As the water industry gears up for a major shift in how it charges for water, a new dual challenge is emerging: infrastructure meets psychology.
On the horizon are progressive, seasonal tariffs designed to make water pricing fairer – and to encourage everyone to use less. But the success of these new structures doesn’t hinge on technology alone. It hinges on people.
Welcome to the behavioural era of water.
Progressive tariffs: A new billing model rooted in fairness and efficiency
Regulators and government alike are backing a move towards smarter, fairer water pricing. Ofwat has encouraged utilities to trial new tariffs that reduce bills for essential use while discouraging waste. One such structure is the Rising Block Tariff, a model that charges more per liter as usage increases.
This pricing model is built on three key goals:
- Keep water affordable for basic needs
- Encourage conservation
- Incentivise lower usage during high-demand periods (like summer)
But this model is only possible with accurate, real-time consumption data – in other words, with smart meters.
Case in point: Severn Trent’s “Water Smart” trial, launching this year. Up to 3,000 smart-metered households will test the new tariff across three usage blocks:
- Block 1 (Essential use): First 5,000 litres/month, cheaper than current rates
- Block 2 (Standard): Next 5,000 litres/month, similar to current rates
- Block 3 (Premium): Anything above 10,000 litres/month, charged at a higher rate
The goal: Test if smarter billing leads to smarter behaviour – and real-world water savings.
The role of behavioural science in making tariffs work
New pricing structures can easily cause confusion, resistance – or worse, backlash. Whether customers embrace or reject the changes will depend not just on how they’re billed, but how they’re engaged.
Behavioural science is the missing link between policy and public action.
It tells us that people don’t always respond logically to price signals. Instead, they respond to:
- Social norms (“Most people like you use less than this”)
- Feedback loops (real-time info on use)
- Timely prompts (reminders before hitting a higher tariff block)
- Framing (presenting choices in a way that drives better decisions)
Discover why this works and how a nudge can help your customers save energy and water.
How Advizzo turns smart data into smart action
Smart meters deliver the data, but that’s just the beginning. Advizzo’s behavioural platform transforms raw data into personalised insights that motivate action and change.
Here’s how we do it:
- Home reports: Tailored advice linked directly to tariff thresholds and saving opportunities
- Norm-based nudges: “You’re using more than your nearby peers” – a proven driver of change
- Segmented messaging: Renters, gardeners, families – each gets what they need, in a way they understand
- Proactive communication: Alerting customers before they hit a costlier usage tier
- Ongoing digital engagement: Portals and apps that reinforce habits with visual progress and personalised feedback
Imagine:
- A household receiving an AI-crafted message warning about increased usage just before they enter a higher tariff band.
- Or a family being automatically offered custom conservation strategies based on their property profile and seasonal behaviour.
A path to smarter, fairer water use
The combination of smart meters, progressive pricing and behavioural insight gives water companies a powerful opportunity to rethink how water is managed and delivered. It enables them to reward efficiency in a meaningful way, while also ensuring that vulnerable households remain protected.
By aligning tariffs with seasonal demand, utilities can help reduce pressure on supplies during peak periods. And by engaging customers with tailored support and communication, they can build trust and even improve satisfaction – proving that innovation doesn’t have to come at the expense of the customer experience. This isn’t just a technical upgrade; it’s a customer transformation.
Looking ahead: How generative AI will power the next generation of tariff engagement
The future of water pricing isn’t just about smarter infrastructure, it’s about hyper-personalised engagement. Generative AI (GenAI) is set to play a pivotal role in this evolution, by enabling water companies to tailor their communications like never before. Instead of generic bill messages, households could receive bespoke alerts just before they enter a higher tariff block, based on their unique consumption patterns.
Conservation advice could be customised to reflect each customer’s property type, lifestyle and seasonal behaviours. Even educational content could be dynamically adapted to suit how each customer prefers to learn. With GenAI, tariff reform becomes not only more effective, but more human.
At Advizzo, we’re already leveraging Machine Learning and behavioural segmentation to drive more sustainable impact. As GenAI matures, it will become a powerful layer in our platform-delivering hyper-personalized, real-time interactions that support smarter water use, increase trust, and minimize customer resistance to pricing reforms.
By combining our deep behavioural science expertise with AI and smart meter data, Advizzo is uniquely positioned to help utilities succeed in this new era of intelligent, equitable water management.
Read more about preparing for the GenAI era.
This isn’t justa tariff reform. It’s a behavioural revolution.
To meet the UK’s water efficiency goals, it’s not enough to install smart meters or redesign bills. We need to redesign the way customers think, feel and act about water.
That’s where data meets behavioural insight.
And that’s where Advizzo can help you lead.
Suggested further reading:
Blog – How behavioural science can help customers prepare for time of use tariffs.
Blog – Why multi-channel customer engagement is the new business as usual.
Blog – Communicating tariff changes – it pays to be proactive