Sometime between when millionaire playboy Joseph Banks became infatuated with the botanical wonders of a certain bay in the newly discovered New South Wales, and when Captain Arthur Phillip returned to that paradise with a flotilla of ships heaving with prisoners, back in the home country, noted British thinker and parliamentarian Edmund Burke made a speech to parliament in which he referenced the Fourth Estate. The point he was making was that the media, which in his case meant newspapers and periodicals, held the other estates accountable and was a crucial player in making the system of government work better.
The role of an independent group of people providing scrutiny is also at the heart of how water corporations can improve their engagement while also providing the regulator with a measure of comfort. They should be friends, but they also need to be critical, hence the commonly used term Critical Friends.[1] In 18th century England, the other three estates were the clergy, the nobility, and the commoners. In our example, the existing three estates are the water corporation, the customers, and the engagement partner.
Do good engagement programs require a Fourth Estate? Not always. It isn’t necessary to secure a favourable E rating – the PREMO regulation makes no mention of any such function, and there are examples of corporations doing well in their price submissions without one. Neither is it sufficient – there is at least one example where a corporation did badly despite having one in place (although the problem in that case was not the advice coming from the group, but the corporation’s habit of ignoring it). However, when we think of price submissions that have gone poorly, it is difficult to find one where there was a Fourth Estate that functioned well. Examples that come to mind include Melbourne Water in 2021 and Water NSW in 2025.
Corporations should therefore consider the circumstances that make this function either more or less likely to improve the price submission. For example, it will be less valuable where corporations experience a high degree of customer centricity across all roles, where there is a large proportion of the core team that have done multiple price submissions in the past, where there is a lack of hierarchy meaning that challenging questions can come from anybody regardless of their seniority, and where the timelines provide sufficient space for contemplation and review. In those cases, a lot of the critical friend value will be added by the first three estates.
On the other hand, in cases where there are low levels of earned autonomy, diluted focus, short timelines, a complex program, and a lot of first-time price submission participants, a Fourth Estate can act as a wise counsellor and add great value.
There are four different models for a Fourth Estate function.
The first model is to try to assure the integrity of the process using someone accredited by the Australian Evaluation Society (AES).
Unlike most of the other models, a person accredited by the AES has demonstrated capability to perform the task of evaluating the engagement. Elsewhere, we are forced to rely on the assumption that the members have good judgement and experience, and can apply both for the benefit of the program.
The downside is that these people are regulation agnostic, as there are, to our knowledge, no AES members who specialise in PREMO. Our experience with the AES was that the process and reports were of good quality, but the fact that the AES member knew less about the regulatory framework than either the water corporation or its consultants meant that the recommendations were general in nature and ultimately not very challenging.
The deliverable was good in that there was an official report on each stage of the engagement that could be stapled together and included as an appendix to the price submission. Whether or not the quality of the engagement and the outcomes were substantially improved by the involvement of the AES member is doubtful.
The commercial arrangements are that, in the normal course of events, you would either pay this person by the hour or pay them a fixed, small percentage of the payment to your engagement consultant as a proxy for the amount of work they would need to do.
The second model is the one used by the Australian Energy Regulator (AER) to provide a measure of independent oversight and assurance about the engagement efforts on regulatory resets (price submissions) by the Transmission and Distribution companies (TNSPs and DNSPs). The model is called the Consumer Challenge Panel (CCP). Its objectives are to tell the AER board whether customer interests are being furthered by the reset proposal, and whether the reset really reflects what customers want.
The show-stopping aspect of the design of the CCP is that, in the case of the Victorian water industry, the CCP would be constituted by and report directly to the Essential Services Commission (ESC). We are glad that the ESC hasn’t implemented this model because its fundamental flaw (especially in a world where we are expected to be agile and iterative) is that the CCP reports to the AER rather than to the regulated corporations. CCP members can form a dim view of how things are going, and the first the corporation becomes properly aware of it is when the CCP criticises the network business after its price submission is lodged.
This is a lot more like a “gotcha” framework. It is easy to argue that customer interests would be better represented by a system which gives the regulated corporation a chance to improve during the engagement rather than afterwards. The upshot of this model is duplicated effort – in addition to CCP members observing and critiquing the engagement, the network corporations are now retaining their own critical friends.
Structurally, the AER recruits around half a dozen CCP members, assigning two or three of the panel to scrutinise each regulatory reset. In the past, the CCP members have been criticised for being too heavily focused on the technical aspects of the resets with insufficient engagement expertise.
In summary, the Consumer Challenge Panel model cannot be applied in the Victorian water industry. The five-yearly review of the operations of the CCP is required under its charter. [2]
The third model, which a great many utilities in Australia employ, is to have a standing panel of stakeholder customers. These groups are often called the Customer Committee (CC), the Community and Customer Reference Group (CCRG), or another similar acronym. These groups have existed for many years and are usually comprised of local government representatives, vulnerability representatives, people from community groups, environmental groups, industry, and land developers. There can be between six and twenty members, with highly variable meeting frequency and regularity.
From our observation, these groups are often well attended and full of energy at the outset, but over time they risk becoming an answer looking for a question.
In the last decade there are multiple examples of these committees being re-purposed to oversee the price submission engagement. For the corporations that do employ this model, there are some advantages, such as the fact that members of the panel already understand the core business of the organisation and often have a relationship with senior executives and a rapport which allows them to ask questions in a psychologically safe manner. In addition, they understand the organisational context because in previous meetings they will have become familiar with many challenges facing the organisation. However, the downsides are that the ability of the members to provide pointed and helpful advice about the design and quality of the engagement program is highly variable, and the size of the committee means that the responsibility for providing scrutiny and assurance is diluted.
The fourth model is to select and recruit a small number of people who can make a genuine impact on the quality of the program, while also providing the corporation’s board and its regulator with a measure of comfort. This group of people does not have to be representative. The composition of the committees referred to in option three is usually driven by a desire to be exhaustive so that all customers can see themselves or their representatives on a group. That is not the point with a small group of critical friends.
Note that the term “critical friends” is used in multiple jurisdictions and is the usual way of referring to these people. For example, you will see it many times in the AER CCP model. This small group of people should be recruited so that every single member has a different and valuable perspective that the organisation wants to hear. Their role is not to be a sounding board for ideas and the challenges of the organisation, but instead to scrutinise the process. For example, they should be able to:
The best contributors to small critical friends groups in the past have been engagement experts, local government CEOs, vulnerability advocates, and land developers. Nevertheless, these individuals need to be carefully selected for their devotion to the task, their ability to think critically, and their understanding of regulatory frameworks generally, if not PREMO specifically. Depending on the context of the organisation, a director may or may not have the skills and time to be part of the group.
To do its job effectively, the group needs to be set up with clear terms of reference prior to the commencement of the engagement. This should include clearly defining its level of participation as Collaborate.[3] It also needs to be provided with time and information, including access to a senior executive of the organisation and, for technical matters, to the engagement consultant as well.
The water corporation’s price submission team needs to be a diligent secretariat of the committee, ensuring that members are provided with materials well in advance. Above all, a log needs to be kept of the feedback received from the group and the organisation’s response, as this ensures that by the time the price submission is submitted there is a clear set of evidence demonstrating how the group altered the style and substance of the engagement.
The group convened by North East Water during its 2026 price submission stands as a good example of how a Fourth Estate can work well:
“A Critical Friends Group (CFG) was established during the Activation stage of our engagement program. The purpose of the CFG was to constructively challenge North East Water on the design and implementation of price submission customer engagement activities, and use of customer insights in decision-making; and assure customers, the community, stakeholders and the ESC of the quality of engagement work and integration of customer insights into the pricing proposal.
The members of the CFG were selected for their background and experience in advocacy and support for both the interests of North East Water’s customers and their communities, and the sustainability and prosperity of the North East region. Members included a representative of the development community, a local government CEO, a First Nations Elder, the Chair of the Customer and Community Advisory Group, the CEO of a community support agency and the acting CEO of an Aboriginal support agency. The different perspectives of this group ensured that our engagement was inclusive, universal and accessible, and that everyone can have their say. The CFG met five times to review the engagement plan and comment on its transparency and authenticity. Throughout the engagement program, the group:
Source: North-East-Water-price-review-2026-submission-pdf-20251001.pdf
[1] The term is used by the AER, Ofgem, CACoP in UK, Ofwat, Scottish Water, the UK Civil Aviation Authority, Chief Regulator of the UK EPA etc. In the USA, Canada and Europe, terms such as intervenor, consumer advocate, public counsel, and stakeholder advisory panel are common alternatives
[2] IAP2 Public Participation Spectrum https://engagementinstitute.org.au/resources/iap2-public-participation-spectrum/
