The Infosys Utilities Blog seeks to discuss and answer the industry’s burning Smart Grid questions through the commentary of the industry’s leading Smart Grid and Sustainability experts. This blogging community offers a rich source of fresh new ideas on the planning, design and implementation of solutions for the utility industry of tomorrow.


April 26, 2019

Utility Regulation: some considerations for the future

Utility regulation is generally complex, no matter where in the world it exists. By nature utilities tend to be a monopoly in the areas they serve, as there is generally only one utility connection of each type (water, electricity, gas, telecom) serving a property. Governments are rightly concerned that customers receive good service and value for money, however does the regulation need to be complex, and are there issues that are not being addressed through regulation?
Utility regulation is commonly split into two areas, the first being customer service. Various qualitative and quantative measure are used here. For quantative measures, time of response to queries, and the avoidance of repeat queries, are generally used. Qualitative measures are based on some form of structured survey of customers who have contacted the utility. Companies are then ranked against each other, and in some cases these rankings used as incentive mechanisms (i.e. the top ranked gains incentives, the bottom ranked loses incentives).
The second area is investment. This covers new or replacement assets (capital expenditure, or CAPEX), and maintenance of existing assets (operational expenditure, or OPEX). Sometimes these are combined in net present value (NPV) or similar calculations to give 'benefit over time' values (total expenditure, or TOTEX). Recently there has been a focus on base operating expenditure (or BOTEX), however this is really a subset of OPEX. Regulators ask utilities to prepare business plans for future investment over a period, scaling risks (e.g. asset failures), issues (e.g. population growth, climate change) and opportunities (e.g. improved quality) against expenditure options. After some discussion between regulators, the utility, customer bodies, other regulators and government (local and/or national), a business plan is agreed for the particular period. The utility is then measured against this plan by the regulator.
However is this overly complex? Whilst the customer measures are simple, in reality most customers regard a utility as a 'fit and forget' service. As long as clean water comes out of the taps, the toilets flush, the lights come on and the gas flows, then they are happy, subject to them paying what they regard as a fair price. The prime focus should therefore be on providing a reliable and safe service. Reliability of service forms part of regulation in some cases, but not all. In terms of investment, the main factors that affect cost are the distance to provide the service and the number of units provided. So for each customer, the more units provided and the further this has to travel, the more that service will cost. There is therefore a curve that can be drawn against units and distance per customer, with companies below the average curve performing more efficiently.
All of the above mechanisms do miss a key issue, and that is ageing assets, an area largely not addressed by current regulation. Many utility assets are old, and replacement cycles very long. For example there are electricity cables over 75 years old, and water mains and sewers over 150 years old. Current replacement rates mean that water mains would only be totally replaced after 150-200 years, and sewers 400-600 years. The replacement cycles for electricity and gas are similarly long, with transformers often only replaced after 80 years. Are such timescales realistic, or are we building up problems for the future? A good measure for any utility would therefore be the 'residual life of assets'. Across their asset base this 'residual', or time before failure, should at least be maintained, or ideally improved, so that burden is not placed on future generations. However more research is needed on rate and probability of failure, so realistic asset life for each type of asset can be determined. There has been some work in this area (such as condition based risk management and pipeline integrity management), and modern tools such as AI and Computer Vision may be a great help in such research and analysis.
So is current regulation fit for the future? I would argue that we need to both simplify measures with regard to customer service and investment, as well as building new measures to ensure that the utility is looking after their assets for future generations. We need to address these issues very soon, otherwise we may find that we are increasingly chasing asset failures. Fixing things before they break is generally much cheaper, and avoids a lot of pain for us all.

April 2, 2015

The Utilities Data Dilemma

Increasingly utilities are being directed to big data, and all the benefits that appears to offer. However such calls miss a fundamental issue, in that asset data is an expensive element for utilities, both to obtain and to maintain. Most utility physical assets are geographically widely spaced, sometimes in locations difficult to access. Costs can be quite high, for example a manhole survey can average >$100. The EPA estimates 12 million municipal manholes in the US, so a 5% validation survey would cost circa $60 million! Surveys can also have complex health and safety risks that need to be managed. For these reasons asset data is often limited, and of dubious quality. Sensors and instrumentation are improving, being both cheaper to install, run and maintain, and more robust, nonetheless they are still relatively expensive items.

With asset data being limited, suspect, and costly to improve, and sensors and instrumentation expensive to deploy, smarter utilities are looking to make better use of the information they already hold. By using a combination of engineering knowledge coupled with effective analytics, trends can be mapped and normal asset behaviour determined. Where data is readily available such analysis is relatively simple, however where asset data is limited engineering knowledge and understanding can be used to define relationships between the seemingly unrelated data sets. The key is in understanding how data sources can be meaningfully linked.

Large Business Information systems may thus be of limited value to utilities in terms of managing their assets. Of more value is the effective linking of dispersed data sources, coupled with an effective, easily configurable analytics engine. Such tools have already been used to answer many asset related questions, such as the viability of rainwater harvesting in differing regions and climates. It is indeed possible to answer many of the asset related questions posed by utilities, even with the limited asset data many hold. Each question is however individual to the specific situation, so only those who can understand both the engineering and system elements will be able to successfully deliver beneficial results.

June 19, 2013

Are water utilities actively engaging their customers?

 Is it innovative for a Utility to have active customer engagement? I think the answer historically is that it would be.

However, there have been significant changes to customer perception and expectations on how they would want to be engaged. A key factor driving change in the water utility sector is the change in the regulatory environment - specifically the penalties and incentives for customer service captured in the Service Incentive Mechanism (SIM). Another regulatory impact is the move towards 'retail' separation which is starting with non-domestic customers in the form of ability to select supply contracts.

Today, through our Water UK partnership, we are participating at their Innovation Hub day focused on Active Customer Engagement - many executives and managers from key UK water companies will be there along with other interested and influential parties such as CC Water, regulators etc. (

I will be posting updates later based upon discussions held throughout the day.

May 22, 2013

UK Parliament All Party Parliamentary Water Group Innovation event May 2013

Yesterday I went to the UK Government All Party Parliamentary Water Group evening meeting on securing sustainable water resources for the future. This short event was chaired by Nia Griffith, Member of Parliament for Llanelli, with talks by Dr Dan Osborn, NERC (National Environment Research Council) and RCUK (Research Councils UK) lead at Living with Environmental Change and Chris Phillips, Chief Marketing Officer, i2O Water.

Dr Osborn talked about the World Economic Forum identifying water supply crises as one of the largest global risks, thus with many new challenges and markets appearing: this from a global market of £500 billion, and about £120 trillion in assets. UK research bodies had budgets of £120 million in this area, with for example Councils spending £13 million on drought research.

Mr Phillips described the world wide success i2O were achieving with their innovative pressure management solution and their close links to research (they are based in Southampton Science Park). He felt that, if properly established, UK water industry competition could lead to a boost in research funding.

A number of interesting discussions were then held. A large number felt that the cyclic, and sometimes short term, nature of work in the UK water industry made innovation difficult for the supply chain, as with tight margins and fluctuating workloads such investment was not feasible. Many felt that the UK needed to increase innovation, and learn from other countries, however generally it was perceived that UK expertise was still valued. Others highlighted the achievements of SMEs in the world water market, indeed UK SMEs, as well as contractors and consultants, were quite successful in the other countries. One gap identified was that the UK was not always as successful in turning research into effective solutions for the market, and more government and industry support was needed in this area. The only negative note was when Nia Griffiths asked if anyone from the utility companies had any comments: no-one from a utility had attended the event!

The official event concluded promptly as Nia Griffiths had to vote, however informal discussion carried on for some time. Overall I found the event very helpful, and believe such meetings should be encouraged in the industry.

May 17, 2013

Competition in the Water Industry part 4

The potential benefits of competition change in the UK water industry are similar to those achieved in the Energy sector (although that has not been without some issues), in that customers will be given choice between suppliers, and prices should be reduced. Customer services should also be improved, as that will be another way to attract customers.

There are however a few issues and challenges. For many commercial and practical reasons (such as installation costs and practicalities) any property is only ever likely to have one set of supply pipes and sewerage, and related treatment and pumping facilities. Thus the customer will have no choice as to who provides their infrastructure, even if the incumbent is sold, or sells off the area as an inset. The cost per property for that infrastructure will be variable, depending on location factors such as:

  • The availability and treatment cost of water;
  • The environmental constraints on discharge;
  • Geographical factors (e.g. terrain, population density);
  • The metres of pipe required to service each property (usually more in rural areas);
  • The age and condition of the existing infrastructure.

The competition regulation thus needs to be carefully constructed to ensure such issues do not create unreasonable cost differences between areas.

I will discuss how companies could achieve success in my final blog.

Competition in the Water Industry part 3

In my last 'competition' blog I looked at some of the proposals in the UK. I will now consider what these may mean to industry and customers.

'Vertical separation' (meaning the accounting and often business separation of parts of a company's business) will mean in the case of a water company that elements such as customer services and billing could be open to full competition. In this regard it would be similar to the Energy market. At present the proposals for competition are limited to commercial customers (all supplied above a yet to be finalised daily volume).  Insets would be fully open for any customers with any supplier purchasing water and sewerage services from the incumbent Water Company at a common price, including the commercial arm of that incumbent Water Company.

This may lead to a number of significant changes, some of which are already being seen in practice:

  • Large national customers, such as supermarkets, may choose to use one supplier only;
  • Water Companies will seek to win commercial customers in other areas;
  • Other companies (e.g. other utilities, supermarkets, etc.) may enter the market.

Business (and potentially in the future domestic) customers will thus be able to choose their supplier, and this should drive down prices. However as well as benefits, there are issues and challenges with this change, that I will discuss in future blogs.

May 16, 2013

Competition in the Water Industry part 2

In a number of countries there is already an element of competition, as the water utilities are privatised and compared through regulation. That regulation can be quite exacting, and companies who are in the bottom of the 'league tables' for performance can suffer significant penalties.

In  the UK changes being proposed include increasing the number of business customers who can chose supplier by lowering the de minimis amount supplied per day, expanding business competition to wastewater as well as supply (it is linked at present), and vertical separation of parts of the water utility, such as billing and customer services. These proposals are laid out by Ofwat, the UK water economic regulator in various documents (e.g. It is also possible that 'insets' may increase: these relate to new areas not previously served by an existing Water Company, or to 'large' commercial customers, or where an existing supplier agrees to transfer an area to a new supplier. In the regulatory proposals (draft Water Bill, June 2012) companies will be able to operate on the basis of a single national authorisation from Ofwat, thus greatly simplifying the process of companies expanding their market.

May 14, 2013

Competition in the Water Industry part 1

Competition is increasingly being seen across the water sector as a mechanism to deliver substantial improvements, especially at present in the UK. Those of us already working in a free market, where competition requires us to constantly innovate and improve, know that it can drive 'step changes' in industries. However water utilities, like other utilities, operate in a different environment than many other sectors. In a short series of blogs, I will look at the potential for competition in the water sector, its advantages and dis-advantages, and how companies can best manage and respond to the changes that will occur. The blog will focus on the UK, as a number of changes in competition are being proposed there.

December 17, 2012

The Power Within

With increasing volumes of information and data lying across the organisation and sometimes buried deep inside the organisation, finding accurate information fast is a necessity. Users are asking and expecting it and senior executives are demanding instant fulfilment, as speed and access is critical to increasing business productivity.

Enterprise Content Management (ECM) or 'findability' is more than managing documents and records according to defined organisational processes to keep them safe and compliant. It is also about finding, accessing and using the content to support and enhance the business activity they are engaged with. Providing this unified view with the underlying synchronisation of operational support systems, HR, ERP, CRM, etc. is complex and no mean feat. It requires the business face of the organisation closely liaising and working with the IT side.

Access to the right information at the right time is also essential in delivering a high quality of customer service, reducing business risk and meeting regulatory requirements for water utilities. If you want to find out how one water company, Anglian Water, succeeded in its quest to empower its knowledge workers by:

· Creating a comprehensive document management system with a taxonomy and metadata, allowing people to find information quickly and easily

· Delivering an integrated repository of structured and unstructured data sources, which provides a unified view of information across the business- one source of the truth, accessible to 4,000 employees and 500 business partners

· Simplifying searches combined with more granular reports and greater quality assurance to help Anglian Water meet its regulatory obligations and make more informed decisions about capital projects, which minimizes its exposure to operational risk and/or regulatory fines.


Watch Anglian Water discuss their approach to Smart Data.


June 28, 2012

Water UK Resilient Water Resources Event

Last week I attended the Water UK Resilient Water Resources event. Many assume that, with so much rain, the UK has no issues with water resources, however, with such a high population density that is not the case. For example, in SE England there is less water per person available each year than in many Middle Eastern countries.

The event provided good insights and interesting debate. Richard Ackroyd (CE Scottish Water) and Chris Loughlin (CE South West Water) gave overviews of some of the initiatives their organisations are pursuing. Trevor Bishop (EA Head of Water Resources) discussed Green Growth, resilience and lowest sustainable cost, and said regulators must be less myopic. Richard Benyon MP (Defra Minister) covered some of the proposals in the new Water Bill, such as more competition and choice, reforms to abstraction (this may take some time), and most interesting changes to planning law to ensure water sustainability is covered.

The debates and discussions covered water security and sustainability, and I facilitated a good discussion on how to engage stakeholders. The general view is more should be done at source, working with farmers to reduce harmful runoff, with manufacturers to use water more effectively, etc. A recurring theme was that 'one size does not fit all', and solutions must be tailored to needs.

The final debate was 'this house believes a measured pace of environmental change is the only realistic option'. Good argument was put forward on both sides, however the final vote was a resounding 'no', and there was a clear view in the room that action needs to be taken now in order to ensure a sustainable future for our water resources.

It is up to all of us to deliver these objectives in a truly sustainable way.

April 27, 2012

What is Customer "Empowerment" anyway, and How Can Utilities Get Started?

There has been much discussion about utilities needing to provide greater customer "empowerment" as a requisite for the emerging "smart grid" world we are now entering. But beyond this nice buzzword, what does "empowerment" really mean, and how are utilities supposed to start down this path of providing it? If we look at our industry today, energy and water consumers are generally not provided with a lot of information related to how they consume what utilities deliver - namely electricity, gas and water. We are typically operating within a paradigm of providing consumers with a monthly bill of "consumption" with no meaningful presentation of data that allows consumers to take action. Certainly there are many utilities that are well down the path here with some sophisticated programs, but generally speaking we are all just beginning this journey together. "Empowerment" is important on several fronts: 1) against the backdrop of more efficient production and consumption of resources, consumers represent a critical element to meeting these objectives, and 2) in an increasingly competitive industry landscape, consumers will be drawn to utilities (including energy retailers) that best "empower" them in how they can more effectively consume energy and water. Cost savings is one element, but the "green" element is also important to many consumers. There are many pieces that can be put in place to achieve a "big bang" approach to greater customer "empowerment." Over time, it seems pretty clear most utilities will embark on this journey. But for the large number of utilities that are just beginning these initiatives, what is a good place to start? From my perspective, deploying a web self-service portal for utility consumers is a relatively low cost - and low risk - starting point to go beyond the traditional paradigm. A portal, even as a deployment within existing legacy systems, will expand the types of customer service channels available to consumers, and can begin to "empower" them with greater and better information on their energy and water usage. The key of course is to select a portal that not only provides immediate benefits around account management, bill presentment and online payment, but also one that can adapt and expand as new components and systems like AMI, MDM and upgraded CIS are added to the mix. Deploying a portal in this manner provides the immediate benefits to utility consumers (and to utilities through lower live agent support costs), while providing the vehicle for more advanced "pilots" involving real-time analytics and energy efficiency/demand management programs which will take more time to mature in the market.

March 23, 2012

What's your water footprint? (2)

Continuing my blog on water footprints, concern about water has been growing, with even 'wet' countries such as the UK suffering droughts. Water is becoming scarcer in certain places, and its availability is a major social and economic concern. Currently, about a billion people around the world routinely drink unhealthy water. The Millennium Development Goals are driving improvements but, even if the difficult goals are met, it will still leave more than an estimated half a billion people without access to safe drinking water and over a billion without access to adequate sanitation. According to the UN World Water Development Report (WWDR, 2003) from the World Water Assessment Program in the next 20 years, the quantity of water available to everyone is predicted to decrease by 30%. So it is clear we cannot carry on using water as we have been doing, especially in regard to food production and manufacturing. Some of the changes needed are very much social, such as limiting population and high water use products (e.g. red meat), but these are major political issues, and not ones the water sector can address. We can however both manage the water cycle more effectively (using Integrated Water Management, IWM, techniques) and reduce water use, especially in regard to food production and manufacturing. My next blog will look at some best practice in these areas.

March 12, 2012

What is your water footprint?

Most people worldwide are unaware of how much water they use each day, although the figures are becoming more known, especially where smart meters are installed. Direct use varies from about 70 litres per person per day (l/h/d) in the Far East, to 150 l/h/d in Western Europe, to 300 l/h/d in the US. However this is just direct use, i.e. that used 'from the tap' for clothes washing, cooking, hand washing, shower and bath, toilet and outdoor watering). This direct use is a fraction of the water that is utilised per person in order to meet their daily needs. Water is required to grow food, manufacture goods, and produce energy. Such water use is often referred to as 'virtual water' and the measurement of how much water is used by an individual or a country is termed its 'water footprint'. Water footprints are sub-divided into three types, green, blue and grey. In simple terms the green water footprint measures the water flowing in aquifers and rivers used for irrigation, washing, processing and cooling, etc. The blue water footprint measures the volume of groundwater and surface water consumed, i.e. withdrawn and then evaporated. The grey water footprint measures the volume of water flow in aquifers and rivers polluted by humans (see for more details and figures). The water footprint of nations varies greatly, with in general terms that of the developed world being far higher than the developing. Whilst the average is about 1,400m3 per person per year, in India this is about 1,000m3 per person per year, in the UK 1,700 m3 per person per year and the US 2,800 m3 per person per year. However this is not the whole picture as, whilst 20% of the water used in the US is from product sourced from other countries, in the UK it is about 70%. Water footprint is thus a key issue with regard to global water security. In the next few blogs I will be looking at the effects of these footprints, and how we can both reduce our footprint and manage water sustainably.

March 6, 2012

High speed rail lines .........are water Utilities on the same track?

Last week one of the UK newspapers commented on United Utilities' idea to run a 2metre water pipe for over 200 miles from Manchester to London, this was especially topical given the announcement of the drought designation in the same week. I am sure the UK Government are keen to welcome innovative approaches to move water from apparently more plentiful areas to more "restricted" areas. However, how practical and viable would this approach really be?

The underlying fact is that it is extremely expensive to transport water, unless of course the route was all downhill. The amount of water that it is claimed would be transported down the pipe equates to less than 2% of Thames Water's daily supplied water.

However, even besides the physical cost and effort of transporting water, it was pointed out at the Water UK City conference last week in London by water company executives including United Utilities' CEO, Steve Mogford, that to run such a main down the side of the proposed High Speed Two (HS2) rail line would be a highly risky venture anyway!

But the principles of trading water relatively short distances between different water companies is a reality and is being more actively discussed as a result of the government's Water for Life white paper and Ofwat's, the water regulator, consultation document. The attendance of both Defra and Ofwat at the conference ensured active debate on the subject. The point is that whilst rainfall has been extremely low in many parts of the UK for quite some time, we have also experienced too much water, leading to floods in other parts of the country.

This unpredictability moves the debate to discuss the options available for water sustainability-type demand reducing initiatives such e.g. grey water use and more domestic water storage. Should such initiatives be implemented even when there are no actual restrictions in place? This would mean even with today's demand that there would then be surplus for use by other "more needy" requirements for clean water.

There are also other perspectives to be considered. The news article also identified the question of who would ultimately end up paying the cost... the customer of course. The initial cost of installation, as well as the on-going cost to operate (and maintain) such a structure would be substantial and is the price ultimately worth paying?

This topic is unlikely fade away given the changing climate the UK and other parts of the world have been experiencing recently. Thus more innovative thinking is required in terms of how a more sustainable solution to the water supply in the UK, as well as other parts of the globe is achieved.