Customer‐centric regulation: The case of Victorian urban water sector

The growing interest in customer engagement (CE) has triggered a new wave of reforms, particularly in utility regulation. Within the water sector, there has been a shift from a focus on cost-re!ective pricing toward customer-centric pricing pro- cesses designed to identify customer preferences and expectations. The Victorian water sector in Australia offers a unique opportunity to explore the outcomes of these CE trends given the recent "rst-time application of a novel Performance, Risk, Engagement, Management, and Outcomes (PREMO) framework. Based on in-depth interviews with senior industry represen- tatives from a diverse sample of Victorian water utilities, this paper critically analyses the scope, design, and incentive mecha- nisms that underpin the new regulatory process. Findings indicate that CE has potentially bene"cial aspects to both the regulator and the regulated utility, including more transparency in capital projects and a better understanding of customer preferences in service delivery.