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This article will explore recent initiatives in customer engagement in water services in Scotland, UK. Scotland has a well-established and successful model for water services regulation and governance, with a public supplier performing as efficiently as the top quartile of private English companies. One recent innovation has been a form of negotiated settlement between the provider and a group representing customers, as part of the price setting process. The paper will assess the initial intention and the subsequent evolution of this initiative, arguing that such developments can work well, when conditions are right. Enabling conditions may include a surrounding regulatory structure that is sufficiently mature and performing sufficiently well. It will offer some reflections on the process and on the role of such a body in the future, and will also posit that there are features of public sector providers that may make these more, rather than less, conducive to efficient and effective service delivery in the customer interest. [ABSTRACT FROM AUTHOR]