Traverse and NERA Economic Consulting were commissioned by Severn Trent to undertake research to provide them with a greater understanding of the cost implications for household customers of water supply interruptions. We conducted surveys with customers who had been affected by one of two specific interruptions of different lengths, to find out the actions they had to take during the interruption, as well as costs incurred.
After piloting a depth survey, we used the fieldwork phase to gather a set of quantitative and qualitative data through two communication channels: phone and online survey. We analysed and reported on the qualitative data we gathered about customer experiences of the interruption, as well as their priorities for the company’s business plan, to allow customer preferences to shape the service they are provided with. NERA analysed the quantitative data using an ‘avertive behaviour’ revealed preference methodology to generate a valuation for the average cost of interruption to customers, based on direct expenditure and additional travel.
In their submitted business plan, Severn Trent stated that “avertive behaviour methods are a useful valuation tool for estimating the value of avoiding short term supply interruptions from the observed market behaviour of customers who have actually been affected by this service disruption. Our research told us that on average customers spent £19.56 on a range of avertive behaviours, ranging from purchasing bottled water, takeaways and travel”. This valuation was triangulated with stated preference data from studies of customer willingness to pay, offering a more nuanced view of overall customer preference.