality of its plan development and legitimacy of outcomes. Triangulation has been an important and much talked about theme for water companies during PR19 and gas network operators throughout GD2 planning. At Utility Week Live in May 2019, Zoe McLeod, Associate of Sustainability First and Chair, Cadent CEG, presented, Putting stakeholder engagement at the heart of the business, where she reiterated the importance of triangulation in supporting a gap analysis of where companies need to engage, with whom and on what issues. National stakeholder and consumer advocate The Consumer Council for Water has asserted, ”Triangulation should be used as an ongoing strategic tool, not simply as a check at the end of engagement programme.” Industry thinking is that companies should triangulate continuously, not just at the end of the RIIO-ED2 consultation. 1.2 Triangulation objectives The objectives of ENWL’s triangulation pilot were to: • Understand the evidence base that already exists, reporting ED1 engagement surprises, key lessons learned, dissenting stakeholder views and trade-offs made; • Improve the robustness of the evidence base through consideration of Business As Usual (BAU) operational data, bespoke engagement and third party insights; • Identify gaps in the current evidence base, by output area; • Consider the wider strategic context moving forwards– a golden thread between engagement, the Business Plan and day to day decision making; and • Recommend next steps, including how triangulation outputs should be utilised to drive mapping of stakeholders, identification of seldom heard groups and prioritisation of the engagement programme (who, what topic, why). 2 ENWL is not starting its RIIO-ED2 consultation from scratch. This report is designed to support the commencement of the Business Planning process by taking stock of what ENWL has learned from stakeholders during ED1 and to ensure that this insight guides strategic planning. 1.3 Triangulation methodology Three main data sources were analysed: 1. Stakeholder engagement: primary qualitative and quantitative research that ENWL, or a third party has conducted directly with stakeholders. By stakeholders, we mean individuals, organisations or communities that are impacted by the activities of ENWL. 2. Operational: All of the operational touch points that ENWL have with customers and stakeholders, including complaints, have been reviewed to understand service levels in greater depth 3. Third party: Companies know they can gain valuable insights by analysing the data they generate from their operations. But internally generated information can leave gaps, and companies are increasingly moving to incorporate new, non-traditional, and external sources of data into their analyses. This data can include almost anything, from historical demographic and weather data to industry news and economic reports, or social media content. All key insights that have implications for ENWL’S ED2 engagement planning are signposted with a lightbulb icon. A full list of sources reviewed is included in Annex 1. 2 Ofgem expectations This section of the report considers the wider strategic context set out by industry regulator Ofgem. 2.1 RIIO-2 Business Plan Guidance In June 2019 Ofgem issued updated guidance1 directed at gas and electricity network companies and their