OUTCOMES IN DETAIL
I NN
OVA
TI
ON
ON
ATI
OR
AB
LL
CO
TRAN
SFORMATION
SATISFIED
CUSTOMERS
FAIR
CHARGES
SAFE, CLEAN
WATER
RESILIENT
SERVICES
SUPPLY MEETS
DEMAND
INTRODUCING OUTCOMES IN DETAIL
This document is part of our regulatory submission
to Ofwat for the 2014 Price Review.
It supplements our business plan summary Our plan 2015–20: Innovation,
collaboration, transformation by providing additional information about
what customers told us and how we are responding to them, how we plan
to deliver the ten outcomes for customers and environment, and how we
will measure our progress.
PLATINUM BIG TICK AWARD
Anglian Water has been named as
one of the top performers in this
year’s Business in the Community
Responsible Business Awards.
We received a Platinum Big Tick –
achieving our highest ever score
of 97%, and were shortlisted for
‘Responsible Business of the Year’,
recognising us as a leader of
responsible business in the UK.
The awards identify companies that
are transforming their businesses
to create a more sustainable
future, looking at how businesses
tackle biodiversity, environmental
protection, waste reduction and
climate change, as well as how
they work with suppliers and take
care of employees.
FLOURISHING
ENVIRONMENT
A SMALLER
FOOTPRINT
CARING FOR
COMMUNITIES
INVESTING FOR
TOMORROW
FAIR
PROFITS
CONTENTS
Our customer engagement programme
Outcomes-based business planning
10 outcomes for customers and the environment
SATISFIED CUSTOMERS
14
Customers said...
Strategy map
Dealing effectively with rain and flooding
Reducing the risk of sewer flooding
Measures and incentives
FAIR CHARGES
26
RESILIENT SERVICES
38
48
SUPPLY MEETS DEMAND
Customers said...
Strategy map
Water efficiency
Leakage
Measures and incentives
72
74
76
77
78
80
Customers said...
Strategy map
Reducing our carbon and water footprint
Measures and incentives
80
82
84
86
88
Customers said...
Strategy map
Schools and community education
Measures and incentives
INVESTING FOR TOMORROW
48
50
52
72
Customers said...
Strategy map
Protecting and enhancing regional biodiversity
Implementing the National
Environment Programme
Measures and incentives
CARING FOR COMMUNITIES
38
40
42
44
46
Customers said...
Strategy map
Adapting to climate change
Increasing the inter-connectivity of our
water network
Resilience to drought
Measures and incentives
10
12
A SMALLER FOOTPRINT
26
30
32
34
36
Customers said...
Strategy map
Integrated catchment management
Taste, smell and colour of water
Measures and incentives
Measuring our progress
Strategy maps
FLOURISHING ENVIRONMENT
14
16
18
20
22
Customers said...
Strategy map
Metering
Addressing affordability and bad debt
Measures and incentives
SAFE, CLEAN WATER
2
6
8
88
90
92
94
96
Customers said...
Strategy map
Measures and incentives
96
98
100
54
57
58
60
102
FAIR PROFITS
60
64
66
68
70
Customers said...
Strategy map
Running our business efficiently
Measures and incentives
ANGLIAN WATER
OUTCOMES IN DETAIL
102
104
106
108
1
SATISFIED
CUSTOMERS
FAIR
CHARGES
SAFE, CLEAN
WATER
RESILIENT
SERVICES
UNDERSTANDING OUR CUSTOMERS’
VIEWS AND PRIORITIES
The price review process continued our
already extensive engagement with
customers. We built our Love Every Drop
strategy on customers’ expectations that
we should support local communities to
thrive, underpin economic growth and
protect our environment.
Research indicates this approach helped continue
to build trust with our customers and to support
collaborative working to achieve our shared goals. Our
Keep It Clear and Drop 20 campaigns demonstrate the
positive results achieved thanks to the encouragement
and practical support given by customers.
To monitor progress and maintain momentum, every
week we speak to approximately 6001 customers about
the services we provide.
1 This includes the Voice of the Customer team who speak to over
30,000 customers each year (2,500–3,000 a month); McCallum
Layton conduct customer satisfaction surveys with over 2,000
people each year (200 per month); monitoring levels and reasons for
service failures throughout the year; and tracking the root cause of
written complaints.
2
ANGLIAN WATER
OUTCOMES IN DETAIL
SUPPLY MEETS
DEMAND
FLOURISHING
ENVIRONMENT
A SMALLER
FOOTPRINT
CARING FOR
COMMUNITIES
INVESTING FOR
TOMORROW
FAIR
PROFITS
OUR CUSTOMER ENGAGEMENT
PROGRAMME WAS EXTENSIVE,
INNOVATIVE, ROBUST AND INDEPENDENT
Over 4,800
Independent review and challenge from
the Customer Engagement
Forum and four Independent
customers responded
to our Discuss, Discover,
Decide consultation
1,000s of customers
Advisory Panels since 2012
7,150 customers
involved in online
conversations, including polls
and My 2020 Water View
budget simulator
involved in willingnessto-pay research
YOUR OPPORTUNITY
TO HAVE A SAY
15 focus
SATISFIED
CUSTOMERS
SAFE CLEAN
WATER
groups
FAIR
CHARGES
RESILIENT
SERVICES
SUPPLY MEETS
DEMAND
FLOURISHING
ENVIRONMENT
A SMALLER
FOOTPRINT
CARING FOR
COMMUNITIES
INVESTING
FOR TOMORROW
FAIR
PROFITS
Entry into a
PRIZE
DRA
W
for
every
completed
return*
* Subject to terms and conditions, see separate survey sheet
960 responses to
Shaping our future
45 in-depth
interviews
with business
customers and
stakeholders
80 news articles
In-depth customer
phone-ins on all regional
BBC radio stations,
covering 13 counties
7 in-depth
ethnographic
interviews
90 customers involved in
deliberative workshops
promoting the conversation
The range and diversity of the
PR14 evidence base is a great
strength. It provides depth as well
as breadth, helps to tackle potential
methods bias, and allows participants
to take part in debates and discussions
a number of different ways.
2,200
customers
involved in
acceptability
research
OPM1
Over 38,000 customers
500
customers
surveyed using
My 2020 Water
View budget
simulator
Email invitations
to join the
conversation
sent to over
interviewed as part of
ongoing research activity,
such as Ofwat’s SIM survey
100,000
customers
Almost 8 million
people targeted with
radio advertising
213 future
customers involved
in education
workshops
1 OPM (Office for Public Management) is an independent organisation that specialises in market research.
ANGLIAN WATER
OUTCOMES IN DETAIL
3
SATISFIED
CUSTOMERS
FAIR
CHARGES
SAFE, CLEAN
WATER
RESILIENT
SERVICES
SUPPLY MEETS
DEMAND
KEY MESSAGES FROM OUR CUSTOMER
ENGAGEMENT INCLUDE:
•
Core responsibilities: the provision of safe,
reliable, clean water is consistently rated by all
customer groups as the most important thing we
do. Customers also perceive removing and treating
wastewater and good stewardship of our assets to be
core responsibilities.
•
Bills, affordability and profits: although the majority
of our customers say that bills are fair, affordable
and value for money, there is a significant minority
of customers who are very concerned about price
and worried about bills rising. Many customers are
concerned that our monopoly status means that we
have no incentive to keep bills fair and affordable.
CUSTOMER
ENGAGEMENT FORUM
The Customer Engagement Forum, has provided
independent advice and scrutiny throughout the
development of our Plan.
The Forum is an independent group made up of
representatives from a wide range of organisations
and backgrounds, to champion the interests of
household and business customers, communities, the
environment and the economy. Dame Yve Buckland,
national chair of the Consumer Council for Water,
chairs the Forum in an independent capacity.
The Forum is supported by four Independent Advisory
Panels, which are subcommittees of the Customer
Engagement Forum designed to provide expert
challenge in the following areas:
•
Economic development
•
Environment and climate change
•
Customers and communities
•
Hartlepool
•
•
Leakage: our customers are particularly concerned
about leaks and are willing to pay for a reduction in
leakage levels.
Resilience and future challenges: there is awareness
of increasing pressures on the water system,
associated with housing growth and changing
weather patterns, and customers want to know that
we are planning ahead and working with others to
address these challenges.
? WANT TO KNOW MORE?
See Discover, Discuss, Decide: Summary of research into
household and business customer and stakeholder views:
version 10, available at: www.discoverdiscussdecide.co.uk.
A MESSAGE FROM THE CUSTOMER
ENGAGEMENT FORUM
The independent Customer Engagement Forum is
a new and very important means of ensuring that
the views of all customers, domestic and business,
influence the way that Anglian Water plans and
delivers its services.
We have put pressure on the company to produce a
plan which represents the priorities of customers and
their willingness and ability to pay for water services
in these tough economic times.
We have carefully reviewed the company’s
proposals in light of customer priorities, regulatory
requirements and the implications for the local
economy, environment and communities.
We accept it is not possible to get everything
customers and stakeholders want at the price that
customers are willing to pay and we believe that this
is a balanced plan.
We are very pleased that the company listened to
our ongoing challenge about keeping bills as low as
possible and have come forward with proposals to
keep rises in average household bills to below half
the rate of inflation.
You can find out more about how we’ve challenged
Anglian Water and come to our conclusions
in our assurance report to Ofwat at
www.discoverdiscussdecide.co.uk.
4
ANGLIAN WATER
OUTCOMES IN DETAIL
FLOURISHING
ENVIRONMENT
A SMALLER
FOOTPRINT
Listening
• Focus groups, in-depth interviews,
county shows, ethnographic portraits,
deliberative workshops and
ongoing engagement
Testing choices
• Discover, Discuss, Decide
• Online conversation hub
• My 2020 Water View budget simulator
• Future customer workshops
• Willingness-to-pay surveys
Acceptability of our Plan
• Your chance to have your say
consultation document
• Acceptability research
Scrutiny and challenge from the independent Customer Engagement Forum
OUR CONVERSATION
WITH CUSTOMERS
CARING FOR
COMMUNITIES
INVESTING FOR
TOMORROW
FAIR
PROFITS
HOW CUSTOMERS
SHAPED OUR PLAN
Focusing on the future
• The 2050s scenarios project
• Understanding future risks and uncertainty
Shaping options
• Developing outcomes
• Identifying choices and
developing proposals
Developing our Plan
• Addressing customer priorities
• Balancing bills and essential investment
Going further
• From flat bills before inflation to
bills falling before inflation
• RPI sharing
Reviewing
• We will engage with customers and
stakeholders on the delivery of our final
Business Plan.
Evolution and future
price reviews
Achieving a balanced and affordable plan
The views of our customers, and others with an interest in what we do, have
shaped every stage of the development of our Plan, starting with the 2050s
scenarios project that focused on the future, through to the development of
our outcomes and draft plan to the feedback on our draft plan.
ANGLIAN WATER
OUTCOMES IN DETAIL
5
SATISFIED
CUSTOMERS
FAIR
CHARGES
SAFE, CLEAN
WATER
RESILIENT
SERVICES
SUPPLY MEETS
DEMAND
OUTCOMES-BASED BUSINESS
PLANNING – IT’S HOW WE WORK
In 2007, in response to the challenge
from Ofwat, we produced our 25-year
Strategic Direction Statement (SDS). It
raised our game and focused us on the
long-term challenges facing the business
– tackling the impacts of climate change
and of a fast-growing population.
However, it was soon clear this didn’t go
far enough. It assumed a relatively ‘fixed’
view of what the future might hold,
and covered a period of just 25 years.
We needed a more flexible strategy,
with a global perspective, that placed
communities, the environment and the
economy at the heart of our thinking and
planning – we needed to go further.
To do this, we threw out any traditional, introverted and
‘incremental’ ways of managing our business. Instead,
we’ve set ourselves ten far-reaching and audacious
goals to focus our strategy and our business, with
over 100 public commitments to drive delivery, against
which we hold ourselves accountable.
We call this strategy Love Every Drop,
and it puts water at the heart of a
whole new way of living. The strategy
encompasses activities and campaigns
that purposefully include everyone
– including customers, stakeholders,
community leaders and young people.
Love Every Drop has fundamentally challenged how we
operate. We have embraced innovation, collaboration
and transformation to help re-define how we think a
21st-century water company should operate. It’s how we’ve
worked since we launched Love Every Drop in 2010.
Our outcomes-based Business Plan is a natural
extension of this revolutionary approach. In the
development of our Plan, we worked with a wide range
of customers, community and business leaders and
others. Between us, we’ve agreed 10 outcomes that we
want to achieve for our customers, the environment,
local communities and the economy. The outcomes are,
in essence, the future that our customers have told us
that we need to work towards.
6
ANGLIAN WATER
OUTCOMES IN DETAIL
As we consulted with our customers and agreed the
10 outcomes with them, it seemed obvious that we
should also review our Love Every Drop goals. We
have examined each goal in turn to ensure that it still
has the relevance and aspiration to drive us towards
the 10 outcomes, in some cases we have left the goals
unchanged, in others, we have sought to raise the bar.
Goals that remain fundamentally unchanged:
No accidents
•
No pollutions
•
•
•
No incidents
•
100% of our customers very satisfied with our service
Zero Waste. Get it right first time every time
Goals that we have refreshed:
Our carbon goals
Our original carbon goals were set in relation to AMP5.
These were aspirational and have enabled a step
change in our approach to managing operational and
embodied (capital) carbon out of our designs and
processes. The goals were time bound to 2015 and so
required revision; in line with our approach across the
rest of our planning we have set new goals across a
much longer time line. Our new goals are as follows:
To exceed a 7% reduction in real terms in gross
operational carbon by 2020 from a 2015 baseline.
To deliver a 70% reduction in capital (embodied)
carbon by 2030 from a 2010 baseline.
Lead and champion the effective management of the
impact of growth and climate change
Our work on adaptation to climate change has
demonstrated that it is vital to collaborate with other
sectors with which we have interdependencies. Our
services are not resilient unless other sectors upon
whom we rely (such as power, agriculture, landscape
management, local services and suppliers) are also
prepared. As our raw material, water, and our ability to
provide our services are so closely linked to the impacts
of climate change we have been seen as a standard
bearer. This is imperative if we are to maintain current
levels of service to our customers into the future.
Frontier performer in the UK
If we want our customers to be very satisfied with our
services then we need to ensure that the experience we
provide is equal to the best that they can experience
anywhere. That is why we have changed this goal from
being the Frontier performer in the industry to being
the Frontier performer in the UK.
FLOURISHING
ENVIRONMENT
A SMALLER
FOOTPRINT
CARING FOR
COMMUNITIES
Employer of choice
To achieve our goals in customer service and be
respected as the frontier performer in the UK we need
the best employees. To reflect this we have changed our
goal from being the Leading employer in the region to
becoming the employer of choice.
New goals:
Pioneer responsible water stewardship
We will do this by building on the work that we have
already begun in our Water Resource East Anglia
project, catchment management and measuring and
managing embodied water.
100%
of our
customers
very satisfied
with our
service
No
incidents
Just as Love Every Drop has enabled our success in
AMP5, we believe that it will be fundamental to the
delivery of the 10 outcomes.
No
accidents
Frontier
performer
in the UK
Deliver a 70%
reduction in capital
(embodied) carbon
by 2030 from a 2010
baseline
Employer
of choice
FAIR
PROFITS
Make a positive difference to the communities we serve
We will respond to our customers’ wish for a more
comprehensive water education programme in schools
across the region. We will support relevant community
activities through our employee volunteering
programme and enable customers to take more action
on water efficiency and Keep it Clear through our
behavioural change campaigns.
Zero waste.
Get it right
first time,
every time.
Lead and champion the
effective management
of the impact of growth
and climate change
INVESTING FOR
TOMORROW
No
pollutions
Pioneer
responsible
water
stewardship
Exceed a 7% reduction
in real terms in gross
operational carbon
by 2020 from a 2015
baseline
Make a
positive
difference
to the
communities
we serve
ANGLIAN WATER
OUTCOMES IN DETAIL
7
SATISFIED
CUSTOMERS
FAIR
CHARGES
SAFE, CLEAN
WATER
WE HAVE DEVELOPED 10
OUTCOMES FOR CUSTOMERS
AND THE ENVIRONMENT
Why this outcome?
RESILIENT
SERVICES
SUPPLY MEETS
DEMAND
A good outcome will be…
We deliver our services efficiently
compared to other leading companies.
We can raise finance efficiently at
relatively low costs to ensure enough
money to fund future investment.
Our business is financially stable over
the long term and we demonstrate
responsible stewardship of
financial resources.
As a monopoly provider of an essential service it is important
that our profits are perceived to be fair and proportionate. Some
customers are concerned about water company profits and this
has convinced us that we need to do more in this area.
FAIR
PROFITS
A good outcome will be…
Why this outcome?
Customers see good
stewardship of assets as one
of our core responsibilities.
They want to know that we are
investing in infrastructure to
safeguard water supplies now
and in the future.
Why this outcome?
This is about acting as
a responsible company
and a force for good in
our region, recognising
the wider impact of
our activities upon the
communities we serve.
Assets (such as our pipes, works,
buildings and equipment) are
maintained effectively so they
provide the services customers
expect both now and in
the future.
INVESTING
FOR TOMORROW
Provide the services our
customers expect over the
long term through responsible
asset stewardship
A good outcome will be…
An inclusive and accessible service,
sensitive to the needs of individual
customers. Our infrastructure
underpins and contributes to a
successful regional economy. Our
operations do not unduly disturb
the community. Our water parks
and nature reserves provide valued
recreational benefits. Our sites are
maintained to ensure the health and
safety of visitors and our employees.
The next generation has a real
personal belief in the value of water.
Why this outcome?
Reducing our dependence
upon natural resources
drives innovation, improves
resilience and saves costs.
Furthermore, as one of
the largest emitters of
greenhouse gases in the East
of England, it is right that
we play our part to mitigate
climate change.
A financially
responsible,
efficient business
earning fair profits
A good outcome will be…
We lead by example on mitigating climate
change and protecting natural resources.
Decarbonisation and resource efficiency
are central to investment and operational
decisions. We continue to reduce energy
consumption and carbon emissions related to
water production, consumption and disposal.
Water footprinting is established as a social and
business norm and drives down usage.
OUT
FOR CUS
AND
ENVIRO
CARING FOR
COMMUNITIES
Working responsibly
with and for your
community
Leading by example on
reducing emissions and
conserving the world’s
natural resources
A SMALLER
FOOTPRINT
A flourishing
environment,
for nature and
for everyone
FLOURISHING
ENVIRONMENT
Why this outcome?
A good outcome will be…
A healthy natural environment
is the foundation of sustained
economic growth, prospering
communities and personal
well-being, and we need to
play our part to protect it.
The environment in our region flourishes. Rivers, lakes, aquifers and coastal waters
support a rich biodiversity, contribute to a growing economy and provide a valuable
amenity for families and communities. There is joined-up, effective and collaborative
management of the water cycle in our catchments (an area drained by a river)
from source to tap and back to the environment. Our activities are sensitive to
environmental needs, and risks and adverse impacts are avoided. People, businesses,
water- and land-users in our region are engaged in the challenges of maintaining a
sustainable environment. All legal requirements are met.
8
ANGLIAN WATER
OUTCOMES IN DETAIL
FLOURISHING
ENVIRONMENT
A SMALLER
FOOTPRINT
CARING FOR
COMMUNITIES
INVESTING FOR
TOMORROW
FAIR
PROFITS
A good outcome will be…
We respond to customer needs with tailored, innovative
services. Our processes are customer focused, and our
people highly motivated and capable. Service failures
are very rare and caused by factors beyond our control.
If failures do occur we act promptly and effectively –
keeping customers up to date and doing all we can
to prevent and reduce the impacts on individuals
and businesses.
Why this outcome?
This outcome will ensure that we continue
to listen to our customers and to focus our
business on the things that matter to them.
We have a responsibility to all our customers
to achieve excellence in everything we do,
because our customers depend upon us to
supply an essential service.
A good outcome
will be…
SATISFIED
CUSTOMERS
Ensuring that
you are very
satisfied with
our service
FAIR
CHARGES
Bills balance fairness,
affordability and
value for money
COMES
TOMERS
THE
NMENT
Drinking water
is safe, clean
and acceptable
SAFE,
CLEAN
WATER
Our services cope with the
effect of disruptive events,
in particular increasingly
severe weather events. We
plan ahead for the impacts
of our changing climate
Manage and
meet the growth
in demand for
sustainable and
reliable water
and wastewater
services
RESILIENT
SERVICES
SUPPLY MEETS
DEMAND
A good outcome will be…
Prudent investment in reliable,
affordable and sustainable supplies
that are flexible enough to cope
with uncertain demands. Manage
changing demand on our water
and wastewater systems from new
and existing customers, as well
as meeting demand and enabling
economic growth with additional
supply. The level of leakage is
acceptable to customers.
Customers recognise that
our bills are a fair way
of covering the costs of
what we need to do. Bills
are seen to be affordable,
and the service provided
represents good value for
money. Tariffs are simple
and easy to understand.
We recover fair costs
from developers for the
infrastructure needed
when new houses are built.
Why this outcome?
Many of our customers are telling us
that they are worried about bills rising,
and it is clear that incomes are not
keeping up with the cost of living. In
addition, some customers are concerned
that our monopoly status means we
have no incentive to keep prices fair and
affordable. Against this background it
is vital that we ensure that customers
perceive our bills to be fair, affordable and
value for money.
A good outcome will be…
Why this outcome?
Customers are confident that
their water is always clean and
safe to drink and use. Water
sources are used wisely and
protected properly, and all legal
requirements are met.
The delivery of highquality, safe, clean
drinking water is the most
important thing we do and
a fundamental expectation
of our customers.
A good outcome will be…
Our business understands and is prepared for
the impact of extreme natural and man-made
hazards. Such hazards do not cause customers
to suffer interruptions to water supply or
disposal of sewage. Customers understand the
risks from disruptive events. We use the best
available science to understand, successfully
plan for and adapt to a changing climate. We
monitor the impacts of these changes on our
assets and processes, and consider their impacts
on all investments and decision making. We set
an example to others in the region on adapting to
our changing climate.
Why this outcome?
Making sure we
are able to provide
reliable water and
wastewater services
to our customers now
and in the future is a
key priority.
Why this outcome?
Customers recognise that water
resources in our region are particularly
vulnerable to increasing pressures
such as population growth and climate
change, and they want us to take
preventative action and to engage in
long-term planning to prevent problems
storing up for the future.
ANGLIAN WATER
OUTCOMES IN DETAIL
9
SATISFIED
CUSTOMERS
FAIR
CHARGES
THIS IS
HOW WE WILL
MEASURE OUR
PROGRESS
SAFE, CLEAN
WATER
£
RESILIENT
SERVICES
Ofwat Totex assessments
Network plus incentive
Network management incentive
A+
Ofwat Key Performance
Indicators
SUPPLY MEETS
DEMAND
£
A+
Discretionary
sharing (RPI
impacts on costs)
Publication of
discretionary
sharing of benefits
Key
Ex-post judgement (others are ex-ante/mechanistic)
£ A+
Financial incentive
Reputational incentive
Existing incentive
Proposed outcome incentive
2020+ Future measure
£
A financially
responsible,
efficient business
earning fair profits
An evolution of Ofwat’s serviceability assessment,
using a basket of service/asset measures, with
performance assessed within ‘tramlines’
2020+
£
INVESTING
FOR TOMORROW
Provide the services our
customers expect over the
long term through responsible
asset stewardship
A more radical change of measures to make an
assessment of ‘asset stewardship’ to be developed
Service Incentive
Mechanism (SIM)
Recreation revenues
Traffic Management
Act charges
Service Incentive
Mechanism (SIM)
Abatement notices
£
A+
£
A+
Cost saving from
carbon reduction
Ofwat Key
Performance Indicators
Enforcement/
prosecution by EA and
other regulators
EA and other regulators’
publications, scrutiny,
measures and
enforcement
Ofwat Key
Performance Indicators
ANGLIAN WATER
OUTCOMES IN DETAIL
OUT
FOR CUS
AND
ENVIR
CARING FOR
COMMUNITIES
Failure demand
A+
10
FAIR
PROFITS
A+
Survey of community
perception
A+
Operation carbon
(reduction from baseline
in real terms)
Embodied carbon
(reduction from baseline)
Working responsibly
with and for
your community
Leading by example on
reducing emissions and
conserving the world’s
natural resources
A SMALLER
FOOTPRINT
2020+ Water footprint
(reduction from baseline)
FLOURISHING
ENVIRONMENT
EA and other regulators have sufficient powers to ensure we
meet our obligations
Meeting our obligations may not deliver outcomes customers
want (if our actions are not the only problem for example)
£
A+
Abstraction Incentive
Mechanism (AIM)
% of bathing waters attaining excellent status
% of SSSIs (by area) with ‘favourable’ status
A flourishing
environment,
for nature and
for everyone
FLOURISHING
ENVIRONMENT
£
A SMALLER
FOOTPRINT
CARING FOR
COMMUNITIES
Water supply interruptions (seconds per total property
served) (average 3 years)
Properties at risk of low pressure
Properties flooded internally (average 3 years)
Properties flooded externally (average 3 years)
A+
UK Customer Service Institute comparison
Qualitative SIM score (customer satisfaction)
% of sewerage capacity schemes using sustainable solutions
for example, Sustainable Urban Drainage Systems
2020+
£
A+
Survey of customer perception of:
• how affordable our charges are
• how fair our charges are
• to what degree our charges represent value for money
SATISFIED
CUSTOMERS
We just do this
Drinking water quality is our highest priority
and we work effectively with our regulators
and stakeholders in order to maintain it
FAIR
CHARGES
Performance in this area is central to our ethos,
and is also adequately incentivised by Drinking
Water Inspectorate through publication,
scrutiny and enforcement
Bills balance
fairness,
affordability and
value for money
We therefore do not feel that any additional
incentive is required
COMES
TOMERS
THE
ONMENT
Drinking water
is safe, clean
and acceptable
SAFE
CLEAN
WATER
A+
Our services cope with the
effect of disruptive events,
in particular increasingly
severe weather events. We
plan ahead for the impacts
of our changing climate
Manage and
meet the growth
in demand for
sustainable and
reliable water and
wastewater services
RESILIENT
SERVICES
SUPPLY MEETS
DEMAND
2020+
£
A+
£
£
A+
2020+
Sewerage capacity measure
Leakage – annual target
Frequency of level of service
restrictions (hosepipe bans)
Independent assurance that we are
abiding by our climate change our
strategy
Independent assessment of the risks to
our assets
Ofwat Key
Performance
Indicators
Per property consumption (PPC)
Security of Supply Index (SOSI)
% of population
supplied by single
supply system
Water
trading
incentive
Leakage (average 3 years)
FAIR
PROFITS
Service Incentive Mechanism
(SIM)
Guaranteed Standards
Scheme (GSS)
Failure costs/compensation
Service Incentive Mechanism
(SIM)
Ofwat KPIs
Consumer Council for Water
Risk-based flooding measure (based on
UKWIR recommendations)
A+
Ensuring that
you are very
satisfied with
our service
INVESTING FOR
TOMORROW
£
Bad debt
costs
A+
£
A+
A+
Consumer
Council for
Water
Drinking Water
Inspectorate
publications,
scrutiny,
measurement
and enforcement
Security and
Emergency
Measures
Direction
(SEMD) audit
Civil
Contingencies
Act (CCA)
Ofwat’s cost assessment (Totex) incentives encourage us to
deliver solutions as efficiently as possible. In addition, we have
developed targeted measures of success and corresponding
incentives which we believe will help to ensure that we achieve
the right outcomes for our customers and stakeholders.
We have been mindful of existing incentives, and are only
proposing limited additional incentives, where they will
encourage us to do more of the right things in the future. We
have balanced a few financial incentives, where appropriate,
with reputational incentives. Good reputational incentives
can often be more effective than financial incentives for us,
as we place a high value on our reputation as a leading water
company. We will continue to review these measures and
incentives to ensure there are no unintended consequences.
ANGLIAN WATER
OUTCOMES IN DETAIL
11
SATISFIED
CUSTOMERS
FAIR
CHARGES
SAFE, CLEAN
WATER
OUR STRATEGY MAPS
SHOW HOW WE PLAN
TO ACHIEVE EACH
OUTCOME
This diagram explains how
the strategy maps work.
1. BUSINESS GOALS
What our relevant business goals are.
They describe what we want to achieve as a
company, whereas outcomes describe what the
key groups will experience.
These goals are what we set ourselves as part of
Love Every Drop.
2.
RESILIENT
SERVICES
3.
SUPPLY MEETS
DEMAND
KEY GROUPS
These are the groups who:
• Benefit from the outcome.
• Will be affected by the outcome.
It is important to think about each
key group separately, because the
outcome may mean different things
to each group, and we may need
to develop strategies to ensure
that we deliver the outcome for
everyone, and not just a small
group. For example, household
customers and business customers
will have very different requirements
that we will need to meet in order to
ensure that they are very satisfied
with their service.
WE THINK THAT...
We have used customer research and expert advice
to help us understand how the world around us
may change in coming years. These changes could
affect how we operate in the future, so we need to
prepare for a number of possibilities:
• How and why we think that certain activities will
impact on our ability to deliver the right outcome
for customers.
• Anticipating economic and social changes in the
world around us.
• The business priorities that we think will be the
most important in the future.
12
ANGLIAN WATER
OUTCOMES IN DETAIL
We have used these ideas to help us make
strategic decisions.
The example below illustrates how two different theories
about how the world works can result in very different
strategic decisions:
• Two hypothetical water companies, ‘Easy Water’ and
‘The Aqua Company’, have two different ideas about
what drives customer satisfaction.
• Easy Water believes that customer satisfaction is driven
only by price. Consequently, the company decides to
reduce prices by off shoring its customer call centre.
• In contrast, The Aqua Company believes that while
price is important, customers also value being able
to communicate easily with them. Consequently, this
company chooses to keep its call centre within the UK.
FLOURISHING
ENVIRONMENT
A SMALLER
FOOTPRINT
4.
STRATEGY
CARING FOR
COMMUNITIES
5.
This section describes the strategies
that we will pursue in order to deliver
the outcome. The strategies listed
here are not a list of options but
a coherent package of activities
designed to deliver the outcome.
INVESTING FOR
TOMORROW
OUTPUTS
This is the tangible
product of a
specific strategy.
FAIR
PROFITS
6.
OUTCOMES FOR
THE KEY GROUPS
This section describes the
outcome that each key
group will see.
The strategy maps are designed to provide a high-level
overview. However, some individual strategies require a
more detailed explanation. These are explained in the
following sections:
Outcome
Strategy in focus
Page
Satisfied
customers
Dealing effectively with rain and flooding
18
Fair charges
Metering
32
Addressing affordability and bad debt
34
Safe, clean
water
Integrated catchment management
42
Taste, smell and colour of water
44
Resilient
services
Adapting to climate change
52
Increasing the interconnectivity
of our water network
54
Resilience to drought
57
Supply meets
demand
Water efficiency
66
Leakage
68
Flourishing
environment
Protecting and enhancing
regional biodiversity
76
Implementing the natural
environment programme
77
A smaller
footprint
Reducing our carbon and
water footprint
84
Caring for
communities
Schools and community education
92
Fair profits
Running our business efficiently
A GOOD
OUTCOME
WOULD BE…
7.
This section describes
what the outcome will look
like in more detail.
106
ANGLIAN WATER
OUTCOMES IN DETAIL
13
SATISFIED
CUSTOMERS
FAIR
CHARGES
SAFE, CLEAN
WATER
RESILIENT
SERVICES
SUPPLY MEETS
DEMAND
However, there is concern that these may not be
suitable for all and that telephone support should
continue for those who need it.
SATISFIED
CUSTOMERS
ENSURING THAT YOU ARE VERY
SATISFIED WITH OUR SERVICE
CUSTOMERS SAID...
“The vast majority (around 90%) of customers of
both Anglian Water and Hartlepool Water say they
are satisfied with their water and wastewater service.
Service problems are also said to be infrequent.
The most frequently reported problems relate to
the aesthetic quality of water, leaks, and notified
interruptions to supply. For household customers
unexpected interruptions to supply, and for
businesses, billing related problems are also among
the most common.
The aspect of the water service that customers
are least satisfied with is the hardness of tap water
(though it is recognised this is a feature of the local
water). The aspect of the wastewater service they
are least satisfied with is the number of incidences
of untreated sewage polluting rivers.
In terms of customer service, being able to get
through to the right person quickly, first time
resolution and, above all, keeping customers
informed of progress with inquiries which are
not resolved at point of contact are particularly
important to customers. Being told if there is a
sudden spike in use would also be welcomed as a
warning of a potential leak.
Customer service is generally viewed positively;
Anglian Water is currently the industry leader in this
respect. There is particular support for how Anglian
Water notifies customers of planned interruptions
and deals with emergencies, as well as for its UK
based call centres.
Though customers make a number of suggestions
for improvements to customer service, this does not
seem to be a priority for future investment. There
is interest in new approaches that make use of new
technology to enable customers to ‘self-serve’.
14
ANGLIAN WATER
OUTCOMES IN DETAIL
Sewer flooding (especially in the home) is seen as a
particularly serious and unpleasant service failure),
albeit one that occurs rarely. Though the majority
of customers say they are happy with the current
level of service, this is an area where the most robust
evidence suggests customers would like to see
further improvement. This issue seems to be most
important to lower income groups.”
Quoted from the report Discover, Discuss, Decide:
Summary of research into household and business
customer and stakeholder views: version 10, prepared by
OPM on behalf of Anglian Water. The report is available at:
www.discoverdiscussdecide.co.uk.
OPM is an independent organisation that specialises in market research.
WE WILL...
We will do this by benchmarking ourselves, improving
our processes and learning from customer-focused
businesses in other sectors. It is good that the majority
of our customers are satisfied with their current water
and wastewater service, but we recognise there’s no
room for complacency. Over the last five years, we
have refocused our operations and processes to make
customer service central, and to make it as easy and
convenient as possible for customers to engage with
us. We will build on our industry-leading position on
customer service.
We will continue to explore new ways of communicating
with our customers, including building on our existing
use of social and digital media, while still offering
more traditional methods of communication for those
that prefer them. In addition, we will implement a new
Customer Relationship Management system to better
‘join up’ customer information.
We will continue to ensure that our drinking water is safe
and wholesome, and maintain our excellent record of
compliance with legal standards. We will tackle localised
problems with the taste, smell or colour of tap water
using a comprehensive sampling and monitoring regime,
and by targeting our disinfection using chlorine more
precisely. We will continue with campaigns such as our
Keeping Water Healthy initiative to raise awareness
of how customers can look after drinking water in the
home. We will work with the plumbing industry to raise
awareness of water quality problems that can result from
faulty domestic plumbing, and to promote WaterSafe,
the national approved plumbers scheme.
FLOURISHING
ENVIRONMENT
A SMALLER
FOOTPRINT
CARING FOR
COMMUNITIES
? WANT TO KNOW MORE?
See Strategy in focus: Taste, smell and
colour of water.
P44
We will continue to help customers with information
and advice. We have thought carefully about whether
to invest to reduce the hardness of water. While some
customers find hard water inconvenient or unpleasant
and want us to invest to address it, many others
recognise that hard water is a feature of the local area.
Altering water hardness is very expensive and would lead
to bill increases. Our research suggests that customers
are not willing to pay as much as it would cost. We do
not plan specific investment to alter hardness of water.
INVESTING FOR
TOMORROW
FAIR
PROFITS
We will do more to tackle pollution of rivers and streams
by improving the onsite instrumentation and monitoring
at our sewage treatment works and pumping stations.
Better monitoring will enable us to tackle any problems
as soon as they occur, and in some cases to prevent
problems from happening in the first place.
? WANT TO KNOW MORE?
See: Flourishing environment.
P72
We will reduce our leakage significantly, using a range of
methods. In particular we will continue with our current
‘rapid repair’ policy, where leaks are repaired within 24
or 48 hours of being reported, depending on the size of
the leak. Where a customer has a meter, we’ll monitor for
particularly high water usage which might be due to a
leak, and notify the customer quickly so the problem can
be fixed. With nearly 20% of the total number of leaks
happening in customers’ private pipes, we will continue
to campaign to raise awareness about how to get them
fixed. This includes Facebook, online videos, and advice
about our accredited plumber scheme.
? WANT TO KNOW MORE?
See Strategy in focus: Leakage.
P68
We will increase the protection for customers against
service interruptions by building additional resilience
into our networks and operational processes. In
particular we are looking at investment to reduce our
exposure to power failures at our two biggest water
treatment works near to Grafham and Rutland Water.
? WANT TO KNOW MORE?
See: Resilient services.
P48
Allocating expenditure to outcomes:
We have allocated 100% of our capital maintenance to
‘Investing for tomorrow’, because this is about maintaining
our current level of service. Together with operating costs
and retail costs, this expenditure falls into the category
‘Running the business and maintaining services’.
We have not allocated any expenditure to ‘A smaller
footprint’ because this outcome is all about doing things
differently, rather than spending money. We have already
demonstrated that, instead of costing more, reducing our
use of finite resources results in cost savings.
Similarly, we have not allocated any expenditure to ‘Fair
profits’. We believe that a fair profit depends on driving
efficient performance throughout the whole business
rather than increasing costs for customers.
ANGLIAN WATER
OUTCOMES IN DETAIL
15
SATISFIED
CUSTOMERS
FAIR
CHARGES
SAFE, CLEAN
WATER
SATISFIED
CUSTOMERS
RESILIENT
SERVICES
SUPPLY MEETS
DEMAND
KEY GROUPS
ENSURING THAT YOU ARE VERY
SATISFIED WITH OUR SERVICE
Household customers
Household customers
affected by service
failure
BUSINESS GOALS
Business customers
100% of our customers very satisfied with our service.
Developers
No incidents (no supply interruptions or flooding from sewers).
Frontier performer in the UK.
Zero waste. Get it right first time, every time.
No pollutions.
Make a positive difference to the communities we serve.
WE THINK THAT...
1.
Satisfaction with a service derives
from many things, including:
• Making it easy for customers to
engage with us.
• Communicating at the right time,
in appropriate forms (for example,
letter, phone, email, social media
and text messages), openly and
honestly. Customers are listened
to and understood.
• Fairness: Customers have some
control over the bill, the service
represents value for money, and bills
and profits are perceived to be fair.
• Levels of service meet and exceed
customer expectations, service
failures are rare, and we recover
effectively when things go wrong.
• Responsiveness: We respond to
customers’ changing priorities and
act at the right time.
16
ANGLIAN WATER
OUTCOMES IN DETAIL
2.
3.
Most customers say they are
satisfied with their water and
wastewater service, and that
service problems are infrequent.
Improving customer service
does not seem to be a priority
for future investment.
Our operations are largely
unseen by customers, and often,
it is only when things go wrong
that they become visible to
customers. These experiences
will inform customers’
perception of us as a company.
4.
5.
Customers do not compare their
experience of dealing with us to
other water companies, but to
other businesses.
We have a responsibility to
all our customers to achieve
excellence in everything we
do, because our customers
depend upon us to supply an
essential service. We are the
monopoly provider of water
and wastewater services to
our household customers,
and although our business
customers and developers have
or will soon have a choice about
which retailer they buy their
services from, the wholesale
part of our business will still
provide the service.
FLOURISHING
ENVIRONMENT
A SMALLER
FOOTPRINT
CARING FOR
COMMUNITIES
INVESTING FOR
TOMORROW
STRATEGY:
SATISFIED
CUSTOMERS
Making it easy:
Continue to focus our business upon
meeting our customers’ changing
needs and expectations, through the
development of customer-focused
people, processes and systems.
OUTPUTS
• Customer-focused people, processes
and systems.
Effective communications:
Tailor our communications to suit different
types of customers.
Use new ways of communicating with
our customers.
When things go wrong, ensure that
communications with customers are timely
and effective.
OUTPUTS
• Range of communications channels,
for example, call centre, website, social
media and text messages.
• Tailored communications, for example,
different languages and use of local
and proactive communications.
• Timely communications.
• New Customer Relationship
Management system.
A culture of transparency:
Continue to develop a business culture of
openness and transparency. This includes
providing easy access to information
about our performance, company profits
and executive pay. Inform customers,
regulators and stakeholders immediately
if there are any issues that may affect
human health or the environment.
OUTPUTS
• Access to information.
• Performance reports.
• Annual reports.
Flood and drainage management:
Integrate the management of flood risk
and drainage. Work in collaboration with
others to address current and future
flood and drainage problems. Develop a
long-term sewerage planning framework
to address future challenges and manage
future uncertainty.
Continue to reduce the risk of sewer
flooding caused by overloaded sewers,
blockages and operational failures.
OUTPUTS
• Drainage strategies.
• Network modelling and monitoring.
• Keep it Clear campaign.
• Sustainable Drainage Systems, storm
tanks, increased sewer capacity.
Reduce the risk of service interruptions:
Make our operations and networks more
resilient to reduce service interruptions.
Increase flexibility within our systems to
deal with unforeseen risks.
Work with others (such as the emergency
services, local authorities, and the energy
sector) to develop integrated resilience and
recovery strategies.
Plan for a major new raw water transfer
from the River Trent to support our
reservoir system.
OUTPUTS
• Tested recovery and contingency plans.
• Onsite generators.
• CCTV and remote security monitoring.
• Increased interconnectivity within our
system.
• Partnerships with other sectors.
• Trent to Rutland raw water
transfer scheme.
Recover our service to customers
promptly and effectively when things
go wrong:
Use operational practices that minimise
the impact of incidents on customers.
Communicate quickly and effectively when
things go wrong. Resolve issues at first
point of contact (where possible) and
before the customer is inconvenienced.
OUTPUTS
• Minimal impact of incidents on customers.
Working with developers:
Support developers through the planning
process, providing the infrastructure
required to meet new housing demands.
Support and encourage developers to
build water-efficient homes by abolishing
infrastructure charges for homes that
achieve 80l/p/d (equivalent to levels five
and six in the Government’s Code for
Sustainable Homes).
Work with developers and others to
ensure that surface water is drained
sustainably from new developments.
OUTPUTS
• Provision of infrastructure.
• Water-efficient homes.
• Sustainable Drainage Systems.
• Water reuse initiatives.
FAIR
PROFITS
Working with business customers:
A dedicated service to business customers
through Anglian Water Business. Services
provided include specialist billing, account
management and engineering support
to optimise water use and wastewater
operations. Offer water efficiency services to
help businesses to grow without increasing
their water consumption.
OUTPUTS
• Range of services on offer.
• Water efficiency services.
OUTCOMES FOR
THE KEY GROUPS
Household customers:
We respond to customer needs with
tailored, innovative services. Our
processes are customer focused, and
our people highly motivated and capable.
Service failures are very rare and caused
by factors beyond our control.
Household customers affected by
service failure:
In addition to the above, if failures do occur
we act promptly and effectively – keeping
customers up to date and doing all we
can to prevent and reduce the impacts on
individuals and businesses.
Business customers:
In addition to the above, we place an
emphasis on building relationships, being
easy to do business with and focusing
on added-value services that enable the
customer to be more efficient and resilient.
Developers:
We provide an efficient service to support
developers through the planning process.
Infrastructure charges abolished for homes
that achieve 80l/p/d.
A GOOD OUTCOME
WOULD BE...
We respond to customer needs with
tailored, innovative services. Our
processes are customer focused,
and our people highly motivated and
capable. Service failures are very rare
and caused by factors beyond our
control. If failures do occur we act
promptly and effectively – keeping
customers up to date and doing all we
can to prevent and reduce the impacts
on individuals and businesses.
ANGLIAN WATER
OUTCOMES IN DETAIL
17
SATISFIED
CUSTOMERS
FAIR
CHARGES
SAFE, CLEAN
WATER
RESILIENT
SERVICES
SUPPLY MEETS
DEMAND
STRATEGY IN
FOCUS: DEALING
EFFECTIVELY WITH
RAIN AND FLOODING
Rainfall provides the water that is
essential for our daily lives at home
and at work, as well as for a flourishing
environment. But heavy or sustained
rainfall can cause its own problems.
It can lead to a build-up of water on
the land (surface water), which has
to go somewhere. Avoiding problems
requires surface water to be managed
actively both on the ground, by making
the right long-term investment, and by
encouraging people and businesses to
take the right actions.
Heavy rainfall leads to localised flooding when it
overwhelms the drainage capacity of the local area.
Flooding can also happen because rivers burst their
banks due to the volume of water flowing in them or, in
coastal areas, when high tides and storm surges breach
flood defences.
One place excess water flows is into the sewers – many
of our older sewers were built to take both surface
water and foul sewage. Rainfall can have a big impact
on the performance of the system because it uses
up available capacity and can result in flooding from
sewers (when sewage escapes from a manhole cover or
drain or by backing up through toilets). This is clearly
extremely unpleasant and although it is relatively rare,
we must continue to reduce the problem for customers.
Sewer flooding can also be caused by other factors, for
example, by sewers becoming blocked.
18
ANGLIAN WATER
OUTCOMES IN DETAIL
Housing growth is likely to increase the pressure on our
drainage and sewerage systems, both by increasing
the demand for sewerage and by increasing the
amount of paved areas, which results in more surface
water run-off. Furthermore, climate change modelling
suggests that the frequency of extreme rainfall is likely
to increase, putting additional pressure on existing
drainage systems and increasing the risk of flooding.
A number of organisations have formal responsibility
for managing surface water and tackling the risk of
flooding, including the Environment Agency, councils
acting as ‘Lead Local Flood Authorities’ and Internal
Drainage Boards, who manage water levels in manmade ditches in flat landscapes such as the Fens.
We also have a key role to play, particularly in relation
to managing flooding from sewers. We need to make
sure we protect our networks and treatment works from
the impact of flooding so we can continue to maintain
the service we provide.
The complicated interrelationship between rainfall,
drainage of surface water, the causes and impact
of flooding and our sewer networks means that our
strategy needs to be collaborative, recognise varying
perspectives of customers and other stakeholders, and
deal as effectively as possible with uncertainty and
future challenges. Here is a summary:
FLOURISHING
ENVIRONMENT
A SMALLER
FOOTPRINT
CARING FOR
COMMUNITIES
INVESTING FOR
TOMORROW
FAIR
PROFITS
DEALING EFFECTIVELY WITH RAIN
Private sewers:
We will manage the impact of the transfer of private sewers and
pumping stations on our network.
Reduce the risk of sewer flooding:
We will continue to reduce the risk of sewer flooding from overloaded
sewers, blockages and operational problems through the use of a variety
of cost-effective measures, including: increasing sewer capacity, sewer
rehabilitation, retrofitting Sustainable Drainage Systems, behavioural
change campaigns to reduce blockages, mains flushing and voluntary
house purchase (in extreme circumstances).
Long-term sewerage planning:
We will work in partnership with others to develop drainage strategies.
Drainage strategies will describe how we will address current drainage
problems, balance supply and demand, and prepare for future challenges.
The drainage strategies will demonstrate how recommended activities are
sustainable and affordable.
Reduce pollution from Combined Sewer Overflows (CSOs):
We will improve our understanding of the frequency and impact of CSOs
on surrounding watercourses through increased monitoring of CSO activity.
Schemes to reduce CSO activity will be considered and prioritised as part
of the long-term sewerage planning process.
Proactive management and optimisation:
We will expand our modelling capability to cover our entire sewerage
network, starting with high-risk catchments. This will facilitate proactive
management and optimisation of our network.
Collaborative working:
We will work with others including Lead Local Flood Authorities, developers,
planning authorities, and the Environment Agency to develop Surface Water
Management Plans and drainage strategies. We will play our part in the
resolution of wider drainage, surface water flooding and water pollution issues.
We will explore opportunities for partnership funding.
Resilience:
We will increase the resilience of our water and wastewater assets to river
flooding, surface water flooding and coastal flooding. We will consider
climate change impacts explicitly as part of the risk assessment process.
DEALING EFFECTIVELY WITH FLOODING.
ANGLIAN WATER
OUTCOMES IN DETAIL
19
SATISFIED
CUSTOMERS
FAIR
CHARGES
SAFE, CLEAN
WATER
RESILIENT
SERVICES
SUPPLY MEETS
DEMAND
IN DEPTH:
REDUCING THE
RISK OF SEWER
FLOODING
Customers made it clear to us that sewer
flooding is of particular concern to them.
We will invest £35 million between 2010 and 2015
to protect customers and reduce the risk of sewer
flooding. This is in addition to millions of pounds spent
in previous years, but some properties still remain at
risk. These are often the properties where traditional
approaches to resolving the problem (such as the
installation of additional local sewer capacity) would be
complicated and very expensive. Our research suggests
that customers, including those not at risk, are willing to
pay an amount to resolve the problem for those that are
at risk, but there is a limit to what unaffected customers
are prepared to contribute.
We will not invest more than customers are willing to
pay, so we need to look for new ways to tackle the
problem. For example, we will look to invest in more
sustainable drainage solutions (such as soakaways)
rather than expensive engineering solutions. We will
look at installing protective measures such as floodproof doors and special non-return valves in the
local sewer networks. In extreme situations we will
consider purchasing the property by mutual agreement
(sometimes it costs more to fix a sewer flooding problem
than the affected property is worth).
20
ANGLIAN WATER
OUTCOMES IN DETAIL
These and other measures should reduce the cost of
dealing with individual properties at risk, so we can
do more for less. Overall, we plan to keep our level of
investment in resolving problems at specific properties
about the same as we currently spend, because that is
what customers are prepared to pay for.
We’ll also continue our work to tackle the causes of
sewer flooding. For instance, we will work with other
organisations to develop better flood and surface water
drainage management strategies. We’ll also continue our
Keep it Clear initiative, working with customers to help
them understand the importance of the sewer network,
and encouraging them to take action to protect it, thus
reducing the number of blockages we have to deal with.
FLOURISHING
ENVIRONMENT
A SMALLER
FOOTPRINT
CARING FOR
COMMUNITIES
INVESTING FOR
TOMORROW
FAIR
PROFITS
Reductions in blockages following our Keep it Clear campaigns
GRIMSBY
10% reduction
LOUTH
RETFORD
MABLETHORPE AND SUTTON
LINCOLN
18% reduction
SKEGNESS
KING’S LYNN
44% reduction
GRANTHAM
STAMFORD
64% reduction
KEEP IT CLEAR
AVERAGE OVERALL
SUSTAINED
BLOCKAGE
REDUCTION 42%
SP
SPALDING
PETERBOROUGH
83% reduction
GREAT
YARMOUTH
28% reduction
EL
ELY
ST IVES
COLLABORATION
NORTHAMPTON
33% reduction
ST NEOTS
CAMBRIDGE
NORWICH
12% increase
NEWMARKET
STOWMARKET
IPSWICH
HA
HAVERHILL
FELIXSTOWE
BUCKINGHAM
BEDFORD
53% reduction
BRAINTREE
COLCHESTER
CHELMSFORD
41% OF CUSTOMERS SURVEYED
SAY THEY HAVE CHANGED THEIR
BEHAVIOUR SINCE OUR CAMPAIGN
SOUTHEND
28% reduction
TILBURY
6% increase
In June 2011 we launched our Keep it Clear social
marketing campaign. This innovative campaign has
changed customer behaviour in those areas that are
at the highest risk of sewer blockage and has reduced
significantly the number of blockages we have to deal
with. We have worked in a number of communities to
raise awareness about sewer blockages caused when
people use the drainage system to dispose of things like
fat, oil, grease, wetwipes and other sanitary items. Keep
it Clear has been highly successful in getting people to
dispose of such items differently and has significantly
reduced sewer blockages in the areas where it has been
rolled out. These changes have been sustained since
the start of the campaign. We will continue to roll out
Keep it Clear across our region, and we will keep up the
campaign’s momentum to make sure that behaviour
change becomes permanent.
Alongside this we plan a programme of targeted sewer
jetting which reduces the build-up of silt and fats.
We will also use technology to improve our ability to
manage the network by installing more automated flow
monitors and alarm systems, and remote control of some
pumping stations.
ANGLIAN WATER
OUTCOMES IN DETAIL
21
SATISFIED
CUSTOMERS
FAIR
CHARGES
SAFE, CLEAN
WATER
RESILIENT
SERVICES
SUPPLY MEETS
DEMAND
MEASURES AND
INCENTIVES
Existing incentives
Key behaviours
There are a number of existing incentives which
encourage the achievement of this outcome. The
Guaranteed Standards Scheme (GSS) ensures that
minimum standards are met, and when they are not,
a financial penalty (directly to the customer affected)
is incurred. In addition, we incur financial costs when
things go wrong, and may incur further financial costs
in the form of compensation. The Consumer Council for
Water also monitors our customer service performance
and publishes the results in comparison to other water
companies, as well as intervening in specific cases. Ofwat
currently publishes cross-company comparisons on
service interruptions, and repeat internal sewer flooding.
Most significantly, the Service Incentive Mechanism (SIM)
is used by Ofwat to compare company performance
across the industry in terms of a set of quantitative
service measures and a qualitative satisfaction survey.
Performance against the SIM is financially incentivised,
but our primary motivation for improving SIM
performance is the reputational effect of performing
well in comparison to our peers.
Traditionally, company and regulatory focus has been
on improving performance in certain prescribed areas
of service (for example, sewer flooding registers, the
Overall Performance Assessment and Ofwat’s DG
measures). However, the introduction of the Service
Incentive Mechanism (SIM) and removal of many of the
more specific regulatory targets on service failures has
refocused us on delivering what our customers want,
rather than a company or regulatory view of what is
important. We believe this is the right approach, and
wish to ensure that our incentive proposals for this
outcome support this.
Furthermore, we should not limit ourselves to aiming
to provide the best customer service in the water
industry. Most customers interact with only a single
water company, therefore in general customers do
not compare us to other water companies. There is a
danger that we do not see ourselves in the same way
as our customers do if we focus too much on achieving
the best performance in the industry, but, levels of
service provided by the industry fall short of customers’
experience from other service providers. It is therefore
important that we compare our performance against
other similar service providers if we want to improve
customer satisfaction.
Whilst we fully believe that customer satisfaction
measured through surveys should be the overall
measure of this outcome, we still consider that
some aspects of our service are worth measuring
individually. This is because customers tell us that
they are important to them and are highly valued, and
because, in general, they affect only a small number
of customers, which means they may not be well
represented in any general survey of satisfaction. It is
important to capture any service failures because, whilst
they are small in number, they can have a significant
impact on our customers.
22
ANGLIAN WATER
OUTCOMES IN DETAIL
FLOURISHING
ENVIRONMENT
A SMALLER
FOOTPRINT
CARING FOR
COMMUNITIES
INVESTING FOR
TOMORROW
FAIR
PROFITS
Measurement of these key failures in the past has often
been based on events which are within our control
(for example, interruptions caused by third parties, or
flooding due to severe weather were excluded). For
the customer, such distinctions are less relevant. We
therefore believe that measures should focus on the
customer experience regardless of cause. This will
incentivise us to take responsibility for all service failures
and work more widely with others to prevent them.
Finally, we wish to encourage innovation in our
approach. Surveys of satisfaction and benchmarking
against leading service providers are both strong
drivers of service innovation. However, in tackling
sewer flooding we recognise that we are facing a step
change in the approach we need to take in dealing with
capacity issues and flood risk. We need to ensure that
we incentivise innovation in this area.
Value to customers
Our customer research shows that supply interruptions,
persistent low pressure and sewer flooding remain
priorities, and that customers are willing to pay for
improvements. Financial incentives are therefore
appropriate for these measures.
Elsewhere, improving overall levels of satisfaction
improvement should obviously be of benefit to
customers. However, we are not proposing expenditure
specifically to raise satisfaction levels, other than where
it would naturally accrue from investment in specific
things valued by customers (for example, low pressure
or leakage). This aligns with customer priorities, as
customer service in particular is not seen as a priority
for investment.
ANGLIAN WATER
OUTCOMES IN DETAIL
23
SATISFIED
CUSTOMERS
FAIR
CHARGES
SAFE, CLEAN
WATER
RESILIENT
SERVICES
SUPPLY MEETS
DEMAND
Proposals
We expect the Service Incentive Mechanism (SIM)
to continue as a comparative financial incentive. The
reward or penalty would be applied to the retailer,
with a pass through according to retail, water and
sewerage proportional costs. However, we also propose
a reputational incentive for each control based on
their individual contribution to the qualitative SIM
component, and also for the retailer to publish the
relative rank amongst other utility companies who are
members of the UK Customer Service Institute. By
targeting performance levels to be among the best in
our peer group within the industry and further afield,
we will ensure that improving customer satisfaction
remains a key focus.
For the water control, we will measure water supply
interruptions (as measured in the current Ofwat KPI)
averaged over three years to reduce volatility from
weather and third-party action. A financial incentive
is appropriate given the importance placed on this
aspect of service by customers, but estimating
improvements is difficult as a diverse range of activities
contribute to performance. A financial reward is
therefore difficult to justify.
We will also measure the number of properties suffering
from persistent low pressure, and our commitment is
to provide a net reduction up to the level we think is
feasible within the AMP. However, to encourage us to
seek alternative ways to deliver more, and because of
the inherent risk being absorbed with regard to new
problems, we believe a small reward for additional
delivery should be available, and this is supported by
our economic analysis of willingness to pay.
24
ANGLIAN WATER
OUTCOMES IN DETAIL
For sewerage, we will commit to reducing the number
of properties that are flooded from sewers internally
and externally. These measures include all causes of
internal/external flooding from sewers (overloaded as
well as other causes), including those due to severe
weather. As these measures are to some degree
weather dependent, a three-year average is appropriate
to remove some volatility. In the past, improvements
have tended to focus on overloaded problems only,
such that, despite significant removals from flood risk
registers over past AMP periods, the number of flooding
incidents overall has not reduced. There has also been
a focus on internal flooding over external flooding,
which ignores the fact that external flooding may have a
greater impact on customers. These measures support
our strategies to consider sewerage catchments more
widely, make better use of lower certainty solutions
such as Sustainable Drainage Systems (SuDS) and focus
on influencing customer use of the sewerage system
through campaigns such as ‘Keep it Clear’. Our flooding
programme is cost beneficial overall. We believe that
the level of investment in this area, combined with the
established measure, justify a financial penalty. However,
we have not proposed a financial reward because of the
difficulty in assessing the economic level of investment.
Finally, by setting a target for the number of sewerage
capacity schemes which include a sustainable element
(such as SuDS), we will incentivise their consideration
and use more widely than currently. As we gain
experience in considering sustainable solutions,
we may be able to find ways to address some other
problems that are currently not cost-beneficial using
traditional solutions.
FLOURISHING
ENVIRONMENT
A SMALLER
FOOTPRINT
CARING FOR
COMMUNITIES
INVESTING FOR
TOMORROW
FAIR
PROFITS
COMMITTED PERFORMANCE LEVELS AND INCENTIVES
Units
End of AMP5
prediction
2014–15
Committed
Performance
Level
2019–20
Qualitative SIM score Reputational
WASC ranking
3rd or above
3rd or above
Retail, water
and sewerage
Service Incentive
Mechanism (SIM)
number
85
Relative
measure
Retail
Utilities
ranking
–
Top 25%
Retail
Measure of success
Incentive type
Reward and
penalty
Reputational
Customer
Satisfaction Index
prepared by UK
Institute of Customer
Satisfaction
Price control
Water supply
interruptions
average over 3 years
Penalty only
sec/property
840 seconds
750 seconds
Water
Properties at risk
of persistent low
pressure
Reward and
penalty
number
517
257
Water
Properties flooded
internally from
sewers – average
over 3 years
Penalty only
number
331
304
Sewerage
Properties flooded
externally from
sewers – average
over 3 years
Penalty only
number
5,060
5,038
Sewerage
Percentage
of sewerage
capacity schemes
incorporating
sustainable solutions
eg SuDS
Reputational
%
n/a
25%
Sewerage
ANGLIAN WATER
OUTCOMES IN DETAIL
25
SATISFIED
CUSTOMERS
FAIR
CHARGES
SAFE, CLEAN
WATER
FAIR
CHARGES
BILLS BALANCE FAIRNESS,
AFFORDABILITY AND VALUE FOR MONEY
CUSTOMERS SAID...
“There is ‘heat’ in conversations about price, linked
to complaints about ‘corporate Britain’ and the state
of the economy. There is widespread concern that
monopoly status means water companies have no
incentive to keep prices fair and affordable.
However, while some customers are very concerned
about price, most say their bills are good or
reasonable value for money, especially compared
to other utilities and given the importance of the
service. Satisfaction with value for money appears to
be higher among Hartlepool Water customers than
Anglian Water customers. Evidence suggests that
improving satisfaction with contact, tackling leaks
and keeping bills affordable may improve customer
assessments of value for money.
The majority of customers of both Anglian Water and
Hartlepool Water say their charges are affordable
and fair, although the proportion saying this fell
between 2011 and 2012. Customers who feel charges
are affordable are more likely to say they are fair.
The Stated Preference research found that, on
average, household customers are willing to pay
up to £30 per annum extra and business customers
up to 5% extra for a defined package of service
improvements.
The OPM Domestic Customer Survey suggests more
customers from single person households and those
already on a meter may be prepared to accept a
slight increase in their bill (than customers from
larger households and unmetered customers).
Among customers who took part in qualitative
research and engagement activities, being prepared
to pay a bit more often depended on bill increases
supporting improvements (rather than profit),
Anglian Water ‘doing their bit’ to tackle leaks and
conserve water, and improvements being considered
26
ANGLIAN WATER
OUTCOMES IN DETAIL
RESILIENT
SERVICES
SUPPLY MEETS
DEMAND
‘value for money’. In general, these customers
wanted Anglian Water to fund improvements from
profit, before customers were asked to pay more
through their bills.
The Acceptability research found that overall a
majority of water and wastewater respondents (68%)
felt the forecast 2020 bill in the proposed plan was
‘about right’. Three quarters of water and waste
water customers (76%) would prefer bills to change
steadily throughout the period from 2015-2020
(rather than change every year in response to the
amount of work that has been conducted, or being
‘front loaded’ with a step-change in year 1).
There are high rates of metering among Anglian
Water customers and it is generally regarded as
fairest to pay for what you use (though there is also
recognition that some customers have additional
needs for water, or may struggle to pay their bills).
However, the issue of compulsory metering divides
opinion. Those without a meter, and households with
five or more people, are more likely to feel that the
decision should be voluntary and customers should
be free to switch in their own time.
Some customers are confused about whether
they would be better off on a meter or not;
many want more information about this. Though
some customers are interested in having more
accurate, timely meter readings, many feel the
costs of installing smart meters outweigh the
potential benefits.
In the Acceptability research, 95% of the core
sample of water and waste water customers felt the
company’s metering plans were acceptable. However,
vulnerable customers viewed this element of the
proposed plan less positively than other groups.
Some customers would like Anglian Water to
explore other ways of incentivising lower use
(beyond metering).
Although there is limited awareness of the additional
(financial) support available to those who struggle
to pay their bills, among Anglian Water customers
awareness of the Water Sure tariff and services
for the elderly/disabled increased between 2011
and 2012. Most (though not all) customers appear
supportive of these schemes, but there are mixed
views about who should be eligible and who should
pay for them.
FLOURISHING
ENVIRONMENT
A SMALLER
FOOTPRINT
CARING FOR
COMMUNITIES
Some household customers find their bills, and the
basis for charging, unclear or confusing. There is
demand for more tailored information about the best
deal for individual households, and more choice and
flexibility in payment arrangements.”
Quoted from the report Discover, Discuss, Decide:
Summary of research into household and business
customer and stakeholder views: version 10, prepared by
OPM on behalf of Anglian Water. The report is available at:
www.discoverdiscussdecide.co.uk
OPM is an independent organisation that specialises in market research.
WE WILL...
Many of our customers are telling us that they are
worried about bills rising, and it is clear that incomes
are not keeping up with the cost of living. Against this
background, we understand that water bill rises would
be unwelcome. They would impact most of those whose
incomes are low, and those who are supported by
benefits. However, across our entire customer base
it is clear that many are feeling the effects of the
economic crisis.
We need to balance these concerns against the need
to maintain or improve services, and the need for us to
invest to meet our legal obligations. We believe that
we have struck the right balance, with average bills not
rising by more than the rate of inflation over the next five
years, while still allowing for essential investment.
Providing great value for money is essential, and we
think our Plan does that. We will strive to do more with
less so that we can deliver the best possible deal
for customers.
Like the rest of the water industry in England, where
companies are either privately owned or publicly listed,
Anglian Water is a business that aims to make a profit.
Generating a fair level of profit is a vital part of our
business model, as it encourages excellent performance
and allows us to attract the investors that help fund the
essential work we do. Essential investment would not
be possible unless investors can be reasonably assured
that they will get a return on their investment. But
where our profits vary because of other factors which
we don’t control, such as the level of inflation, then
there is a case for a new approach where the impacts
of such fluctuations are shared more equitably with
customers. We will share outperformance (and the risk
INVESTING FOR
TOMORROW
FAIR
PROFITS
of underperformance) 50:50 between the company and
customers. Generally, we would expect to outperform
and customers will share a greater proportion of this
benefit than previously.
We recognise that when inflation outturns at a higher
rate than was assumed at a determination, this can
be a benefit to companies, and this may be perceived
to be unfair or unwarranted. However, we believe that
the link to inflation is a fundamental feature of the
regulatory regime in water (and other sectors), and
is a key driver of the relatively low costs of capital
from which customers benefit. Conversely, if inflation
outturns significantly lower this can adversely impact
the company’s financial position.
We have included in our Plan an innovative sharing
mechanism which restricts the impact of higher than
expected Retail Price Index (RPI) inflation on customer
bills, whilst retaining the essential link to Regulatory
Capital Value (RCV). Subject to Ofwat accepting our
Plan in the round, we will absorb half of any increase in
RPI between 3.0% and 4.5%.
For outturn rates of inflation that are above our Plan
assumption of 3%, but below 4.5%, we will only apply
to bills 50% of the difference between outturn and 3%
in the period. For example, if RPI outturns at 4% in the
November before the charging year, the bill increase
applied to the wholesale element of bills for inflation
will only be 3.5%. RCV would still be adjusted by 4% in
this example.
At rates above 4.5% there will be no automatic sharing,
but the impact of higher inflation on costs will be
reviewed to determine the appropriate course of action
and we would expect to explain to customers and
stakeholders the impact on our business. At rates below
3% bills will be adjusted by the lower rate of inflation and
the company would bear the consequences of this.
In addition, we will be more open about how we
finance our business, and the profits we earn through
our operations.
ANGLIAN WATER
OUTCOMES IN DETAIL
27
SATISFIED
CUSTOMERS
FAIR
CHARGES
SAFE, CLEAN
WATER
Some customers will be particularly hard-hit by the
ongoing economic downturn. We plan to do more for
those worst affected.
We will continue to offer our AquaCare Plus and
WaterSure tariffs (which offer lower tariffs for eligible
customers), and will increase our contribution to the
Anglian Water Assistance Fund, to help customers with
historic water debt get back on track. We currently
provide £750,000 to the fund each year and we are
proposing increasing this to £1 million per annum from
1 April 2015. In addition, we are proposing to provide
additional support through the introduction of a new
social tariff from 1 April 2015.
We think this will help more people to pay their bill,
meaning we will be able to reduce the cost to customers
of unpaid bills.
? WANT TO KNOW MORE?
See Strategy in focus: Addressing affordability
and bad debt.
P34
We have been a strong advocate of metering for many
years. Currently, 82% of our household customers have
a meter fitted to their home, and nearly 75% pay a
measured charge. We aim to increase the number of
household customers who have a meter fitted to 96%,
with 88% paying a measured charge.
We think that there are potentially significant
benefits to be had by introducing more sophisticated
‘smart’ meters which allow, for example, remote meter
reading and frequent feedback to customers of their
water consumption. We will begin the transition from
‘dumb’ mechanical meters to ‘smart’ meters during
AMP6. By installing smart meters we will increase the
frequency of meter reads to once a month using driveby technology. We will provide detailed consumption
information to customers in their bill, and we will
consider making this information available to customers
via an online portal, a smart phone app, emails and text
messages. We plan to install over one million smart
meters over AMP6.
28
ANGLIAN WATER
OUTCOMES IN DETAIL
RESILIENT
SERVICES
SUPPLY MEETS
DEMAND
In the long term, we would like all of our customers to
be metered where it is physically possible. To achieve
this, we may need to consider compulsory metering
in the future, as not everyone will choose to pay on a
meter if they believe it will increase their bills. However,
we do not think that this step would be appropriate at
this time.
? WANT TO KNOW MORE?
See Strategy in focus: Metering.
P32
We agree that paying for what you use is fair, and
encouraging customers to reduce water use also helps
them to manage the cost of water and save money
and energy. Typically, customers who are metered use
less water, which means that we can take and treat less
water from the environment for water supplies. We will
continue to work with our customers to support and
encourage them to reduce their water consumption,
building on our recent campaigns such as Drop 20,
which focuses on changing customer behaviours, the
Potting Shed, which encourages more water-efficient
gardening, and Bits and Bobs, where we install waterefficient devices in homes, for free. We will continue to
work with our business customers to develop tailored
water strategies.
? WANT TO KNOW MORE?
See Strategy in focus: Water efficiency.
P66
FLOURISHING
ENVIRONMENT
A SMALLER
FOOTPRINT
CARING FOR
COMMUNITIES
INVESTING FOR
TOMORROW
FAIR
PROFITS
Allocating expenditure to outcomes:
We have allocated 100% of our capital maintenance to
‘Investing for tomorrow’, because this is about maintaining
our current level of service. Together with operating costs
and retail costs, this expenditure falls into the category
‘Running the business and maintaining services’.
We have not allocated any expenditure to ‘A smaller
footprint’ because this outcome is all about doing things
differently, rather than spending money. We have already
demonstrated that, instead of costing more, reducing our
use of finite resources results in cost savings.
Similarly, we have not allocated any expenditure to ‘Fair
profits’. We believe that a fair profit depends on driving
efficient performance throughout the whole business
rather than increasing costs for customers.
Installing a new meter.
ANGLIAN WATER
OUTCOMES IN DETAIL
29
SATISFIED
CUSTOMERS
FAIR
CHARGES
SAFE, CLEAN
WATER
FAIR
CHARGES
RESILIENT
SERVICES
SUPPLY MEETS
DEMAND
KEY GROUPS
BILLS BALANCE FAIRNESS,
AFFORDABILITY AND VALUE FOR MONEY
Household customers
Household customers
who struggle to pay
Household customers
with a medical need for
more water
BUSINESS GOALS
100% of our customers very satisfied with
our service.
Household customers who
live in rural areas
Frontier performer in the UK.
Business customers
Zero waste. Get it right first time, every time.
Developers
WE THINK THAT...
1.
2.
3.
30
Customers’ understanding
of ‘fair, affordable and value
for money’ will vary, and all
concepts of ‘fair’ are valid,
even if different concepts can
be contradictory.
Perceptions of fairness,
affordability and value for
money derive from many
things. Our understanding of
what drives perceptions of
fairness, affordability and value
for money can be improved.
We will be able to influence
customers’ perception of
fairness, affordability and value
for money.
4.
5.
6.
In water-scarce areas, it is
appropriate for properties to
be metered and for customers’
charges to be based on the
amount of water they consume
(as it encourages water efficiency).
ANGLIAN WATER
OUTCOMES IN DETAIL
Currently, household customers
pay the same price for their water
regardless of where they live,
even though it costs us more to
serve customers in rural areas.
To date, this has been widely
regarded as ‘fair’.
Business customers’ charges
should be cost reflective and
encourage business activity in
the region.
When new houses are built, a
fair proportion of the costs of
providing the infrastructure
required to serve them should be
recovered from developers.
7.
The affordability of household bills,
including water, is increasingly
a concern for many. While only a
subset of our customers struggle
to pay, all customers are affected,
because when some customers do
not pay their bills, the lost revenue
is eventually recovered from those
who do.
8.
In order to ensure that bills
represent value for money, we will
need to operate our business as
efficiently as possible.
FLOURISHING
ENVIRONMENT
A SMALLER
FOOTPRINT
STRATEGY:
FAIR CHARGES
Understanding and improving customer
perceptions of fairness, affordability and
value for money:
Undertake market research to develop
our understanding of how different groups
understand ‘fairness, affordability and
value for money’, and to track changes in
perception over time.
Act upon this deeper understanding
to improve perceptions of fairness,
affordability and value for money.
OUTPUTS
• Research programme.
• Community educational teams.
Metering household customers:
Continue to encourage household
customers to switch to a meter voluntarily
by demonstrating the benefits to them. In
the long term, we may need to consider
compulsory metering but not before 2020.
Proactively replace ‘dumb’ meters that have
reached the end of their economic life with
‘smart’ meters.
OUTPUTS
• Where physically possible, all household
customers are metered.
• Smart meters and monthly meter readings
where appropriate.
Protecting rural household customers:
Work with Ofwat and policymakers to
ensure that geographically averaged bills
are protected and that market reform does
not result in de-averaging of regional
prices, which could lead to steep price
increases for some customers.
OUTPUTS
• Evidence base for policymaking.
Recovering a fair proportion of the cost
of supplying new housing developments:
Where new infrastructure is required to serve
housing developments, we will recover a
proportion of the cost of its provision from the
developer, except where that infrastructure
would be required to address existing capacity
issues within the network regardless of any
proposed developments.
OUTPUTS
• Infrastructure contribution recovered.
CARING FOR
COMMUNITIES
INVESTING FOR
TOMORROW
Ensuring fair charges for business
customers:
Base business customers’ charges on how
much it costs us to serve them. Ensure charges
reflect the costs of providing sustainable
supplies now and in the future.
OUTPUTS
• Dedicated operation to serve business
customers.
• Range of services on offer.
• Business customer tariffs based on
appropriate margin.
Addressing affordability:
Continue to offer the WaterSure and
AquaCare Plus tariffs.
Consider introducing a further ‘Affordability
Tariff’ which will provide a discounted rate
for customers in receipt of income-related
benefits.
Challenge the drivers of bill increases, such
as quality enhancements.
OUTPUTS
• Affordability and WaterSure tariffs promoted
and available.
Continuing to reduce levels of bad debt:
Continue to offer the Anglian Water
Assistance Fund.
Take strong action to recover debt from
customers who are evading making payment.
OUTPUTS
• Payment plans.
• Direct payments.
• Increased contribution to Anglian Water
Assistance Fund.
• Levels of debt reduced.
Running our business efficiently:
Maintain tight financial and budgetary
discipline.
Where cost effective, make investment to
reduce costs through initiatives such as
improving energy efficiency.
Explore all options to ensure the most
appropriate economic and innovative
investment solution is adopted.
Ensure efficient capital delivery through
partnership with our contractors and suppliers.
OUTPUTS
• Efficiency programmes.
• Application of investment principles.
• Robust capital delivery process.
FAIR
PROFITS
OUTCOMES FOR THE
KEY GROUPS
Household customers
Customers recognise that our bills are a fair
way of covering the costs of what we need
to do. Bills are seen to be affordable, and
the service provided represents good value
for money. Levels of bad debt are reduced.
Household customers who struggle
to pay
Well-targeted social tariffs are available
and accessible. There is a robust challenge
of the drivers of bill increases (for example,
higher-quality standards).
Household customers with a medical
need for more water
Customers in receipt of income-related
benefits with medical need for more water
are not penalised for higher consumption.
Household customers who live in
rural areas
In addition to the above, rural household
customers pay the same as urban
customers, regardless of the cost to
serve them.
Business customers
Charges reflect the costs to serve and
the cost of ensuring water resources are
sustainable in the long term. Business
activity in the region is encouraged.
Developers
We recover fair costs from developers for
the infrastructure needed when new houses
are built.
A GOOD OUTCOME
WOULD BE...
Customers recognise that our bills are a
fair way of covering the costs of what we
need to do. Bills are seen to be affordable,
and the service provided represents good
value for money. Tariffs are simple and easy
to understand. We recover fair costs from
developers for the infrastructure needed
when new houses are built.
ANGLIAN WATER
OUTCOMES IN DETAIL
31
SATISFIED
CUSTOMERS
FAIR
CHARGES
SAFE, CLEAN
WATER
RESILIENT
SERVICES
SUPPLY MEETS
DEMAND
STRATEGY IN
FOCUS: METERING
Meters are the fairest way to charge for
water, because customers only pay for
what they use. Having a meter therefore
encourages water saving. On average,
customers with a water meter save
£100 a year, and use 10–15% less
water than customers who pay an
unmeasured charge.
Our approach is to fit meters to all properties in
selected areas (where water supplies are least secure),
but we don’t compulsorily switch customers to pay on
a measured charge (where the bill is based on water
consumption). Instead we offer the option to ‘activate
the meter’, and encourage customers to voluntarily
make the switch by explaining the financial benefits
of paying via a meter. We also offer a ‘switch back
guarantee’, which allows customers to go back to paying
an unmeasured charge at any point up to two years after
the meter is activated. The exception is when properties
change ownership: in this case the new customer is
automatically switched to paying a measured charge.
We have consistently looked to increase the number
of customers who are metered, without making paying
on a meter compulsory. By 2015, we expect that 87%
of households will have a meter fitted and 79% of
customers will pay a measured charge. Our approach
has been to encourage customers to opt for a meter
voluntarily by demonstrating the benefits, rather than
making metering compulsory, which would not make
good sense everywhere (for example, only 30% of our
customers in the Hartlepool region are metered,
because it is in a region in which the supply of water
is more plentiful).
However, we recognise that metering may increase costs
for some groups, and some customers (such as large
families on low incomes) may need additional support.
We will offer a tailored water efficiency service free of
charge, which includes conducting water audits and
fitting water-efficient devices (in areas where water
resources are least secure), or providing DIY water
efficiency packs for all customers.
We intend to continue with our current strategy and
expect that by 2020 95% of households will have a
meter fitted and 88% of household customers will pay
a measured charge. This will result in water savings of
approximately 5.6Ml/d by the end of the AMP6 period.
There is a strong link between our strategy to address
water affordability in our region, and our metering and
water efficiency programmes. The provision of water
efficiency advice to metered customers helps them to
reduce consumption, and consequently their bill.
? WANT TO KNOW MORE?
See Strategy in focus: Water efficiency
P66
Strategy in focus: Addressing affordability and bad debt.
P34
32
ANGLIAN WATER
OUTCOMES IN DETAIL
In the long term, we want all our household customers in
the Anglian region to have a meter and pay a measured
charge where physically possible. Metering is difficult
where properties share a water supply pipe, and
sometimes it is not possible. We estimate that it will be
possible to meter 94–95% of customers in our region
without having to invest in costly new pipework.
In the long term, the option of compulsory metering
may be reconsidered, but customers are generally not
in favour, and we do not think there is a need to do so
before 2020.
Over the long term we will move from using ‘dumb’
mechanical meters to ‘smart’ meters, because they will
allow us to collect more frequent consumption data.
Smart meters can be read by walking or driving past, and
can raise an alert if they record consumption patterns
that indicate leakage or reverse flows (which could cause
water quality issues). Because smart meters can be read
without having to go and look at them (as in the case of
dumb meters), they are much cheaper to read, although
these costs are offset by the cost of sharing more
frequent consumption data with customers.
FLOURISHING
ENVIRONMENT
A SMALLER
FOOTPRINT
CARING FOR
COMMUNITIES
INVESTING FOR
TOMORROW
FAIR
PROFITS
INNOVATION
During AMP6, any new meters that we install will be
smart meters and, as our existing dumb meters reach
the end of their useful life, we will replace them with
smart meters.
Currently, we read meters on average once or twice a
year, but there would be many benefits to having more
frequent consumption information, including:
•
•
The provision of frequent consumption data
to customers.
•
More accurate and responsive leakage detection.
•
A better understanding and management of
peak consumption.
•
More accurate evaluation of the effectiveness of
water efficiency campaigns.
•
Allows informed tariff development.
Informs strategic decision making, for example,
better consumption data can indicate where demand
management activity is likely to be most effective.
It is more expensive to install smart meters. Our
customer engagement programme found that: ‘Across
several (qualitative and quantitative) evidence streams
some household and business customers express
an interest in having more accurate, up to date, and
convenient meter readings to enable them to manage
their use more effectively.’ However, some customers
involved in the deliberative events and the consultation
felt that the costs outweighed the benefits, and that the
company should pay for them.1
In the draft business plan we proposed to continue with
our current approach to increase metering levels, and to
install smart meters. This was considered acceptable by
94% of customers. This very high level of acceptability
was achieved in the context of our draft plan, which
proposed flat bills before inflation. In our final business
plan we are proposing to achieve the same reduction in
leakage whilst reducing bills by 1.8% before inflation. We
therefore believe that we have got the balance right in
our approach to metering.
By installing smart meters we will increase the frequency
of meter reads to once a month. We will provide detailed
consumption information to customers in their bill,
and we will consider making this information available
to customers via an online portal, a smart phone app,
emails and text messages.
1 OPM, Discover, Discuss, Decide: Summary of research into household
and business customer and stakeholder views: version 10, page 31.
ANGLIAN WATER
OUTCOMES IN DETAIL
33
SATISFIED
CUSTOMERS
FAIR
CHARGES
SAFE, CLEAN
WATER
STRATEGY IN
FOCUS: ADDRESSING
AFFORDABILITY AND
BAD DEBT
The affordability of household bills,
including water, is increasingly a concern
for many. The majority of our customers
do not experience difficulty paying
their water and sewerage bill. However,
affordability issues indirectly affect all of
our customers because the cost of unpaid
bills is loaded onto the bills of customers
who do pay.
The term ‘water affordability’ describes the ability of
household customers to pay their water and sewerage
bills given competing demands on tight budgets. As
a concept, ‘affordability’ is inherently subjective and
this makes it difficult to quantify an ‘affordable bill’. For
individual customers, the affordability of their water and
sewerage bills depends on a range of factors, including
how households prioritise their spend, and what other
demands are made on their household income.
Addressing water affordability in our region:
We have a comprehensive package of measures to
address water affordability, which includes:
•
•
Offering a variety of tariffs that are designed to help
customers on low incomes, and proactively ensuring
that customers are on the most appropriate tariff for
their individual circumstances.
•
Providing metering and water efficiency advice
to help customers reduce their consumption, and
consequently their bill.
An industry-leading approach to the management
and payment of bills, which includes the provision of a
series of payment options.
34
ANGLIAN WATER
OUTCOMES IN DETAIL
•
RESILIENT
SERVICES
SUPPLY MEETS
DEMAND
Offering the Anglian Water Assistance Fund to help
customers who have fallen into debt get back on track.
This strategy has proven successful during AMP5 and we
will continue to build upon it during AMP6. Despite the
increasing pressure on household budgets resulting from
the economic crisis, we have reduced levels of bad debt
from 3% of our revenue in 2010–11, to 2.7% in 2012–13.
Tariffs:
We will continue to offer our AquaCare Plus tariff and
the national WaterSure tariff.
•
•
In 2001–02 we introduced our AquaCare Plus tariff,
which is designed to help large families on low
incomes. It is available to customers who are metered
and eligible for certain income-related benefits.
Subsequently, the Government introduced the national
WaterSure tariff, which we are required to offer by law.
It is available to customers who are metered, eligible
for certain income-related benefits, and either:
– Receive Child Benefit for three or more children
under the age of 19 who are in full-time education
and living at the property.
– Or, have a medical condition that requires them to
use large amounts of water.
In response to the economic crisis, we have been
proactively checking customers’ tariff arrangements
and placing them on the tariff most appropriate to their
circumstances. Consequently, the number of customers
on the WaterSure and AquaCare Plus tariffs has
increased markedly since 2009.
Number of customers on WaterSure and
AquaCare Plus tariffs
FLOURISHING
ENVIRONMENT
A SMALLER
FOOTPRINT
CARING FOR
COMMUNITIES
INVESTING FOR
TOMORROW
FAIR
PROFITS
An industry-leading approach to the
management and payment of bills:
We are also proposing to provide additional support
through the introduction of a new social tariff from
1 April 2015. We are proposing that customers who
have been independently assessed by a third-party
advisory agency as needing additional support will be
able to access a discounted tariff. We are in preliminary
discussions with the Citizens Advice Bureau about
the process for carrying out assessments and we will
be carrying out further customer consultation on this
proposal, as required by legislation, over the next
few months.
We have implemented a sophisticated debt management
system and are working with leading debt collection
specialists to make progress in this area, including the
appropriate sharing and use of credit reference data.
Although we continue to have significant numbers of
customers who do not pay their bills, we have made
progress reducing the total level of bad debt. In 2010–11,
we provided 3% of our revenue against non-payment of
bills, which we reduced to 2.7% in 2012–13.
Our debt management programme:
COLLABORATION
We offer a full range of payment options and ensure that
our payment arrangements are as flexible as possible for
those vulnerable customers who want to pay their bill
but struggle to do so.
•
Metering and water efficiency advice:
Early diagnosis: We encourage customers who find
themselves in difficulty to contact us as early as
possible through our dedicated freephone helpline.
We believe that meters are the fairest way to charge for
water, because customers only pay for what they use.
We have consistently looked to increase the number
of customers who are metered, without making paying
on a meter compulsory. We intend to continue with
our current strategy and expect that by 2020 95%
of households will have a meter fitted and 88% of
household customers will pay a measured charge.
? WANT TO KNOW MORE?
See Strategy in focus: Metering.
P32
We will continue to link our metering and water
efficiency campaigns, and to work with all our
customers to support and encourage them to
reduce their water consumption.
? WANT TO KNOW MORE?
See Strategy in focus: Water efficiency.
P66
•
•
Effective recovery: Where possible, we engage with
customers to agree affordable payment options.
When a customer is eligible for income-related
benefits, we will seek to collect Direct Payments from
the Department for Work and Pensions.
Tough action where required: We place a strong
focus on the collection of customer debts and use all
available recovery procedures, including external debt
recovery agents and county court action.
Anglian Water Assistance Fund:
Where customers are experiencing financial hardship
but are not eligible for income-related benefits, we
will offer them help to clear debts through the Anglian
Water Assistance Fund (AWAF). The fund is available
to customers who have debts older than 18 months and
who can afford to pay their on-going bills but cannot
afford to clear the debt. The fund is administered
independently by a company called Charis Grants that
specialises in grant making from charitable funds. We
currently provide £750,000 to the fund each year and
we are proposing increasing this to £1 million per annum
from 1 April 2015.
ANGLIAN WATER
OUTCOMES IN DETAIL
35
SATISFIED
CUSTOMERS
FAIR
CHARGES
SAFE, CLEAN
WATER
RESILIENT
SERVICES
SUPPLY MEETS
DEMAND
MEASURES AND
INCENTIVES
Existing incentives
Key behaviours
Maintaining a good relationship with our customers
is our strongest incentive to deliver this outcome; a
perception that bills were anything other than fair,
affordable and value for money would damage that
relationship. Throughout this plan, we have emphasised
the importance of collaboration. We cannot achieve the
outcomes without the active support of our customers
and others; therefore, it is important that everything we
do is seen to be legitimate and reasonable.
In order to deliver this outcome we will need to
be more transparent about our charges, services
and performance.
In addition, the Consumer Council for Water, which
represents customers’ interests, will continue to put
pressure on us to ensure bills are fair, affordable and
offer value for money.
Finally, there is an incentive to ensure bills are
affordable because of the link between affordability
and bad debt. Although there are many factors that
contribute to the level of bad debt, ensuring that our
bills are affordable is an important part of reducing the
debt burden.
Currently, we have a limited understanding of how
customers judge fairness, affordability and value for
money, and how their perceptions are affected by our
tariffs and our performance as a company. We will need
to improve our understanding of what drives customer
perceptions in these three areas.
We will then be able to take specific action to improve
perceptions of fairness, affordability and value for
money, based on this better understanding.
Perceptions of these factors are subjective and
we would expect this to vary between different
customer groups and even between customers within
groups. There are significant tensions between these
perceptions. Regularly measuring these perceptions
will guide our behaviour with these tensions in mind.
For example, we will be able to measure the effects of
social tariffs on perceptions of fairness.
Value to customers
We are conscious of customer concerns about
legitimacy, prices and profits. Affordability has been a
key theme from our consultations with customers, and
clearly we are attempting to address this, managing the
overall bill level, and through improving affordability for
customers who struggle to meet our costs through social
tariffs. But customers are also keen that core services
are maintained, so it is not just a case of reducing costs,
but of delivering value for money as well. Finally, by
measuring perceptions of fairness we can ensure that
actions taken to reduce bills for some customers are
broadly perceived to be fair and acceptable.
36
ANGLIAN WATER
OUTCOMES IN DETAIL
FLOURISHING
ENVIRONMENT
A SMALLER
FOOTPRINT
CARING FOR
COMMUNITIES
INVESTING FOR
TOMORROW
FAIR
PROFITS
Proposals
We will add to these existing incentives by introducing
a survey to measure customer perceptions of fairness,
affordability and value for money, and to explore
what lies behind these perceptions. We will publish
the results of the survey, which act as a reputational
incentive to improve them. The design of the survey,
and the appropriate frequency and wording of
questions will be developed with expert input, and
then independently run on our behalf. We anticipate
publishing an annual result. This survey will be
conducted for the whole service (water, sewerage and
retail) as each part of the business can have an effect
on perception, and it is not clear how this could be
allocated amongst different controls.
Financial incentives are not appropriate for these
measures given their novel nature, uncertainty and
difficulty in deriving economic analysis on which to
build an incentive.
At this stage, we do not think that it is appropriate
to set individual committed levels of performance
against these measures since they are new measures
and improvements may come in unexpected ways. In
fact, there may be a degree of trading off performance
between the three perceptions if, for example,
improving affordability is achieved through introducing
tariffs that some customers do not consider to be fair
(but the majority do). Nevertheless, we aim to see
improvements in each measure within the five-year
period to 2020 over the end of the AMP5 baseline.
There are risks that customer perception may be
affected by factors outside our control. However, this
can be mitigated through effective engagement with
our customers and understanding what is important to
their perception, and through the provision of a valued,
high-performance service at an affordable price.
COMMITTED PERFORMANCE LEVELS AND INCENTIVES
End of AMP5
prediction
2014–15
Committed
Performance
Level
2019–20
Price control
Measure of success
Incentive type
Units
Survey of customer
perception of
fairness of bills
Reputational
–
We have
not yet
commenced
the survey
Improvement
over 2014–15
baseline
Whole
business
Survey of customer
perception of
affordability
Reputational
–
We have
not yet
commenced
the survey
Improvement
over 2014–15
baseline
Whole
business
Survey of customer
perception of value
for money
Reputational
–
We have
not yet
commenced
the survey
Improvement
over 2014–15
baseline
Whole
business
ANGLIAN WATER
OUTCOMES IN DETAIL
37
SATISFIED
CUSTOMERS
FAIR
CHARGES
SAFE, CLEAN
WATER
RESILIENT
SERVICES
SUPPLY MEETS
DEMAND
SAFE,
CLEAN WATER
DRINKING WATER IS SAFE, CLEAN AND ACCEPTABLE
CUSTOMERS SAID...
“Delivering high quality, safe, clean drinking water is
a fundamental expectation of the company. All clean
water attributes are seen as very important, but
taste, odour and discolouration are mentioned most
frequently. Customers want to know immediately if
changes are likely to have health impacts.
Current water quality is generally regarded as
good. The most frequent problems relate to the
aesthetic quality of tap water. Customers are least
satisfied with the hardness of tap water, and there
are some concerns about the costs associated with
damage to household appliances. However many
customers seem to accept this is a feature of the
local environment. Opinion is divided about whether
future investment is needed in this area or not.
Many customers find the issue of catchment
management difficult to understand; some
would like more information. There is support for
prevention (as being better than cure). However,
opinion is divided about whether catchment
management is a sound approach. Even those who
support it tend to express some concerns or caveats
(e.g. about the strength of the evidence base, the
likelihood of success, and the potential impact on
customer bills).
Opinion is divided about whether Anglian Water has
a leading role to play in catchment management.
Government, statutory agencies, supermarkets and
farmers are also seen to have a role, working in
partnership with the company.
38
ANGLIAN WATER
OUTCOMES IN DETAIL
There are a range of concerns about paying farmers
to change their behaviour (including a view that this
is not fair, is not likely to influence practice, and may
have unintended consequences).”
Quoted from the report Discover, Discuss, Decide:
Summary of research into household and business
customer and stakeholder views: version 10, prepared by
OPM on behalf of Anglian Water. The report is available at:
www.discoverdiscussdecide.co.uk.
OPM is an independent organisation that specialises in market research.
WE WILL...
Delivering a reliable supply of safe, clean drinking water
is fundamental to everything we do. We will continue
to ensure that we achieve excellent compliance with
legal standards and that our drinking water remains
among the best in the world. We believe that open
and honest communication is essential to earning and
maintaining public confidence and we will continue with
our current policy of informing customers, regulators and
stakeholders immediately if there are any issues that may
affect human health.
We will continue to make sure that our drinking water
is safe and wholesome, and maintain our excellent
record of compliance with legal standards. We will
tackle localised problems with the taste, smell or colour
of tap water. We will continue with campaigns such as
our Keeping Water Healthy initiative to raise awareness
of how customers can look after drinking water in the
home. We will work with the plumbing industry to raise
awareness of water quality problems that can result from
faulty domestic plumbing, and to promote WaterSafe,
the national approved plumbers scheme.
FLOURISHING
ENVIRONMENT
A SMALLER
FOOTPRINT
CARING FOR
COMMUNITIES
INVESTING FOR
TOMORROW
FAIR
PROFITS
We have thought carefully about whether to invest to
reduce the hardness of water. While some customers
find hard water inconvenient or unpleasant, many others
recognise that hard water is a feature of the local area.
Altering water hardness is very expensive and would lead
to bill increases. Our research suggests that customers
are not willing to pay for this. We do not plan specific
investment to alter hardness of water, but we will
continue to help customers with information and advice.
We will implement our integrated catchment
management strategy. This aims to provide value for
money by seeking opportunities to address multiple
problems at the same time. Our team of catchment
officers will work with farmers and land managers to
ensure that best practice is understood and implemented
at farm level. We will also work in partnership with others
including the Environment Agency and supermarkets at
a regional and national level.
In some high-risk catchments, we will investigate how
farmers might be incentivised to use alternative plant
protection products, or we may make direct investment
in third-party assets.
Allocating expenditure to outcomes:
We have allocated 100% of our capital maintenance to
‘Investing for tomorrow’, because this is about maintaining
our current level of service. Together with operating costs
and retail costs, this expenditure falls into the category
‘Running the business and maintaining services’.
We have not allocated any expenditure to ‘A smaller
footprint’ because this outcome is all about doing things
differently, rather than spending money. We have already
demonstrated that, instead of costing more, reducing our
use of finite resources results in cost savings.
Similarly, we have not allocated any expenditure to ‘Fair
profits’. We believe that a fair profit depends on driving
efficient performance throughout the whole business
rather than increasing costs for customers.
ANGLIAN WATER
OUTCOMES IN DETAIL
39
SATISFIED
CUSTOMERS
FAIR
CHARGES
SAFE, CLEAN
WATER
RESILIENT
SERVICES
SUPPLY MEETS
DEMAND
SAFE,
CLEAN WATER
KEY GROUPS
Household customers
DRINKING WATER IS SAFE, CLEAN AND ACCEPTABLE
Business customers
Drinking Water
Inspectorate (DWI)
BUSINESS GOALS
100% of our customers very satisfied with our service.
No incidents.
Plumbers, developers
and building managers
Land managers and the
agricultural community
Frontier performer in the UK.
No pollutions.
Environmental regulators
Pioneer responsible water stewardship.
WE THINK THAT...
1.
2.
40
The provision of safe clean
drinking water is consistently
rated by customers as the most
important service that we provide.
Given the importance customers
place on safe clean drinking
water, the level of risk that we are
prepared to accept on behalf of
our customers is very low.
Drinking water quality is our
highest priority and we go to
considerable lengths to ensure
that our drinking water is both
safe and acceptable to our
customers. We work closely
with our regulators to achieve
excellent compliance with quality
standards. But, there are new
challenges in drinking water
quality that we need to respond
to, and we will need to collaborate
with others in order to address
them effectively.
ANGLIAN WATER
OUTCOMES IN DETAIL
3.
4.
The fertilisers and pesticides
that farmers use to improve their
yields and protect their crops
can be a problem for us if they
get into water sources, such
as rivers and reservoirs. If this
happens we need to use complex,
expensive treatment processes
to make sure water is safe to
drink. If we work with farmers,
the environmental regulators,
manufacturers and others, we
can stop pollutants getting into
the water in the first place.
Medical advice suggests that the
lead can be harmful if excessive
levels are allowed to build up
in the body, and that pregnant
women and young children are
most vulnerable. Our water is
lead free when it leaves our water
treatment works. However, lead
can dissolve into the water from
lead pipes in our network and in
customers’ properties.
5.
6.
7.
There are strong regulatory
expectations for us to minimise
the risk of disinfection byproducts (DBPs) in our
drinking water. DBPs form
when the chlorine we use to
disinfect drinking water reacts
with naturally occurring
materials in the water. We need
to better understand DBP
formation, so that we can keep
levels to a minimum.
Customers’ own plumbing
arrangements, in domestic,
business and industrial premises,
can have a significant impact on
the safety and quality of water
within buildings, and can, in some
circumstances, present a risk to
other customers supplied through
our network of pipes.
Although the hardness of water is
a common complaint, it would be
very expensive to reduce it and
the extra costs are not supported
by customers. Consequently,
we do not plan to reduce the
hardness of our drinking water.
FLOURISHING
ENVIRONMENT
A SMALLER
FOOTPRINT
CARING FOR
COMMUNITIES
INVESTING FOR
TOMORROW
FAIR
PROFITS
STRATEGY:
SAFE, CLEAN
WATER
Put Drinking Water Safety Plans at the
heart of our management of water quality:
Minimising disinfection by products
(DBPs):
Ensure that drinking water quality remains
our highest priority and this is reflected
in quality management and governance
processes, including regular board
engagement in water quality performance,
a comprehensive lessons-learnt process
and a robust process for internal challenge.
Improve our understanding of how DBPs
form through modelling and use of latest
available science. Minimise the formation
of DBPs through further optimisation of
our treatment works and investigating the
effectiveness of alternative disinfection
methods such as ultra-violet light.
OUTPUTS
• Regular board engagement.
OUTPUTS
• Modelling and use of latest science.
• Internal challenge and lessonslearnt process.
• Treatment works that are better optimised.
• ISO 9001 certification of our quality.
• Competent people at all levels.
Building confidence with our customers:
Continue to cultivate a trusting relationship
with our customers through open and
honest communication on drinking water
quality. Maintain excellent relationships
with regulators and external stakeholders
(such as health professionals, local
authorities, the Consumer Council for
Water and the Environment Agency)
through achieving compliance with
standards, and open communications.
• New processes at selected sites.
Protecting customers from the effects of
lead pipes:
Continue dosing orthophosphoric acid to
prevent lead leaching into water, replacing
lead pipes in our network and using
innovative solutions such as pipe relining.
Work in partnership with health professionals
and housing associations to raise awareness
about the potentially harmful effects of lead
(targeted to customers most vulnerable to
lead). Pilot a lead supply pipe replacement
programme that will make grants to
household customers.
OUTPUTS
• Clear, understandable and accessible
drinking water quality information.
OUTPUTS
• Orthophosphoric acid dosing to minimise
the ability of water to dissolve lead.
• Open performance reporting.
• Pipe replacement and relining.
• Excellent relationships with the DWI and
external stakeholders.
• Strategic partnerships with health
authorities and housing associations.
• Lead supply pipe replacement pilot.
Integrated catchment management
(working with others to protect water in
the environment):
Drive integrated catchment management
approaches within our region to reduce
the need for carbon-intensive water and
wastewater treatment solutions. Work to
change practices within catchments to stop
pollutants entering water sources. This
will involve working with land managers
(including farmers), the Environment Agency,
supermarkets and others to ensure best
practice is understood and implemented.
OUTPUTS
• Catchment-based advice and education at
farm level (all surface water catchments).
• Modelling and investigatory work.
• Investigate product substitution in selected
higher-risk catchments.
Managing water in buildings:
Continue to work with the plumbing
industry to promote the nationally
approved plumbers’ scheme WaterSafe.
Inspect high-risk business, and public
and domestic properties, and ensure that
any infringements are promptly rectified.
Raise awareness of the negative impacts
faulty plumbing can have upon drinking
water quality among plumbers, buildings
managers and our customers. Support
developers to ensure that innovative water
efficiency measures installed into new
homes do not adversely impact drinking
water quality.
OUTPUTS
• National WaterSafe approved plumbers
scheme embedded within our region.
• An effective risk-based programme of
building inspection.
• Keep Water Healthy campaign.
• Effective partnerships with
buildings managers.
OUTCOMES FOR THE
KEY GROUPS
Household customers:
Drinking water is safe, clean and
acceptable to drink and use. Customers
have confidence in the quality of their tap
water, and can easily access advice and
information about it.
Business customers:
In addition to the above, business
customers can access specialist advice
and services if required.
Drinking Water Inspectorate (DWI):
Legal obligations and policy objectives
are met. The DWI has confidence that our
water is clean and safe. This in turn will
give our customers confidence in
our water.
Plumbers, developers and buildings
managers:
These groups understand the risks to
the quality of water within buildings, and
the steps which need to be taken to reduce
these risks.
Land managers and the agricultural
community:
These groups understand how their activities
may impact on raw water quality, and work
with us in partnership to adopt sustainable
approaches to land management.
Opportunities for mutual benefits obtained
from good practice are maximised.
Environmental regulators:
Water sources are protected and pollution
is minimised. Legal obligations and policy
objectives are met.
A GOOD OUTCOME
WOULD BE...
Customers are confident that their water
is always clean and safe to drink and
use. Water sources are used wisely
and protected properly and all legal
requirements are met.
ANGLIAN WATER
OUTCOMES IN DETAIL
41
SATISFIED
CUSTOMERS
FAIR
CHARGES
SAFE, CLEAN
WATER
STRATEGY IN
FOCUS: INTEGRATED
CATCHMENT
MANAGEMENT
A catchment is the area of land that
is drained by a single river system. All
human and natural activity on land
within a catchment has the potential to
affect the quality of the water within the
catchment, which in turn can impact upon
the water taken from the catchment to
provide drinking water.
RESILIENT
SERVICES
SUPPLY MEETS
DEMAND
Integrated catchment management refers to a joined-up
range of actions that seek to influence practices
(by farms, businesses and households) within the
catchment to stop pollutants entering the water
environment and, more generally, to manage the health
of the catchment in a more holistic way.
Over the last five years, we have conducted work to
develop our understanding of the physical properties of
the catchments in our region, the origin and transport
of pollutants within them, and how this is affected by
land management practices. We have also been working
with a range of stakeholders to raise awareness of the
problem and to ensure that best practice is understood
and implemented.
Our integrated catchment management strategy aims
to address a range of water quality issues in selected
catchments, including the impact of pesticides and
fertilisers, low flows and discharges to the environment.
Our approach has been designed to offer value over
the long term by tackling problems at source where
it is more cost effective, and seeking opportunities to
address multiple problems at the same time.
We will therefore take forward these initiatives by
adopting a tiered approach of implementing measures
appropriate to the catchment and the pollutant. This
will range from direct interventions in the small number
of natural catchments that feed our major reservoirs,
to working at a national and regional level to influence
policy and direct the actions of third parties.
COLLABORATION
42
ANGLIAN WATER
OUTCOMES IN DETAIL
FLOURISHING
ENVIRONMENT
A SMALLER
FOOTPRINT
CARING FOR
COMMUNITIES
INVESTING FOR
TOMORROW
FAIR
PROFITS
COMMON CATCHMENT ISSUES:
Two chemicals that have a substantial impact on the
quality of water we abstract for drinking water are
metaldehyde and nitrate. In addition, phosphorous
and the bacteriological load impact the quality of the
water environment, and will need to be addressed to
meet European Union standards on water quality.
Metaldehyde is a pesticide which is commonly
spread on agricultural land to control slugs.
We are required to remove this from drinking water
but the treatment processes are expensive and
energy intensive.
Nitrate originates from fertilisers used by farmers
and from animal manure. There is no commercially
practical alternative to nitrogen fertilisers, and the
only way to significantly reduce the level of nitrate
entering groundwater systems is to convert arable
land into rough pasture or woodland, with the
consequent loss of agricultural output. There are
well-established treatment processes available to
remove nitrogen from drinking water.
Phosphorous in water can originate from a variety of
sources, including laundry detergents, fertilisers used
by farmers and rainwater that washes off roads and
urban areas.
The bacteriological load is the measurable number
of bacteria in a unit of water. Bacteria can enter the
water from a variety of sources, including treated
sewage effluent and animal waste (for example, from
livestock, dogs or seagulls). The EU Bathing Waters
Directive sets out strict standards for the number of
bacteria in bathing waters.
OUR INTEGRATED CATCHMENT MANAGEMENT STRATEGY
Level
Farm and
field level
Issue
We will...
Metaldehyde
Investigate the effectiveness of incentivising farmers to use an
alternative product (ferric phosphate) in a few selected high-risk
catchments.
Phosphorous and
bacteriological load
Pilot the effectiveness of funding investment in third-party assets in
high-risk catchments.
Encourage use of buffer strips and cattle watering stations.
Catchment and
farm level
Metaldehyde, nitrate,
phosphorous and
bacteriological load
Work with farmers, provide on-farm advice and education and
conduct catchment monitoring.
Phosphorous and
bacteriological load
Run focused customer awareness and education campaigns to
reduce phosphorous use.
Liaise with local councils to improve quality of urban run-off, and
with others (for example, pier owners) to identify and implement
appropriate measures to reduce bacteriological loading associated
with their assets.
Regional and
national level
Metaldehyde, nitrate,
phosphorous and
bacteriological load
Continue to work closely with a range of stakeholders (including
Defra, the Environment Agency, the National Farmers’ Union, the
Metaldehyde Stewardship Council, environmental NGOs and others).
Develop opportunities to work with supermarkets to influence
agricultural practices.
Continue to develop and maintain our catchment models, and
improve our understanding of the catchments in our region.
Lobby for better regulatory controls of metaldehyde use.
ANGLIAN WATER
OUTCOMES IN DETAIL
43
SATISFIED
CUSTOMERS
FAIR
CHARGES
SAFE, CLEAN
WATER
RESILIENT
SERVICES
SUPPLY MEETS
DEMAND
STRATEGY IN
FOCUS: TASTE,
SMELL AND COLOUR
OF WATER
We work hard to ensure that our drinking
water is safe, clean and acceptable to our
customers, and we consistently achieve
excellent compliance with legal standards.
Issues with safety and cleanliness are
therefore extremely rare and we have very
rigorous procedures for ensuring public
safety in such circumstances.
Customers do sometimes experience problems with the
taste, smell and colour of tap water. However, these are
quite rare. We supply drinking water to over 1.9 million
households, and in 2012 we received fewer than 4,000
complaints relating to discoloured and cloudy water
and fewer than 1,000 complaints relating to taste and
odour. Our strategy aims to further reduce the number
of such complaints.
•
Variations in chlorine levels (the variation makes them
more noticeable to customers).
•
TCP-like tastes that result when chlorine in
drinking water reacts with rubbers and plastics in
household appliances.
Problems that result from domestic plumbing
arrangements.
44
ANGLIAN WATER
OUTCOMES IN DETAIL
99.96
99.98
99.96
99.96
99.96
99.96
2007
2009
2010
2011
2 0 12
Water can become discoloured when:
•
•
Sediment that has collected in a water main is
disturbed by a change in water velocity (for example,
following a burst).
Galvanised pipework deteriorates at
individual properties.
Water can look cloudy:
Some of the main causes of unusual or unpleasant tastes
and smells are:
•
2008
Drinking water
%
quality performance
•
•
When air enters a water main following a burst.
Due to domestic plumbing arrangements, such as hot
and cold pipes next to each other.
We use chlorine to disinfect water so that it stays safe to
drink as it travels through the pipes between our water
treatment works and customers’ taps. Chlorine can react
with naturally occurring materials in the water to form
disinfection by-products which affect the taste and smell
of the water.
FLOURISHING
ENVIRONMENT
A SMALLER
FOOTPRINT
CARING FOR
COMMUNITIES
INVESTING FOR
TOMORROW
FAIR
PROFITS
COLLABORATION
As part of our strategy to drive down leakage, we will
use pressure management techniques to reduce the
number of burst mains. This will also help to reduce the
problem of cloudy water, as reducing the incidence of
burst mains will reduce the opportunities for air to get
into our network.
? WANT TO KNOW MORE?
See Strategy in focus: Leakage.
P68
For more information on drinking water quality, you can
download our Drinking Water Quality Report at:
www.anglianwater.co.uk/about-us/annual-reports
KEEP WATER HEALTHY INSIDE YOUR HOME
DS
SOFTENIN
GB
EA
Water arrives at your tap clean and safe but sometimes it can get contaminated
around the home, here are some great tips to keep your water healthy:
A matter
of taste
Keep
it clean
Disinfect taps
regularly to
kill harmful
bacteria
Clear
and
simple
Tiny air
bubbles
in water
can make
it cloudy.
Lagging
your pipes
can help.
Be bold
with mould
Mould
thrives in
warm, damp
environments.
Improving
ventilation
can help.
Clear and
simple
If you have
a water
softener
make
sure it’s
maintained
and serviced
regularly.
Hot water
storage
tank
TIP
4
PAVEMENT
Water
softener
The taste
of your
water can
be affected
by chlorine
reacting
with your
plumbing and
appliances.
Simple steps
can put this
right.
W
EP AT
H
EA
ER
KE
Customers’ own plumbing arrangements in domestic,
commercial and industrial premises can have a
significant impact on the safety and quality of water
they draw from the tap. We have therefore launched a
Keeping Water Healthy campaign, which encourages
customers to look after water in their own homes.
For instance, it raises awareness of the problems
that can result from faulty or inappropriate plumbing
arrangements, and how to resolve them. Campaigns
similar to this will continue. We will also work with the
plumbing industry to promote WaterSafe, the nationally
approved plumbers scheme.
We will continue with our programme of regular mains
flushing to reduce the build-up of sediment in our
network and to minimise stagnation at dead-end mains.
LT H
Y
Over the last decade, we have made improvements
to our chlorine disinfection processes and this has
helped reduce the number of chlorine-related issues
we deal with. We will continue to investigate alternative
disinfection processes, such as ultra-violet light
treatment. This should further reduce taste and odour
problems associated with chlorine and TCP-type tastes
and odours, as the amount of chlorine in drinking water
that is free to react with household appliances should
be reduced.
For more tips and advice visit
anglianwater.co.uk/keepwaterhealthy
ANGLIAN WATER
OUTCOMES IN DETAIL
45
SATISFIED
CUSTOMERS
FAIR
CHARGES
SAFE, CLEAN
WATER
RESILIENT
SERVICES
SUPPLY MEETS
DEMAND
MEASURES AND
INCENTIVES
Existing incentives
Key behaviours
The Drinking Water Inspectorate (DWI) adequately
incentivises compliance with our statutory obligations
through both reputational (for example, publishing
compliance statistics) and financial (for example,
enforcement action or prosecutions) incentives.
Such incentives work well in ensuring that we meet
our statutory obligations to provide safe, clean and
acceptable drinking water. The DWI Chief Inspector’s
report is published annually and compares compliance
and performance across the industry, with in-depth
commentary on trends and significant drinking water
quality events. We sample our drinking water supplies
and raw water sources and submit over 700,000
biological and chemical results to the DWI annually.
These results enable DWI to judge compliance with
Drinking Water Standards. Some of the statistics
published by the DWI are below.
The safety of our customers and employees is our
highest priority. Consequently, drinking water quality is
our primary concern. This is evident from our historical
performance on drinking water compliance, risk
management and response to threats to drinking water
quality when they occur. Maintaining high standards
of drinking water quality is central to our operations.
For example, each week key senior managers meet to
discuss water quality, including our Chief Executive
and Director of Water Services. This level of focus
ensures that every compliance issue or water quality
event receives attention at the highest level within our
company. We also ensure that any of our people who
are involved in the supply of safe, clean drinking water
undergo comprehensive training and competency
assessments through our industry-leading ‘Licence
to Operate’ and scientific chartership programmes.
Drinking water quality is so central to our company
ethos, that in effect, every day, ‘we just do this’.
We are also required to produce and maintain
Regulation 28 Risk Reports, which enable us to manage
risks to drinking water quality from source to tap in
each of our supply systems. Our risk assessments
are also provided to and scrutinised by the DWI. Our
drinking water quality is amongst the best in the
industry and we have stayed at the forefront of water
quality risk management systems.
When investment is required to ensure current or future
compliance, it is tied to legal instruments by the DWI.
2010
2011
2012
Industry
average
2012
Overall drinking water quality
(Mean Zonal Compliance (MZC))
99.96%
99.96%
99.96%
99.96%
Process Control Index
100%
100%
100%
99.99%
Disinfection Index
99.99%
99.99%
99.99%
99.97%
Distribution Maintenance Index
99.81%
99.95%
99.93%
99.88%
Reservoir Integrity Index
99.97%
99.97%
99.97%
99.95%
Source: Drinking Water 2012:
A report by the Chief Inspector
of Drinking Water
46
This goes beyond compliance with drinking water
standards. We strive to reduce the small numbers of
complaints we receive about our drinking water, and
complaint numbers have shown strong downward
trends over recent years. We also pride ourselves on
the information we provide to our customers and
stakeholders, with detailed and specific drinking water
ANGLIAN WATER
OUTCOMES IN DETAIL
Anglian Water
FLOURISHING
ENVIRONMENT
A SMALLER
FOOTPRINT
CARING FOR
COMMUNITIES
INVESTING FOR
TOMORROW
FAIR
PROFITS
Value to customers
quality information available by post code searches
on our website, and through advice such as our Keep
Water Healthy leaflets. This information reassures
our customers about the safety of their drinking
water, gives tips on how to ensure that drinking water
remains safe and acceptable within their home and also
provides useful information on hardness when installing
domestic appliances.
Understandably, our provision of quality, safe, clean
drinking water is a fundamental customer expectation,
and customers in general regard water quality as good.
This aligns with our approach, which is to continue to
give the provision of safe, clean drinking water our top
priority, and that further incentives are unnecessary to
achieve this outcome.
However, there is no room for complacency. We want to
go further, and that is why we are proposing to lead the
way in working with the DWI to promote and improve
the quality of drinking water within buildings. We are
also planning to work closely with the DWI and the
scientific community to better understand the emerging
issue of disinfection by products (DBP), and working
to reduce their formation without compromising
disinfection. Our catchment management strategies
also aim to identify innovative ways to deal with
drinking water quality at source, rather than relying
on expensive treatment. In all these cases, we do not
feel that any additional incentives are required: we are
doing this anyway, because it is the right thing to do.
The existing regulatory framework encourages us to do
this and will ensure that any customer money invested
in these activities is effective in achieving the outcomes
our customers want.
We believe that no additional incentive is required to
ensure we deliver against this outcome.
Proposals
COMMITTED PERFORMANCE LEVELS AND INCENTIVES
Measure of success
Incentive type
Units
End of AMP5
prediction
2014–15
No additional
measures proposed
Incentivised
through DWI
measures and
enforcement
–
–
Committed
Performance
Level
2019–20
Price control
–
Water
ANGLIAN WATER
OUTCOMES IN DETAIL
47
SATISFIED
CUSTOMERS
FAIR
CHARGES
SAFE, CLEAN
WATER
RESILIENT
SERVICES
OUR SERVICES COPE WITH THE EFFECT
OF DISRUPTIVE EVENTS, IN PARTICULAR
INCREASINGLY SEVERE WEATHER EVENTS.
WE PLAN AHEAD FOR THE IMPACTS OF OUR
CHANGING CLIMATE.
CUSTOMERS SAID...
“There is recognition of increasing pressures on the
water system and the specific vulnerability of the
region, in particular associated with housing growth
and changing weather patterns.
RESILIENT
SERVICES
SUPPLY MEETS
DEMAND
want clear evidence the company is doing their
bit to tackle leaks (rather than simply imposing
restrictions on them).
Flash flooding and river flooding are seen to be
increasing and there is a particular concern about
the potential impact of housing development on this.
Customers attach greater value to the prevention
of internal flooding than external flooding. Most
customers feel that flooding of treatment works
would be highly disruptive and should be protected
against. Customers want the company to work in
partnership with government and local planning
authorities to manage housing demand and improve
flood management.”
Quoted from the report Discover, Discuss, Decide:
Summary of research into household and business
customer and stakeholder views: version 10, prepared by
OPM on behalf of Anglian Water. The report is available at:
www.discoverdiscussdecide.co.uk.
OPM is an independent organisation that specialises in market research.
Customers want the company to take preventative
action and engage in long-term planning to build
resilience. They also want to know it is working in
partnership and learning from other regions and
countries. Opinion seems to be divided about future
investment in this area; some customers want the
company to continue to invest at approximately
current rates (while keeping bill increases to a
minimum), while similar proportions would like to
increase spend.
Severe water restrictions (such as rota cuts and
standpipes) are one of the most unwanted of all
service failures. Customers are willing to pay to avoid
these failures and don’t expect to experience these in
their lifetime. For all types of disruptions (hosepipe
bans, non essential use bans, and rota cuts/
standpipes) frequency of disruption is regarded as
more important than duration. However, customers
want to know how long a ban or interruption is likely
to last so they can plan around this.
There is widespread confusion about why the
hosepipe ban in 2012 was necessary after recent
rainfall. However, while some customers express
frustration, the majority say they are happy with the
frequency of restrictions during period of drought.
Although most householders have a leisure activity
likely to be affected by shortages (car washing and
maintaining gardens are most commonly identified),
most household customers said they were not
inconvenienced by the 2012 ban when it was in place.
Leaks are seen as a key reason why interruptions are
sometimes necessary in the first place. Customers
48
ANGLIAN WATER
OUTCOMES IN DETAIL
WE WILL...
As an essential service provider we have put in place
mechanisms to improve resilience across our assets and
region. Our approach to resilience has been recognised
as industry leading, and we’re the only utility to have
fully embraced the business continuity recommendations
of the Pitt Review, and we adopted BS 25999 before the
transition to ISO 22301.
In addition to improving asset protection, we think about
how we work, what risks we need to manage and what
layers of resilience we need. We work with suppliers,
partners and Local Resilience Forums to ensure we are
including all the agencies and communities we work
with. Part of this approach has been the formation of the
Multi Agency Support Group (MASG) that consists of
all agencies who would be involved in responding to an
incident or event, including the category one responders,
the blue light services, and many others both locally and
across the region. The MASG group has been replicated
across other regions.
During AMP6 we will continue to build on this industryleading approach. Improving resilience can be expensive,
and so we propose to spread projects over several
regulatory periods to keep the level of investment
at current levels. We will increase the protection for
customers against service interruptions by building
additional resilience into our networks and operational
processes. In particular, we will reduce our exposure
FLOURISHING
ENVIRONMENT
A SMALLER
FOOTPRINT
CARING FOR
COMMUNITIES
to power failures at our two biggest water treatment
works, and we will work with the Environment Agency,
Lead Local Flood Authorities, developers and others to
manage flood risk effectively.
? WANT TO KNOW MORE?
See Strategy in focus: Dealing effectively with
rain and flooding.
P18
An important part of increasing resilience is building
flexibility into systems so that they can cope with
unforeseen events. Currently, there are population
centres in our region that are vulnerable to the effects
of a catastrophic water treatment works failure.
Although the risk of catastrophic failure is very low, the
consequences of a prolonged failure would be significant
for the population affected. Our long-term strategy is to
ensure that none of our customers are vulnerable to the
risk of catastrophic water treatment works failure.
INVESTING FOR
TOMORROW
FAIR
PROFITS
We need to improve our resilience to extended periods
of dry weather. Had the 2010–12 drought continued
through a third consecutive dry winter, maintaining
supplies for customers would have become increasingly
challenging, and more severe restrictions may have
been needed. Customers have told us that these sorts of
severe water restrictions are one of the most unwanted
of all service failures and they don’t expect to experience
these in their lifetime.
Our analysis has shown that the vulnerabilities in our
system can only be addressed through a major raw
water transfer. Our plan therefore proposes measures
to improve our resilience to drought, in particular by
developing a major raw water transfer scheme over the
next decade.
? WANT TO KNOW MORE?
See Strategy in focus: Resilience to drought.
P57
? WANT TO KNOW MORE?
See Strategy in focus: Increasing the
interconnectivity of our water network.
P54
It is important that we take action now to prepare
for future challenges, particularly that of a changing
climate. Our region is particularly vulnerable to
climate change and we have been working for some
time and with policymakers, businesses, academics
and other stakeholders to understand how climate
change may affect our business, and to ensure that we
consider the potential impacts of climate change when
designing new assets. Our approach to climate change
adaptation has been recognised as exemplary by the
UK Government.
? WANT TO KNOW MORE?
See Strategy in focus: Adapting to climate change.
P52
There is significant uncertainty about when and where
the impacts of climate change will manifest. To mitigate
this risk, and reduce the scale of the investment needed
in additional supply capacity, we are taking action now
to significantly reduce demand. This includes further
reducing our leakage, increasing the number of customers
who are metered and supporting and encouraging all our
customers to be more water efficient.
Allocating expenditure to outcomes:
We have allocated 100% of our capital maintenance to
‘Investing for tomorrow’, because this is about maintaining
our current level of service. Together with operating costs
and retail costs, this expenditure falls into the category
‘Running the business and maintaining services’.
We have not allocated any expenditure to ‘A smaller
footprint’ because this outcome is all about doing things
differently, rather than spending money. We have already
demonstrated that, instead of costing more, reducing our
use of finite resources results in cost savings.
Similarly, we have not allocated any expenditure to ‘Fair
profits’. We believe that a fair profit depends on driving
efficient performance throughout the whole business
rather than increasing costs for customers.
ANGLIAN WATER
OUTCOMES IN DETAIL
49
SATISFIED
CUSTOMERS
FAIR
CHARGES
SAFE, CLEAN
WATER
RESILIENT
SERVICES
SUPPLY MEETS
DEMAND
RESILIENT
SERVICES
KEY GROUPS
OUR SERVICES COPE WITH THE EFFECT OF
DISRUPTIVE EVENTS, IN PARTICULAR INCREASINGLY
SEVERE WEATHER EVENTS. WE PLAN AHEAD FOR
THE IMPACTS OF OUR CHANGING CLIMATE.
BUSINESS GOALS
100% of our customers very satisfied with our service.
No incidents (no supply interruptions or flooding
from sewers).
Frontier performer in the UK.
Customers
(includes household and
non-household)
Government
(local and national)
Local resilience forums
(includes local authorities,
Environment Agency,
Distribution network
Operators and
emergency services)
Other water users
Supply chain
Lead and champion the effective management of the
impact of growth and climate change.
The regional environment
No pollutions.
Pioneer responsible water stewardship.
WE THINK THAT...
1.
Resilience is the ability of
assets, networks and systems
to anticipate, absorb, adapt to
and rapidly recover from an
external event.
2.
Improving resilience involves
mitigating foreseeable risks, and
preparing and testing recovery
plans. It also involves building
flexibility and protection against
unforeseen circumstances
(as future events cannot be
precisely foreseen).
Foreseeable risks include:
• Changing and severe weather, for
example, drought, flooding, wind,
gales, snow and ice.
• Effect of third parties, for example,
theft, terrorism, energy shortages,
fuel shortages.
3.
4.
Partnerships and collaborative
working with others will be
required to ensure that our
water and wastewater services
are resilient. This includes joint
planning across different sectors.
The experience of the 2010–12
drought was sobering. If the
drought had continued through
the summer and winter of
2012–13, maintaining supplies to
customers at normal levels would
have been impossible, and more
severe restrictions would have
been needed. Clearly, this would
have had a serious impact on
customers and businesses within
our region.
5.
6.
Currently, there are population
centres in our region (below
50,000 population) that can only
be supplied by a single water
supply system. Although the
risk of any water supply
system failing is very low, the
consequences of a prolonged
failure would be significant for
the population affected.
Our region is particularly vulnerable
to climate change. In order to
ensure our services are resilient
in the long term, we must, as far
as possible, mitigate the impacts
of climate change upon our
operations, taking into account
the following:
• There is significant uncertainty
associated with climate change
impacts; consequently, adaptation
options need to be flexible.
• Our investment decisions should
take account of the impacts of
climate change, and investment in
climate change adaptation should be
cost effective.
50
ANGLIAN WATER
OUTCOMES IN DETAIL
FLOURISHING
ENVIRONMENT
A SMALLER
FOOTPRINT
STRATEGY:
RESILIENT
SERVICES
Increasing the resilience of our systems
to drought:
Plan for and develop a new raw water
transfer from the River Trent to support our
reservoir system.
OUTPUTS
• Plan for a new raw water transfer from
the River Trent, for delivery after AMP6.
Increasing the resilience of our assets
to flooding:
Work in partnership with Lead Local Flood
Authorities, Local Authorities and Drainage
Authorities, to understand and mitigate
flood risk through collaborative planning.
Develop and test recovery plans.
OUTPUTS
• Effective partnerships with other sectors.
• Flood defences at our water and
wastewater sites.
• Tested recovery plans.
Increasing the security of our sites:
Improve security at key sites to reduce the
impact of third-party interference and theft.
OUTPUTS
• Monitoring and alarm systems.
• Remote security.
Increasing our resilience to power
disruptions:
Work with the Distribution Network
Operators (DNOs) to develop our
understanding of the risk of power supply
disruptions, and deliver solutions for
the highest risk sites. Develop and test
recovery plans.
OUTPUTS
• Onsite generators and electric
control panels.
• Tested recovery plans.
• Integrated resilience strategies.
Process and organisation ISO 22301:
Continue to test ourselves against the
highest standards for business continuity
and resilience, covering people, IT
and assets.
OUTPUTS
• Extended LRQA assurance.
CARING FOR
COMMUNITIES
Increasing our supply chain resilience:
Require our suppliers to consider resilience.
OUTPUTS
• Risk assessment with appropriate
mitigation, for example multi-sourcing.
Increasing the resilience of our systems
to fire:
Continue to improve the resilience of our
operational sites to fire. Work with others
(such as the emergency services) to
develop integrated resilience and
recovery strategies.
OUTPUTS
• Fire suppression systems.
• Integrated resilience and recovery
strategies.
Building business continuity:
Maintain the flexibility of our business to
unforeseen events.
OUTPUTS
• Disaster recovery centres (DRCs).
• IT recovery plans and multiple data centres.
Continuing to increase the flexibility of
our water supply systems:
Mitigate the impact of catastrophic failure by
ensuring that all customers can be supplied
from more than one water supply system.
Ensure adequate alternative supplies are
available to mitigate the risk of failure.
OUTPUTS
• New pipes to transfer water between
supply systems.
• Increased interconnectivity within our
system.
• Alternative supplies.
INVESTING FOR
TOMORROW
FAIR
PROFITS
OUTCOMES FOR THE
KEY GROUPS
Customers (includes household and
non-household):
Customers receive a continuous supply
of drinking water and sewerage services.
Customers are satisfied with the service they
receive during an event and our recovery
procedure. The additional needs of priority
and vulnerable customers are met. The cost
of improving our resilience is acceptable.
Government (local and national):
We are compliant with the Security and
Emergency Measures Direction. We play
our part in achieving National Adaptation
Programme goals, managing the risks of
climate change to UK plc.
Local resilience forums:
Partnerships across sectors are strong, and
resilience plans are integrated and deliver
mutual benefits.
Other water users:
Opportunities for mutual resilience benefits
are realised.
Supply chain:
Our supply chain understands and is
prepared for the impact of extreme natural
and man-made hazards. Such hazards do not
cause interruptions to our operations.
The regional environment:
By improving our resilience to drought, the
pressure experienced by the environment
during dry periods is minimised. Pollution
incidents are avoided by improving the
resilience of our wastewater assets to flooding.
Adapting to climate change:
Continue to take the lead in driving climate
change adaptation within our region,
working with stakeholders to address
interdependencies and common issues.
Continue to build understanding of the risks
climate change poses to our business and
potential adaptation solutions. Integrate
climate change adaptation into our
business decision-making processes, such
as asset design and maintenance.
OUTPUTS
• Asset monitoring, research, participation
in forums and consultations.
• Improved understanding of asset
performance.
• Partnerships.
A GOOD OUTCOME
WOULD BE...
Our business understands and is prepared
for the impact of extreme natural and manmade hazards. Such hazards do not cause
customers to suffer interruptions to water
supply or disposal of sewage. Customers
understand the risks from disruptive
events. We use the best available science
to understand, successfully plan for and
adapt to a changing climate. We monitor the
impacts of these changes on our assets and
processes, and consider their impacts on all
investments and decision making.
We set an example to others in the region
on adapting to our changing climate.
ANGLIAN WATER
OUTCOMES IN DETAIL
51
SATISFIED
CUSTOMERS
FAIR
CHARGES
SAFE, CLEAN
WATER
STRATEGY IN
FOCUS: ADAPTING
TO CLIMATE
CHANGE
The climate around us is changing rapidly.
While nobody can predict for sure what
the impacts will be, we expect that it will
get warmer, sea levels will rise and winter
rainfall will get heavier. Droughts and
flooding could become more frequent
and increasingly severe. Our region is
particularly vulnerable to climate change
because it is the driest part of the UK,
it is flat and low lying, and has a long
coastline. This means that, within the UK
we are particularly vulnerable to both
drought and flooding.
In order to deal effectively with this uncertainty, we
need to ensure that adaptation options are flexible and
perform well in many different future scenarios. We
are piloting an innovative approach to water resource
planning, called Robust Decision Making (RDM),
working with other water companies and water users
(for example, farmers and businesses) in East Anglia.
It will allow us to test investment options in hundreds
of future scenarios, so we can better evaluate their
performance. This will allow us to select investment
options that perform well over a wide variety of
possible scenarios.
Anglian Water is an organisation at
the forefront of efforts to adapt to climate
change, is actively adapting and is an
exemplar organisation for others that
need to adapt.
Lord Henley
Former Climate Adaptation Minister
Effective adaptation is all about reducing the impact
that changes in the climate will have on our business
and the vital services we provide to our customers.
Much of what we already plan to do, such as reducing
levels of leakage, promoting water efficiency and
increasing the resilience of our assets to extreme
weather, will help to prepare our business for the future.
In addition to this, we need to:
•
Improve our understanding of how climate change
may affect our business.
•
Continue to embed the risks posed by climate
change into our decision-making processes.
•
ANGLIAN WATER
OUTCOMES IN DETAIL
SUPPLY MEETS
DEMAND
INNOVATION
There is a lot of uncertainty about how and when
climate change will affect our region, but we need
to manage this uncertainty. This means we need to
balance the risks of making investment in assets that
are later underutilised (because the perceived threats
do not materialise), with the risk that investing too late
in adaptation could impact on our service to customers
and result in significant environmental damage.
52
RESILIENT
SERVICES
Work with others to address common issues.
FLOURISHING
ENVIRONMENT
A SMALLER
FOOTPRINT
CARING FOR
COMMUNITIES
We will continue to take the lead in driving climate
change adaptation within our region. We cannot
successfully adapt our business without thinking
about how the services and infrastructure we rely on to
deliver our services may be affected. Therefore, we will
work in partnership with our customers, stakeholders
and other sectors to develop knowledge and address
common issues.
INVESTING FOR
TOMORROW
FAIR
PROFITS
For more information on climate change adaptation,
you can download our Climate Change Adaptation
Report at: www.anglianwater.co.uk/environment/
climate-change/adaption
RESILIENCE OF THE WATER INDUSTRY
There is an increasing focus on the resilience of water
and wastewater services driven by concerns about the
potential impacts of climate change and population
growth upon water resources across the UK.
The need to improve the resilience of utility
infrastructure was highlighted when hundreds of
thousands of people lost their electricity and water
supply as key infrastructure was flooded in 2007.
The Pitt Review that followed made numerous
recommendations, including the need to improve the
resilience of critical infrastructure, and for essential
service providers to become considerably more
active in local and national emergency preparedness
and response. The Flood and Water Management Act
(FWMA) was enacted in 2010, and took forward many
of the recommendations contained in the Pitt Review,
including reforming the institutional arrangements for
the management of flood risk.
The need to improve the resilience of the water
industry was highlighted again by the 2010–2012
drought. The period from 2010 to April 2012 was
exceptionally dry across the South East and East
Anglia. Our region was one of the worst hit and in
2011 the Environment Agency declared that the
region was in drought. In 2012 we were forced to
introduce a hosepipe ban in accordance with our
drought plan. This challenging period highlighted
a number of vulnerabilities in our supply system
to multi-seasonal drought. If the drought had
continued, water supplies to customers in these
vulnerable areas could only have been maintained
through the use of alternative supplies, reducing
water pressure substantially, and, potentially, cutting
supplies to customers for a few hours every day,
according to a timed rota.
In response to this, and wider concerns about
climate change and population growth, there is
a clear government expectation that the water
industry should be investing to address long-term
pressures on water resources, by:
•
•
Promoting supply-system connectivity to
allow more flexible and efficient use of available
water resources.
Integrate water resource, drought and
resilience planning.
In the current Water Bill it is proposed that Ofwat
should have a primary duty to promote resilience.
Arising from this and the above, there is an
expectation that we will invest in AMP6 to further
increase the resilience of our supply system.
ANGLIAN WATER
OUTCOMES IN DETAIL
53
SATISFIED
CUSTOMERS
FAIR
CHARGES
SAFE, CLEAN
WATER
RESILIENT
SERVICES
SUPPLY MEETS
DEMAND
STRATEGY IN
FOCUS: INCREASING
THE INTERCONNECTIVITY OF
OUR WATER NETWORK
An important part of increasing resilience
is building flexibility into systems so that
they can cope with unforeseen events.
While we have resilience plans that
mitigate foreseeable risks, such as fire
and theft, we also need to ensure that our
systems can cope with the unexpected.
Currently, there are population centres in our region
(mostly in the east) that are vulnerable to the effects
of a catastrophic water treatment works failure. This
is because the east of our region is predominantly
rural with small dispersed population centres,
supplied typically from boreholes. Although the risk
of catastrophic failure is very low, the consequences
of a prolonged failure would be significant for the
population affected.
Increasing the resilience of our water supply system
is part of our long-term strategy. We started to make
investments after 2005 to make sure that where a
water treatment works served more than 50,000
people, alternative supplies would be available should
that works fail. Similar investment is planned up until
2015. We have also built a number of connections that
improve our ability to move water around our
supply system.
Our long-term strategy is to ensure that none of
our customers are vulnerable to catastrophic water
treatment works failure. In the north and west of our
region, this will involve making reinforcements to the
local distribution system, and in the east it will involve
connecting adjacent supply systems to improve
interconnectivity. We recognise that affordability is a
concern to many of our customers, and consequently
we propose to spread this investment over 10 to 20
years, prioritising work according to the population
affected, the cost of the scheme and any specific
vulnerabilities (such as the presence of a hospital)
within the area affected.
East Hills pumping station.
54
ANGLIAN WATER
OUTCOMES IN DETAIL
Increasing the interconnectivity of our supply system
will generate additional benefits, such as increased
opportunities for water resource trading and more
efficient network operations.
FLOURISHING
ENVIRONMENT
A SMALLER
FOOTPRINT
CARING FOR
COMMUNITIES
INVESTING FOR
TOMORROW
FAIR
PROFITS
Construction of a new pipeline from Covenham to Boston.
ANGLIAN WATER
OUTCOMES IN DETAIL
55
SATISFIED
CUSTOMERS
FAIR
CHARGES
SAFE, CLEAN
WATER
RESILIENT
SERVICES
SUPPLY MEETS
DEMAND
The proposed Trent transfer scheme
RIVER TRENT
NOTTINGHAM
GRANTHAM
AN
TR
ER
SF
STAMFORD
RUTLAND WATER
PETERBOROUGH
AN
TR
ER
SF
CORBY
KETTERING
GRAFHAM WATER
HUNTINGDON
WELLINGBOROUGH
NORTHAMPTON
BEDFORD
MILTON KEYNES
BUCKINGHAM
LEIGHTON BUZZARD
This diagram is only illustrative;
the pipeline route has yet to
be determined.
56
ANGLIAN WATER
OUTCOMES IN DETAIL
FLOURISHING
ENVIRONMENT
A SMALLER
FOOTPRINT
CARING FOR
COMMUNITIES
INVESTING FOR
TOMORROW
FAIR
PROFITS
STRATEGY IN
FOCUS: RESILIENCE
TO DROUGHT
The period from 2010 to April 2012 was
exceptionally dry across much of the UK.
The Anglian region was one of the worst
hit and in 2011 the Environment Agency
declared that the region was in drought.
Thankfully, a very wet period in April 2012
brought an end to the drought and water
levels recovered.
This challenging period highlighted a number of
vulnerabilities in our supply system. If the drought
had continued, water supplies to customers in these
vulnerable areas could only have been maintained
through the use of alternative supplies, reducing water
pressure substantially, and, potentially, cutting supplies
to customers for a few hours every day, according to a
timed rota.
We are allowed to take these measures; however, they
would have been very disruptive for our customers, and
could have seriously affected businesses in our region.
Customers are clear that they want us to make sure that
we plan for the long term to maintain supplies.
We already do a lot that makes our supply system
resilient to drought. For example, we have a good track
record of helping customers to save water, and we will
continue to work with all our customers to help them
reduce their water consumption.
? WANT TO KNOW MORE?
See Strategy in focus: Water efficiency.
P66
We have also made significant progress on reducing our
levels of leakage. In 2012–13, leakage was reduced to its
lowest ever level, and we have set even more ambitious
targets to reduce it in future.
? WANT TO KNOW MORE?
See Strategy in focus: Leakage.
P68
However, these activities alone will not be sufficient
to make our supply system even more resilient. That is
why we have been looking in detail at the options we
have to provide improved resilience, in particular to the
western part of our region. This will be a major, strategic
investment that will see raw water pumped from the
River Trent to support our Ruthamford reservoir system
(which includes our reservoirs at Rutland, Pitsford and
Grafham). See diagram on page 56.
Major infrastructure of this nature requires careful
planning to ensure it best meets the needs of current
and future customers. Consequently, we will spend the
next five years designing and planning the transfer to
make sure it is the best option.
ANGLIAN WATER
OUTCOMES IN DETAIL
57
SATISFIED
CUSTOMERS
FAIR
CHARGES
SAFE, CLEAN
WATER
RESILIENT
SERVICES
SUPPLY MEETS
DEMAND
MEASURES AND
INCENTIVES
Existing incentives
Proposals
There are specific resilience incentives in existence
through both the Security and Emergency Measures
Direction (SEMD) audit and Civil Contingencies Act.
Furthermore, we plan for resilience on the basis of
potential threats to drinking water quality, interruptions
to supply and loss of sewerage services. Each of these
areas is measured under the Safe, clean water or
Satisfied customers outcomes. Failure to adequately
plan for a changing climate would likewise manifest in
deterioration of measures of success in other outcomes.
Ideally, we would like a measure that independently
assesses the level of risk we are carrying of service
interruptions occurring on either water or sewerage
services. However, it is very difficult to arrive at such
an assessment. One approach might be to seek a
combination of water industry expertise and insurance
company risk expertise to quantify these risks. Whilst
we believe there is some scope for such an approach to
form the basis of a measure in the future, we will not be
in a position to implement it in time for AMP6. We are
therefore proposing to give further consideration to this
for possible inclusion as a measure of success for AMP7.
Key behaviours
Instead, we are proposing to measure the percentage
of the population we supply with water who are served
by a single supply system. Whilst this is a relatively
crude measure of risk, it has the advantage that a wide
variety of risk types are considered (since the measure
is not risk specific) and it is also an objective measure.
Investment in resilience in AMP6 justifies a financial
incentive where measurement is reasonably robust, and
we are proposing a financial penalty to apply to this
measure of success.
One approach to measuring resilience is to monitor the
levels of severe service interruptions (lengthy supply
interruptions for example). We believe this is a poor
measure of the risk faced by customers. In such a
case, our performance in managing risk only becomes
evident when we fail, and it is therefore not possible
to differentiate between effective and prudent risk
mitigation, and fortunate circumstances that mean that
risks have not materialised.
We will instead incentivise an active and effective
management of risks to our service, no matter what the
source, and ensure that the identified (but uncertain)
risks from a changing climate are appropriately
addressed in our planning.
Value to customers
Our customers have told us that they want us to take
preventative action and engage in long-term planning
to build resilience. Most customers are happy with the
current level of supply restrictions, although there is
confusion over why they are necessary when rainfall
appears to be high.
58
ANGLIAN WATER
OUTCOMES IN DETAIL
The expected frequency of hosepipe bans gives an
indication of supply–demand resilience to drought.
For AMP6 we are not proposing a change in the level
of service from the current 1 in 10 year frequency, but
this may well be an area of improvement for AMP7, so
the measure is included in the suite now in anticipation
of this.
For climate change, we have a clear strategy to ensure
that it is business as usual to incorporate climate
change planning in all of our decisions, rather than
make specific climate change investments. As such, we
propose to seek independent assurance throughout
AMP6 that we are abiding by our climate change
strategy, with an individual assessment made on both
water and sewerage. We will publish the outcome of
this assessment as a reputational assessment.
FLOURISHING
ENVIRONMENT
A SMALLER
FOOTPRINT
CARING FOR
COMMUNITIES
INVESTING FOR
TOMORROW
FAIR
PROFITS
COMMITTED PERFORMANCE LEVELS AND INCENTIVES
Committed
Performance
Level
2019–20
Price control
Measure of success
Incentive type
Units
End of AMP5
prediction
2014–15
Percentage of
population supplied
by a single supply
system
Penalty only
%
27.5%
24.7%
Water
Frequency
1 in 10 years
1 in 10 years
Water
Frequency of level of Reputational
service restrictions
(hosepipe bans)
Independent
assurance that we
are abiding by our
climate change
strategy
Reputational
Assessment
n/a
Positive
assessment
Water,
sewerage
Independent
assessment of the
risks to our assets
Future
measure
–
–
–
Water,
sewerage
ANGLIAN WATER
OUTCOMES IN DETAIL
59
SATISFIED
CUSTOMERS
FAIR
CHARGES
SAFE, CLEAN
WATER
RESILIENT
SERVICES
SUPPLY MEETS
DEMAND
SUPPLY MEETS
DEMAND
MANAGE AND MEET THE GROWTH IN
DEMAND FOR SUSTAINABLE AND RELIABLE
WATER AND WASTEWATER SERVICES
CUSTOMERS SAID...
“There is recognition of increasing pressures on the
water system and the specific vulnerability of the
region, in particular associated with housing growth
and changing weather patterns.
Customers want the company to invest in
maintaining its reservoirs and building new ones.
They also want to know it is planning ahead and
working in partnership to tackle future challenges.
There is particular support for collaboration with
developers and social landlords to ‘design-in’ water
efficiency measures.
Most households and many businesses say they
are taking steps to save water; there is a mix of
evidence on trends in water saving behaviours.
Among Anglian Water customers, unmetered
customers were more likely to say they were doing
nothing to save water than metered customers.
Saving money is the most important motivation;
environmental beliefs and a dislike of waste (for
householders) and sustainability/corporate social
responsibility (for businesses) are also important.
Tailored advice from Anglian Water, low cost or
free devices, and greater evidence of payback in
bills are some of the things customers say would
encourage further saving. Evidence suggests most
customers would like the company to invest more
in household water efficiency in future.
Anglian Water’s campaigns are well received,
though there is room to further improve awareness
of them. Customers who are familiar with particular
campaigns say these are likely to be effective.
The main message customers remember from
campaigns and communication is how save money.
Customers are particularly concerned about leaks,
which are seen primarily as wasteful of a precious
natural resource. Customers are also concerned
that leaks are a disincentive for bill payers to
save water, and a sign that the company is not
‘doing its bit’ to conserve water and invest in the
infrastructure. A clear driver of concerns about
leakage is a perception that they lead to higher
water bills (this is especially important to lower
income groups). Leaks are also seen as a key
reason why service interruptions are sometimes
necessary. Although some customers recognise
there will always be some leakage, this emerges as
a clear priority for future investment.
In the Acceptability research, more respondents
rated the leakage proposals as unacceptable (177
people) than any other individual element of the
proposed plan. However this part of the Plan was
still considered acceptable by over 90% of all
customer groups (with the exception of vulnerable
customers). Of those customers who felt the
leakage proposals were unacceptable, 19% said they
wanted leaks fixed more quickly and the rest were
concerned that the proposals did not go far enough.
Some customers support transfer of water from
wetter regions of the country (though there is also
concern about the impact on the industry’s carbon
foot print). Others would like to know more about
whether desalination is a viable option for the
future.”
Quoted from the report Discover, Discuss, Decide:
Summary of research into household and business
customer and stakeholder views: version 10, prepared by
OPM on behalf of Anglian Water. The report is available at:
www.discoverdiscussdecide.co.uk.
OPM is an independent organisation that specialises in market research.
60
ANGLIAN WATER
OUTCOMES IN DETAIL
CARING FOR
COMMUNITIES
WE WILL...
Our customers recognise that the pressure on the
water system is increasing as a result of growth and
climate change, and that our region is particularly
vulnerable. Scenario testing for the 2014 Water Resources
Management Plan shows that our supply–demand balance
is at risk from a combination of climate change, population
growth and the reductions in deployable output that we
need to make to restore abstraction to sustainable levels.
In the worst case, the impact could be equivalent to
540Ml/d, approximately 50% of the water we put into
supply in 2011–12.
We have developed a twin-track strategy to balancing
supply and demand that involves making the most of
the resources we have, while making carefully targeted
investment to increase the water available in some areas.
Where future demand is likely to be greater than the
available supply, we look first to reduce the amount of
water we actually need before we resort to taking more
water from the environment. Because there is significant
uncertainty about when and where the risks associated
with climate change and growth will manifest themselves,
reducing demand for water resources is a robust strategy
for mitigating these risks and managing future uncertainty.
Since privatisation we have proven our ability to manage
the demand for water. We put the same amount of water
into our network today as we did in 1999, even though the
local population has increased by more than 20%. This
has been achieved by moving water around the region
to where it is needed most, increasing the number of
customers who are metered, reducing our leakage and
encouraging and supporting our customers to become
more water efficient.
INVESTING FOR
TOMORROW
FAIR
PROFITS
Making the most of our resources
+30%
1993–94
1994–95
1995–96
1996–97
1997–98
1998–99
1999–00
2000–01
2001–02
2002–03
2003–04
2004–05
2005–06
2006–07
2007–08
2008–09
2009–10
2010–11
2011–12
2012–13
A SMALLER
FOOTPRINT
Percentage change from 1993–94 levels
FLOURISHING
ENVIRONMENT
Properties
supplied
+22%
+20%
+10%
+0%
1993–94 levels
Water
supplied into
network -4%
-10%
-20%
Leakage
-32%
-30%
-40%
During AMP6 we will continue to manage the demand
for water and we will deliver significant water savings.
Customers have told us very clearly that leakage is a
particular concern and so we plan to reduce our leakage
significantly. We have set ambitious targets to reduce our
leakage to less than 10% of our distribution input by 2040
(approximately 93Ml/d), and we will reduce our leakage to
less than 15% of our distribution input (172Ml/d) by 2020.
? WANT TO KNOW MORE?
See Strategy in focus: Leakage.
P68
We will continue with our current metering strategy so
that, by 2020 95% of household customers will have a
meter fitted and 88% will pay a measured charge.
? WANT TO KNOW MORE?
See Strategy in focus: Metering.
P32
ANGLIAN WATER
OUTCOMES IN DETAIL
61
SATISFIED
CUSTOMERS
FAIR
CHARGES
SAFE, CLEAN
WATER
RESILIENT
SERVICES
SUPPLY MEETS
DEMAND
In addition, we will continue to work with our customers
to support and encourage them to reduce their water
consumption, building on our recent campaigns such
as Drop 20 and Potting Shed. We are expanding our
programme of water efficiency audits (which includes
fitting water efficiency devices) for household customers
and we will continue to work with our business customers
to develop tailored water efficiency plans.
Nevertheless, the future challenge is great. The East of
England is an engine of growth in the UK economy, and
if the necessary water and sewerage infrastructure is not
there to support it we would be failing to play our part
in delivering that growth. This is a message we hear loud
and clear from our business customers, who above all
else want to know that their businesses can rely on the
provision of such essential services.
We’ll also work with developers building new homes in
our region to encourage and support them to achieve the
most challenging water consumption standards set by the
Government in its Code for Sustainable Homes standards.
This can make a real contribution to reducing demand: at
the highest level the Code aims to reduce average daily
usage by 80 litres per person. Currently, the average
customer who is metered tends to use around 127 litres per
person per day, and unmetered customers use even more.
Given the uncertainty about possible future climate
change impacts, population growth and sustainability
reductions, we have proposed no growth-related supplyside enhancements in our AMP6 Business Plan. Instead,
we will work collaboratively with other water companies,
our regulators and other abstractors to develop a robust,
long-term water resource strategy for the Anglian region.
This will be delivered through the Water Resources East
Anglia (WREA) project and will result in the delivery of
assets from AMP7 onwards.
? WANT TO KNOW MORE?
See Strategy in focus: Water efficiency.
P66
Water efficiency services for business customers.
62
ANGLIAN WATER
OUTCOMES IN DETAIL
FLOURISHING
ENVIRONMENT
A SMALLER
FOOTPRINT
CARING FOR
COMMUNITIES
INVESTING FOR
TOMORROW
FAIR
PROFITS
•
The WREA differs from existing regional planning efforts in
several important respects:
•
It is long term and multi sector, and recognises that
success requires effective decision making.
•
It will be based on an innovative approach to the
economics of balancing supply and demand. Currently,
a cost-effectiveness approach is favoured by the
industry. The WREA will use a scenario-based cost–
benefit approach that is based on Robust Decision
Making (RDM) and multi-criteria optimisation.
•
Through the RDM approach, the impact of abstraction
on the environment will be explicitly modelled.
The WREA will provide a framework for the
development of company-only Water Resources
Management Plans (WRMPs); it will not replace them or
the process by which these are developed.
It is too soon to make the really major investments that
we think we’ll need in the longer term – and in any case
the need to consider the affordability of customers’ bills
in the short term means we have to think carefully about
what we need to spend now versus later. However, we
do need to start the necessary detailed planning. Some
limited investment, mainly in pipework allowing us to
transfer water between areas of surplus, together with
the relocation of a sensitive abstraction near Norwich,
is planned over the coming 10 to 15 years.
It is equally important that we plan to meet the demand
for sewerage services alongside water supplies, and our
plans include investment in selected areas. We will also
focus on making our investment as efficient as possible, by
using campaigns such as Keep it Clear to alter behaviour
in relation to our sewerage infrastructure, reducing the
amount we need to spend on some maintenance work.
Allocating expenditure to outcomes:
We have allocated 100% of our capital maintenance to
‘Investing for tomorrow’, because this is about maintaining
our current level of service. Together with operating costs
and retail costs, this expenditure falls into the category
‘Running the business and maintaining services’.
We have not allocated any expenditure to ‘A smaller
footprint’ because this outcome is all about doing things
differently, rather than spending money. We have already
demonstrated that, instead of costing more, reducing our
use of finite resources results in cost savings.
Similarly, we have not allocated any expenditure to ‘Fair
profits’. We believe that a fair profit depends on driving
efficient performance throughout the whole business
rather than increasing costs for customers.
? WANT TO KNOW MORE?
See Strategy in focus: Dealing effectively with
rain and flooding.
P18
ANGLIAN WATER
OUTCOMES IN DETAIL
63
SATISFIED
CUSTOMERS
FAIR
CHARGES
SAFE, CLEAN
WATER
SUPPLY MEETS
DEMAND
RESILIENT
SERVICES
SUPPLY MEETS
DEMAND
KEY GROUPS
MANAGE AND MEET THE GROWTH IN
DEMAND FOR SUSTAINABLE AND RELIABLE
WATER AND WASTEWATER SERVICES
Household customers
Business customers
Developers
BUSINESS GOALS
100% of our customers very satisfied with our service.
Local government
Frontier performer in the UK.
The regional environment
Lead and champion the effective management of the
impact of growth and climate change.
Pioneer responsible water stewardship.
WE THINK THAT...
1.
Despite past successes, water
resources in our region are facing
challenges that we will need to
respond to.
3.
• In the short term, the Environment
Agency’s Restoring Sustainable
Abstraction programme will reduce
the availability of water resources in
some areas.
• In the medium to long term,
population and housing growth will
increase the overall demand for
water and sewerage services.
2.
64
• In the long term, climate change
will change the demand for and
availability of water resources.
Metering household customers
is an important part of
managing demand. On average,
household customers who are
metered use 10–15% less water
than customers who pay
a fixed charge.
ANGLIAN WATER
OUTCOMES IN DETAIL
4.
5.
In areas where demand for
water and sewerage services
is expected to be greater
than the available supply,
our first response should be
to reduce demand. In order
to encourage others to change
their behaviour, we will need
to reduce our leakage, be seen
to act responsibly, and ensure
our campaigns are targeted
appropriately.
The current water allocation
regime is not sufficiently flexible
to deal with the long-term
challenges of population growth
and climate change. Trading could
increase flexibility and allocate
water resources between different
users more efficiently.
Collaborative approaches
(regional, local, sector) are
essential to meet regional
growth needs efficiently with
a fair allocation of costs and risk.
6.
In order to meet future demand for
water and wastewater services,
we will need to develop new
supplies in addition to demand
management and trading. Options
for developing new supplies are
limited by the water resources
available in our region. They
include winter storage reservoirs,
water reuse schemes and aquifer
storage and recovery. Desalination
remains under review but is
currently an expensive option.
The development of new supplies
should account for uncertainty,
and be done on a regional basis
in collaboration with neighbouring
water companies. New
infrastructure should consider the
needs of multiple sectors.
7.
Legislation needs to be changed
to allow us to plan and deliver
strategic sewerage schemes
and collect fair contributions
from developers.
FLOURISHING
ENVIRONMENT
A SMALLER
FOOTPRINT
STRATEGY:
SUPPLY MEETS
DEMAND
Leakage:
Continue to reduce leakage through rapid
leakage repair, proactive leakage detection,
and proactive management of our network
to reduce the risk of leaks developing.
Reducing our leakage will save water,
energy and carbon.
OUTPUTS
Leakage figures down to 15% of the water
we put into our network by 2020, and less
than 10% by 2040.
Reducing our water footprint:
Collaborate with all stakeholders to
measure, manage and reduce our
water footprint.
OUTPUTS
Informed strategy for water footprint
measurement and reduction.
Working with customers to reduce their
water consumption:
Work with household customers to reduce
their water consumption through behavioural
change campaigns, increasing metering,
installing smart meters, and targeted water
efficiency audits at customers’ properties.
Offer water strategy services to business
customers to improve their water efficiency,
helping businesses to increase production
without increasing their water consumption.
OUTPUTS
• Behavioural change campaigns (Drop 20).
• Where physically possible, all household
customers are metered.
• Smart meters and monthly meter readings.
• Water efficiency audits and equipment.
• Water strategy services for businesses.
CARING FOR
COMMUNITIES
INVESTING FOR
TOMORROW
Developing new water supplies and
increasing resilience to drought:
Developing our approach to long-term
sewerage planning:
Collaborate and work in partnership
with neighbouring water companies, the
Environment Agency and other sectors
through the Water Resources East Anglia
(WREA) project. Use a scenario-based
approach to planning known as Robust
Decision Making (RDM) to develop our
understanding of the long-term supply–
demand risk and deliver any related assets.
Develop a sewerage planning framework.
This includes improving our understanding of
risk and uncertainty within the catchment, in
order to deliver minimum-regret solutions.
Manage the volumes of surface water
entering our sewers by retrofitting Sustainable
Drainage Systems (SuDS).
Influence legislation and charging
arrangements for fair sharing of costs.
Make incremental and flexible increases to
our raw water storage capacity. This may
include large and medium-scale winter
storage reservoirs, aquifer recharge and
transfers. Develop opportunities for water
reuse schemes.
Mitigate the risk of severe drought through
the development of a raw water transfer, for
example, a transfer from the River Trent to
support our Ruthamford reservoir system.
OUTPUTS
• WREA project.
• RDM planning tool.
• New raw water storage assets.
• Trent to Rutland raw water transfer
scheme.
Water resources to facilitate sustainable
regional growth:
Collaborate and work in partnership with
others (such as local authorities, planners,
the Environment Agency and Local Enterprise
Partnerships) to integrate spatial planning and
planning of water and sewerage services.
Engage with others (including industry
and agricultural water users) to explore
opportunities for how infrastructure schemes
could deliver storage and resilience benefits
to multiple sectors.
Work with local agencies to proactively
encourage new business into our region.
OUTPUTS
• Water Resources Management Plan.
• Integrated spatial and water resources
planning.
• Multi-sectoral planning and ventures.
Informing abstraction and upstream
reform:
FAIR
PROFITS
Work closely with Defra and Ofwat to
inform abstraction and upstream reform.
Develop practical approaches to trading
within our catchments.
Working with developers:
OUTPUTS
• Evidence base for policymaking.
Support and encourage developers to
build water-efficient homes by abolishing
infrastructure charges for homes that achieve
80l/p/d (equivalent to levels five and six in the
Government’s Code for Sustainable Homes).
Support developers through the planning
process, providing the infrastructure required
to meet new housing demands.
Work with developers and others to ensure
that surface water is drained sustainably from
new developments.
OUTPUTS
• Provision of infrastructure.
OUTPUTS
• Sewerage planning framework.
• Catchment modelling.
• Advanced drainage models.
OUTCOMES FOR
THE KEY GROUPS
Household customers:
We plan for and meet the challenges
associated with water resources and sewerage
planning in our region. The infrastructure
planned and built now is sufficient to meet the
needs of future household customers. The
level of leakage is acceptable.
Business customers:
In addition to the above, our infrastructure
underpins and contributes to a successful
regional economy.
Developers:
We support developers to deliver sustainable
regional growth.
Local government:
Our infrastructure underpins and contributes to
a successful regional economy.
The regional environment:
The adverse impacts of our abstraction upon
the environment are minimised.
A GOOD OUTCOME
WOULD BE...
Prudent investment in reliable, affordable
and sustainable supplies that are flexible
enough to cope with uncertain demands.
Manage changing demand on our water and
sewerage systems from new and existing
customers, as well as meeting demand and
enabling economic growth with additional
supply. The level of leakage is acceptable
to customers.
• Water-efficient homes.
• Sustainable Drainage Systems.
• Water reuse initiatives.
ANGLIAN WATER
OUTCOMES IN DETAIL
65
SATISFIED
CUSTOMERS
FAIR
CHARGES
SAFE, CLEAN
WATER
STRATEGY IN
FOCUS: WATER
EFFICIENCY
We already undertake a range of water
efficiency activity to support and
encourage all our customers to save
water, and we will expand this activity in
AMP6. Our water efficiency work makes
a real difference to the supply–demand
balance. For example, we launched our
Drop 20 campaign during the 2010–12
drought, encouraging customers to
reduce their water consumption by 20
litres per person per day by changing
their behaviour. Our customers responded
to Drop 20 and this resulted in a water
saving of 60Ml/d during the drought.
RESILIENT
SERVICES
SUPPLY MEETS
DEMAND
COLLABORATION
During AMP6 we will extend our programme of
water efficiency audits for household customers. The
audits are free of charge and include the installation
of water efficiency devices. We will offer two different
types of audit:
•
•
Bits and Bobs is the most comprehensive audit,
and is available to customers in areas with a supply–
demand deficit. The average water saving as a result
of the audit is 48l per property per day.
•
Drop by 20 is a new service that we will offer to
household customers if we visit their property for
another reason (for example, to install a meter). The
average water saving as a result of the audit is 20l
per property per day.
DIY packs will be available to all our customers
free of charge.
We will also offer a free-of-charge water efficiency
advice service to non-household customers in deficit
areas, who do not use water in a commercial capacity
(such as schools).
In total, we expect our water efficiency programme to
result in 9.8Ml/d savings over the course of AMP6.
There is a strong link between our strategy to address
water affordability in our region, and our metering and
water efficiency programmes. The provision of water
efficiency advice to metered customers helps them to
reduce consumption, and consequently their bill. We
intend to continue with our current strategy so that, by
2020 95% of household customers will have a meter fitted
and 88% will pay a measured charge, which will save
approximately 5.6Ml/day by the end of the AMP6 period.
In addition, we will begin the transition from ‘dumb’
meters to ‘smart’ meters, and this will allow us to provide
more detailed consumption information to customers.
? WANT TO KNOW MORE?
See Strategy in focus: Metering.
66
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ANGLIAN WATER
OUTCOMES IN DETAIL
FLOURISHING
ENVIRONMENT
A SMALLER
FOOTPRINT
CARING FOR
COMMUNITIES
INVESTING FOR
TOMORROW
FAIR
PROFITS
Here are the key elements of our strategy:
Customer
Demand management activity
Behavioural change campaigns such as Drop 20 and the Potting Shed.
Conducting water efficiency audits on customers’ properties and installing water-efficient
devices in areas where water supplies are least secure. We will offer free DIY water efficiency
devices to all customers.
Household
customers
Metering all our household customers in the long term (where physically possible).
Providing frequent consumption information to customers where a smart meter has
been installed.
Working with schools, local community groups and councils to support and encourage
others to adopt more sustainable behaviours.
Demonstrating exemplary water-efficient facilities at our recreation sites.
Business
customers
Developers
Water efficiency services, which will help business customers to reduce their water
consumption, including activities such as technical support and employee behavioural change.
Metering all of our business customers.
Water-efficient homes: We will support and encourage developers to build water-efficient
homes by abolishing infrastructure charges for homes that achieve 80 litres per person per
day (equivalent to levels five and six in the Government’s Code for Sustainable Homes).
ANGLIAN WATER
OUTCOMES IN DETAIL
67
SATISFIED
CUSTOMERS
FAIR
CHARGES
SAFE, CLEAN
WATER
RESILIENT
SERVICES
SUPPLY MEETS
DEMAND
STRATEGY IN
FOCUS: LEAKAGE
There are important reasons why we believe that we
need to continue to drive down our leakage.
Our leakage performance
In overall terms, our leakage record has improved
dramatically since we were privatised in 1989. We
now lose 30% less of our water through leaks,
despite the fact that our pipe network has expanded
to connect approximately 500,000 more properties
in the region.
In recent years, our leakage performance has
consistently improved. However, in some years this
has been particularly challenging – for instance,
in the severe cold weather of winter 2010–11, the
number of bursts we had to deal with increased
significantly. This meant our level of leakage rose
above our target in the north of our region (where
conditions were most severe), partly because we
prioritised maintaining supplies to customers over
leakage repair. Despite this, we quickly recovered
leakage levels to below seasonal levels.
During the 2010–2012 drought, we invested an
additional £17 million and recruited over 60 extra
permanent employees to target leakage. This extra
investment was funded by our investors and did not
come out of customers’ bills.
In 2012–13 we went on to achieve our lowest level
of leakage (189Ml/d) beating our leakage target by
about 10%. This is the result of increased investment,
technological advances that help us find more leaks,
customer support in reporting leaks, and a reduction
in the time it takes us to fix leaks.
We have the lowest level of leakage of any of the
larger companies in the industry.1
1 At 189Ml/d in 2012–13, which is equivalent to 4.97l/d/km of main,
compared with the next lowest water and sewerage company at
5.31l/d/km.
2 Environment Agency, Ofwat, Defra and the Welsh Government, Water
resources planning guideline: The guiding principles for developing a
water resources management plan, June 2012, page 13.
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ANGLIAN WATER
OUTCOMES IN DETAIL
Most importantly, we have heard loud and clear from our
customers that leaks are a major concern, and tackling
leakage emerges as a clear customer priority for further
investment. Many customers perceive leakage as a waste
of a precious resource, a sign that we are not ‘doing
our bit’ to conserve water or invest in infrastructure.
Leaks are seen by some as a key reason why service
interruptions are sometimes necessary.
Scenario testing for the draft 2014 Water Resources
Management Plan shows that our supply–demand
balance is at risk from a combination of climate change,
population growth and the reductions in deployable
output that we need to make to restore abstraction to
sustainable levels. In combination with our extended
metering and water efficiency programmes, reduced
levels of leakage will help us to manage this risk.
In addition, there is a regulatory expectation that levels
of leakage should reduce over the AMP6 period. For
example, in The guiding principles for developing a water
resources management plan, published by Defra, Ofwat,
the Environment Agency and the Welsh Government in
June 2012, it states that: ‘We want to see the downward
trend for leakage continue.’2
To date, targets for reducing leakage in the water
industry have been set by Ofwat and the Environment
Agency using a methodology known as the Sustainable
Economic Level of Leakage (SELL). SELL seeks to
determine the level of leakage at which it is uneconomic
to invest further; as the cost of providing an extra unit of
water from leakage reduction would be more expensive
than providing in another way, such as metering or a
supply scheme.
However, it is now widely recognised that the SELL
methodology does not account for important noneconomic arguments for leakage reduction, such as the
reputational impacts of customer views on leakage and
the effects that these can have on customer behaviours
and demand management.
FLOURISHING
ENVIRONMENT
A SMALLER
FOOTPRINT
CARING FOR
COMMUNITIES
INVESTING FOR
TOMORROW
FAIR
PROFITS
TRANSFORMATION
Customers are reluctant to change their personal
behaviour to conserve water unless they see that we
are leading by example. Over AMP6 we plan to extend
our water efficiency programme to deliver a total water
saving of 9.8Ml/d by the end of the period, and we need
to demonstrate to our customers that we are doing
everything we can to tackle leakage effectively before
we can ask them to reduce their consumption.
However, the more leaks that are repaired, the harder –
and therefore more expensive – it becomes to find those
less visible leaks that remain. Because we are already
below our target, further reductions in our leakage will
be more expensive than developing alternative supplyside options.
In developing our strategy, we have listened to what
customers have told us and we believe that a plan
that looks only at the costs and SELL benefits of
leak repairs is unlikely to deliver acceptable levels of
leakage reduction for customers. Therefore, we have
set ambitious targets to reduce our leakage to less than
10% of our distribution input by 2040 (approximately
93Ml/d), and we will reduce our leakage to less than
15% of our distribution input (172Ml/d) by 2020. In total,
reducing leakage from 211Ml/d to 172Ml/d will result in
a water saving of 39Ml/d. This will make a significant
contribution to the supply–demand balance, and is
equivalent to twice the output of two of new Hall water
treatment works, currently being built to serve the City
of Lincoln.
The increased level of activity to reduce leakage
levels will result in an increase in the number of
bursts being reported. We are proposing to retain
the number of mains bursts as one of our proposed
suite of serviceability measures and we have adjusted
the reference levels to reflect the impact of our new
leakage target.
There is a question as to whether customers are willing
to pay to see reduced levels of leakage. Our willingnessto-pay work indicates that customers would value a
reduction in the level of leakage. On the other hand,
the Consumer Council for Water’s report Research into
customer perceptions of leakage found that, although
customers want more to be done to address levels of
leakage, they do not want bills to be increased.
We have thought carefully about how to balance leakage
reduction against costs. In our draft business plan we
proposed to reduce leakage to 172Ml/d, and this was
considered acceptable by 92% of customers. This very
high level of acceptability was achieved in the context of
our draft plan, which proposed flat bills before inflation.
In our final business plan we are proposing to achieve the
same reduction in leakage whilst reducing bills by 1.8%
before inflation. We therefore believe that we have got
the balance right – delivering bills below inflation and
lower levels of leakage.
•
We will achieve this through a combination of activities,
including:
•
Continuing with current high levels of resources
dedicated to finding and fixing hidden leaks.
•
Continuing with our current rapid repair policy, fixing
leaks within 24 or 48 hours of the leak being reported
to us (depending on its size).
•
Increasing the level of pressure management in our
network to reduce the incidence of bursts.
Targeted mains and communication pipe replacement.
ANGLIAN WATER
OUTCOMES IN DETAIL
69
SATISFIED
CUSTOMERS
FAIR
CHARGES
SAFE, CLEAN
WATER
RESILIENT
SERVICES
SUPPLY MEETS
DEMAND
MEASURES AND
INCENTIVES
Existing incentives
Key behaviours
Long-term supply–demand planning is subject to
outside monitoring and approval through Water
Resources Management Plans. There is an established
and well-publicised measure for supply–demand
balance in the Security of Supply Index, and leakage
in particular is subject to high levels of political,
stakeholder, regulator, public and media scrutiny. For
sewerage, we are obliged to provide new connections
and we are incentivised to ensure that new connections
do not cause capacity issues through our obligations
under the Water Industry Act, and through Environment
Agency scrutiny and enforcement in the event of
pollution or compliance failings.
A key part of our strategy to ensure that supply meets
demand is through demand management, as detailed in
our Water Resources Management Plan. We can reduce
our demand on existing supplies through tackling
leakage. However, leakage reductions are also key to
getting customers to change their behaviours too and
reduce consumption. We cannot expect customers
to value the efficient use of water if they perceive
us to allow water to be wasted through leakage. We
therefore believe the time is right to change our view
of the economic level of leakage to take account of
the effects of these perceptions, and the intrinsic value
that customers place on avoiding leakage. Leakage
figures for any given year are heavily dependent on
weather conditions, and in the past, we have been
driven to uneconomic levels of activity to combat
tough conditions and meet an annual target, such is the
reputational incentive to meet leakage targets. A more
rational approach to leakage would allow for variation
around a glide-path in any given year accompanied by
longer term reductions in average leakage.
Value to customers
Management of demand and provision of new
supplies are necessary to meet regional population
and economic growth. By managing both, we enable
services to be extended to new customers without
existing customers’ services being adversely affected.
Demand management is an important element of
maintaining a balance of supply and demand. Demand
management is a sustainable solution, and can be cost
effective when compared to investment to bring new
supplies online. Reducing household consumption and
leakage can help to delay the need for new sources.
Whilst reducing leakage may increase bills, we have
been given a clear message that customers value a
lower level of leakage than we currently experience.
Leakage is seen as wasteful by customers and is a
highly visible and emotive problem, which undermines
our wider credibility but is particularly damaging to
efforts to manage customer demand.
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ANGLIAN WATER
OUTCOMES IN DETAIL
FLOURISHING
ENVIRONMENT
A SMALLER
FOOTPRINT
CARING FOR
COMMUNITIES
INVESTING FOR
TOMORROW
FAIR
PROFITS
Proposals
The Security of Supply Index (SOSI) is an important
and well-understood metric, and we will commit to
maintaining this at 100 to the end of AMP6.
For leakage, we are proposing a year-on-year reduction
to around 172Ml/d by the end of AMP6, which will be a
three-year average of 177Ml/d. Given the importance of
this measure, and the expenditure included in our Plan
to make these significant reductions, we believe that a
financial incentive is justified. However, we are uncertain
about customer valuation of leakage reduction beyond
this level, and therefore we are not proposing to
include a reward for over delivery in AMP6. Whilst we
are committing to a significant reduction in average
leakage by the end of the AMP, we also recognise that
annual leakage targets are useful in the industry, and so
we will also commit to each year’s performance being
no more than 10% above the glide-path expected to
reach our end-of-AMP target, subject to publication and
a reputational incentive.
A part of the reasoning for reducing leakage is that
this helps to encourage customers to play their part
in reducing consumption; we also propose to include
a financial penalty only on the level of Per Property
Consumption (PPC).
Finally, we accept that there are no established
measures of sewerage supply–demand to match the
SOSI, so whilst ideally we would include a measure, it
is not possible to do so at this time. We will, however,
explore this further for AMP7.
COMMITTED PERFORMANCE LEVELS AND INCENTIVES
Committed
Performance
Level
2019–20
Price control
Measure of success
Incentive type
Units
End of AMP5
prediction
2014–15
Security of Supply
Index (SOSI) – dry
year annual average
Reputational
number
100
100
Water
Reputational
Security of Supply
Index (SOSI) –
critical period (peak)
demand
number
100
100
Water
Leakage – 3-year
average
Penalty only
Ml/d
196
177
Water
Leakage – annual
target (upper
bound)
Reputational
Ml/d
195
189 (plus
Water
annual targets)
Per Property
Consumption (PPC)
Penalty only
l/hh/d
340
333
Water
–
–
–
Sewerage
Sewerage capacity
Future
measure (undefined) measure
ANGLIAN WATER
OUTCOMES IN DETAIL
71
SATISFIED
CUSTOMERS
FAIR
CHARGES
SAFE, CLEAN
WATER
RESILIENT
SERVICES
SUPPLY MEETS
DEMAND
FLOURISHING
T
N
E
M
N
O
R
I
ENV
A FLOURISHING ENVIRONMENT,
FOR NATURE AND FOR EVERYONE
CUSTOMERS SAID...
“There is limited understanding of the nature and
scope of Anglian Water’s work in this area. While
some customers are strongly supportive of the
company’s environmental work, others feel it is
less important than providing the core service
and tackling leaks. However, on average, evidence
suggests household and non household customers
across the Anglian Water region are willing to pay
for environmental performance.
Though wastewater appears to be an ‘invisible’
service that is not thought about very much,
most customers say they are satisfied with the
wastewater and environmental service. Of a range
of environmental issues, preventing pollution of the
water environment emerges as a priority concern
and regarding their wastewater service customers
are least satisfied with the number of incidents in
which untreated sewage pollutes rivers.
Though customers find it difficult to comment on
legal standards, there seems to be strongest support
for going beyond these where there are clear
economic benefits for local people (and/or doing so
does not increase bills substantially).
Though relatively few household customers regularly
take part in formal water-based recreation activities
(swimming, boating, or fishing), most enjoy activities
alongside or nearby a water source at least ‘a few
times a year’. Most customers rate the quality of
nearby water sources as quite or very good. The
region’s beaches seem to be widely enjoyed and are
recognised as an important draw for visitors.
Reducing pollution and improving rivers and canals
for wildlife is customers’ top priority for improving
the local water environment. When customers
understand how much raw water is taken from rivers
to supply them, it heightens the importance of river
water quality. If river pollution does occur, customers
want timely reassurance about the impact on health.
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ANGLIAN WATER
OUTCOMES IN DETAIL
Some qualitative research and engagement activities
suggest loss of biodiversity and natural habitats
may be less of a priority than other environmental
issues (such as water pollution or climate change).
Nevertheless, Stated Preference research indicates
some willingness to pay for improvements, in line
with other environmental measures.”
Quoted from the report Discover, Discuss, Decide:
Summary of research into household and business
customer and stakeholder views: version 10, prepared by
OPM on behalf of Anglian Water. The report is available at:
www.discoverdiscussdecide.co.uk.
OPM is an independent organisation that specialises in market research.
WE WILL...
It’s reassuring that the majority of our customers are
satisfied with the services that we provide, and that
many strongly support our work to protect and enhance
the distinctive and natural environment in our region.
However, we recognise that many people are concerned
about rising bills, and do not see environmental
enhancements as a priority area for investment.
Wherever possible, we will use innovative approaches and
work with others to deliver our environmental obligations
in the most cost-effective manner. For example, the
success of our integrated catchment management
programme will hinge on collaborative working.
? WANT TO KNOW MORE?
See Strategy in focus: Integrated catchment management.
P42
FLOURISHING
ENVIRONMENT
A SMALLER
FOOTPRINT
CARING FOR
COMMUNITIES
INVESTING FOR
TOMORROW
FAIR
PROFITS
We will continue to reduce the risk that our activities
have a negative impact on the water environment.
We aim to reduce the number of incidents where
untreated sewage pollutes rivers and streams, and
improve the quality of the water that leaves our
sites, by improving the onsite instrumentation and
monitoring at our sewerage treatment works and
pumping stations. This will enable us to manage our
assets more proactively and to resolve problems
before they result in a pollution incident.
While we take our legal obligations to protect and
enhance the environment very seriously, we need to
balance investment in these activities with customers’
ability and willingness to pay. Consequently, we will
work with the Environment Agency and Natural
England to make sure that investment made to enhance
the environment delivers real and substantial benefits
and that the pace of implementation is affordable for
our customers.
We will continue to provide exemplary recreational
facilities at our water parks, and ensure that our
recreation business is self-financing. We will ensure
that we meet or exceed the required bathing water
standards and that our assets do not prevent beaches
from applying for Blue Flag status.
Biodiversity is not a priority area for investment for the
majority of our customers, but we have an important
role to play in conserving biodiversity in our region.
We will work in partnership with others to enhance the
aquatic environment in a way that is cost effective for
our customers, through initiatives such as the Water for
Wildlife project, our partnership with the Wildlife Trusts,
and RiverCare.
Allocating expenditure to outcomes:
We have allocated 100% of our capital maintenance to
‘Investing for tomorrow’, because this is about maintaining
our current level of service. Together with operating costs
and retail costs, this expenditure falls into the category
‘Running the business and maintaining services’.
We have not allocated any expenditure to ‘A smaller
footprint’ because this outcome is all about doing things
differently, rather than spending money. We have already
demonstrated that, instead of costing more, reducing our
use of finite resources results in cost savings.
Similarly, we have not allocated any expenditure to ‘Fair
profits’. We believe that a fair profit depends on driving
efficient performance throughout the whole business
rather than increasing costs for customers.
ANGLIAN WATER
OUTCOMES IN DETAIL
73
SATISFIED
CUSTOMERS
FAIR
CHARGES
SAFE, CLEAN
WATER
RESILIENT
SERVICES
SUPPLY MEETS
DEMAND
FLOURISHING
T
N
E
M
N
O
R
I
ENV
A FLOURISHING ENVIRONMENT,
FOR NATURE AND FOR EVERYONE
KEY GROUPS
The regional
environment
Customers
BUSINESS GOALS
100% of our customers very satisfied with our service.
Frontier performer in the UK.
Lead and champion the effective management of the
impact of growth and climate change.
No pollutions.
WE THINK THAT...
1.
2.
Our activities can have positive
and negative impacts upon
the environment.
• We abstract water from rivers and
groundwater sources.
• We collect wastewater from homes and
businesses then clean it before returning
it to the environment. In many cases,
the water that we discharge plays an
important role in supporting the flow in
rivers and streams in dry periods.
• Our reservoirs provide important habitats
for wildlife, as well as amenity value
for visitors.
• We generate waste, some of which
we recycle and some of which we send
to landfill.
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ANGLIAN WATER
OUTCOMES IN DETAIL
Environmental regulators
Environmental NGOs (NonGovernmental Organisations)
Pioneer responsible water stewardship.
A healthy, properly functioning
natural environment is the foundation
of sustained economic growth,
prospering communities and
personal well-being. Therefore, it is
important that we play our part in
helping to protect and enhance our
regional environment.
Users of the environment
(includes abstractors,
agriculture, amenity users,
industry, tourism,
fisheries)
3.
In order to achieve this
outcome we will need to work in
partnership and collaborate with
all key groups, as their activities
also affect the environment.
• Other sectors that abstract water
from the environment include
agriculture, industry and
power generation.
• Land management practices
affect the quality of water in
the environment. For example,
fertilisers used by farmers and
pollution from roads can be
washed into watercourses
by rainwater.
4.
Tariffs that increase the price
of water during dry periods are
not an effective way of reducing
domestic water consumption
in the UK, because household
customers can only make
small changes to their water
consumption in response to
price changes.
5.
Many of our activities are
governed by European and UK
legislation and standards set
out in a range of directives to
protect the environment, such as
the Water Framework Directive
and Habitats Directive. We have
a statutory duty to protect the
environment, and also enhance
it where there are clear benefits.
We also have a statutory duty to
protect biodiversity.
FLOURISHING
ENVIRONMENT
A SMALLER
FOOTPRINT
STRATEGY:
FLOURISHING
ENVIRONMENT
Protecting and enhancing regional
biodiversity:
Deliver our Biodiversity Action Plan, which
identifies ‘priority’ habitats and species,
and outlines targets for their conservation
and enhancement.
Work in partnership with others to enhance
the aquatic environment in a way that is
cost effective for our customers.
Sensitive management of our 47 Sites of
Special Scientific Interest (SSSIs).
OUTPUTS
• Conservation management at our water
and wastewater sites.
• Water for Wildlife, RiverCare and
BeachCare initiatives.
• SSSIs meet legal obligations.
Connecting our customers to the
environment:
Engage with communities through schools
and community education to inspire and
educate the next generation.
Inspire visitors at our water parks to adopt
sustainable behaviours through positive
experiences of the environment, and the
demonstration of exemplary water and
energy-efficient facilities.
OUTPUTS
• Schools and community education
programme.
• Accessible water parks with exemplary leisure
facilities and resource-efficient buildings.
• RiverCare and BeachCare.
Integrated catchment management
(working with others to protect water in
the environment):
Drive integrated catchment management
approaches within our region to reduce
the need for carbon-intensive water and
sewerage treatment solutions. Work to
change practices within catchments to
stop pollutants entering water sources.
This will involve working with land
managers (including farmers), the
Environment Agency, supermarkets
and others to ensure best practice is
understood and implemented.
OUTPUTS
• Catchment-based advice and education at
farm level (all surface water catchments).
• Modelling and investigatory work.
• Test product substitution in selected
higher-risk catchments.
Building knowledge and understanding:
Undertake a joint innovation and research
programme (with industry and academia) to
understand how ecosystems services could
support our key objectives.
OUTPUTS
• Development of ecosystems services
approaches.
CARING FOR
COMMUNITIES
INVESTING FOR
TOMORROW
Reducing the impact of our activities on
the environment:
Reduce our water footprint and our leakage.
Increase our raw water storage capacity and
resilience to drought to reduce the volume of
water we abstract from the environment in
dry periods.
Work closely with the Environment Agency
to reduce unsustainable abstractions (where
there is clear evidence that they are causing
harm), and work closely with Defra and
others to inform abstraction reform.
Explore opportunities for trading with other
water users.
Continue to reduce pollution incidents by
improving the onsite instrumentation and
monitoring at our wastewater treatment
works to manage them more proactively and
to resolve problems before they result in a
pollution incident.
OUTPUTS
• Informed strategy for water footprint
measurement and reduction.
• Leakage figures down to 15% of the water
we put into our network by 2020, and less
than 10% by 2040.
• Increased raw water storage capacity
and Trent to Rutland raw water
transfer scheme.
• Onsite instrumentation and monitoring.
• Naturally beneficial trading.
Working with customers to reduce their
water consumption:
Work with household and business
customers to help them reduce their
water consumption.
Support and encourage developers to
build water-efficient homes by abolishing
infrastructure charges for homes that achieve
80l/p/d (equivalent to levels five and six in the
Government’s Code for Sustainable Homes).
OUTPUTS
• Behavioural change campaigns (Drop 20).
• Where physically possible, all household
customers are metered.
• Smart meters and monthly meter readings.
• Water efficiency audits and equipment.
• Water strategy services for businesses.
Recycling more waste:
Continue to measure, manage and reduce
the amount of waste we produce.
OUTPUTS
• Reduction in volume of waste sent to
landfill.
• Increased volumes of waste recycled.
Meeting legal requirements:
Work with others (such as the Environment
Agency and Defra) to ensure that we meet
all of our legal requirements. Work with
the Environment Agency and others to
ensure that investment decisions driven
by environmental legislation are based on
robust evidence.
FAIR
PROFITS
OUTCOMES FOR
THE KEY GROUPS
The regional environment:
Our activities create net gains for the
natural environment and contribute to the
creation of a coherent ecological network.
Customers:
The environment supports a growing
economy and provides amenity value for
families and communities. Customers
understand the value of the environment
and their role in protecting it. The cost of
meeting legal requirements and pace of
implementation is proportionate.
Users of the environment:
The regional environment supports tourism
and industry. Water and land users are
engaged in sustainable approaches to
environmental land management.
Environmental regulators:
All legal requirements are met, and policy
goals are achieved.
Environmental NGOs:
We take our responsibility towards the
environment seriously and work with
NGOs to ensure best practice.
A GOOD OUTCOME
WOULD BE...
The environment in our region flourishes.
Rivers, lakes, aquifers and coastal waters
support a rich biodiversity, contribute to a
growing economy and provide a valuable
amenity for families and communities. There
is joined-up, effective and collaborative
management of the water cycle in our
catchments (an area drained by a river) from
source to tap and back to the environment.
Our activities are sensitive to environmental
needs, and risks and adverse impacts are
avoided. People, businesses, water- and
land-users in our region are engaged in
the challenges of maintaining a suitable
environment. All legal requirements are met.
OUTPUTS
• Compliance with legislation.
• Proportionate cost.
ANGLIAN WATER
OUTCOMES IN DETAIL
75
SATISFIED
CUSTOMERS
FAIR
CHARGES
SAFE, CLEAN
WATER
STRATEGY IN
FOCUS: PROTECTING
AND ENHANCING
REGIONAL
BIODIVERSITY
Our operations are uniquely and
necessarily bound up with the health of
our environment as we take from and
return water to it on a large scale. Some
of our operational sites are of particular
ecological importance. Because of this,
we are in a unique position to make
a positive impact on the East of
England’s wildlife.
We have extensive statutory duties and obligations in
relation to environmental protection and improvement,
and these extend to the requirement to act to protect
and encourage biodiversity.
We are responsible for 47 Sites of Special Scientific
Interest (SSSIs)1 across our region, many of which also
provide valuable spaces for recreation, such as Rutland
Water, Pitsford Water and Grafham Water. Natural
England is responsible for assessing the condition of
SSSIs, and the Government has set a target for all SSSIs
to be in ‘favourable’2 or ‘recovering’ condition by 2020.
We recognise, though, that customers have mixed
opinions about how much we should invest to secure
a flourishing environment. While some are strongly
in favour of our work in this area, asking us to do
more than the minimum we are required to, many are
concerned about rising bills and do not see this as a
priority area for investment.
We will therefore continue to target our work carefully,
and look for new and innovative approaches to deliver
the most value. Increasingly this involves working with
others to reap the maximum environmental benefits for
the least cost.
1 A Site of Special Scientific Interest (SSSI) is an area of land given a
statutory designation by English Nature or the Countryside Council for
Wales because of its nature conservation value.
2 ‘Favourable’ condition means that the SSSI land is being adequately
conserved and is meeting its ‘conservation objectives’; however, there
is scope for the enhancement of these sites.
76
ANGLIAN WATER
OUTCOMES IN DETAIL
RESILIENT
SERVICES
SUPPLY MEETS
DEMAND
COLLABORATION
For instance, using community programmes we are
able to tap into a large volunteer workforce and have
seen substantial environmental benefit delivered for
very little financial investment. We work in partnership
with Keep Britain Tidy to deliver the RiverCare project,
which encourages groups to collect litter, and carry
out species surveys and habitat improvements in a
safe, appropriate and rewarding way. RiverCare groups
raise awareness of locally important species (such as
the white-clawed crayfish and the water vole), remove
graffiti, carry out wildlife surveys, reclaim riverbanks
from anti-social behaviour and remove invasive plant
species. We now plan to expand the project to coastal
areas under the BeachCare brand.
These approaches also deliver social benefits that can
be important in difficult economic times. They target
directly the environmental improvements customers
think should be our priority: reducing pollution and
improving rivers and canals.
In addition we have a number of more specific scientific
goals. In 2010 we launched our Biodiversity Action Plan
(BAP), which sets out how we will meet biodiversity
targets on the land we own. Developed with expert
input from Natural England, the Royal Society for the
Protection of Birds and the Wildlife Trusts, our BAP
identifies 19 habitats and 60 priority species of plants,
animals and insects that we can help to conserve. We
will continue to work in partnership with the Wildlife
Trusts to manage our SSSIs at Rutland Water, Pitsford
Water and Grafham Water.
We will also continue work with the Wildlife Trusts and
the Environment Agency under the national Water for
Wildlife project. We will build on successful projects
running in Norfolk, Suffolk, Lincolnshire, Cambridgeshire,
Bedfordshire and Essex. For example, the Lincolnshire
Chalk Streams Project is working to conserve and enhance
chalk and limestone streams in the county.
To date, our strategy in this area has been successful
and cost effective. For example, in 2009, only 17% of
our SSSIs were in ‘favourable’ condition. Today, over
45% are classified as ‘favourable’. Nearly all the rest are
in ‘recovery’ condition.
FLOURISHING
ENVIRONMENT
A SMALLER
FOOTPRINT
CARING FOR
COMMUNITIES
INVESTING FOR
TOMORROW
FAIR
PROFITS
STRATEGY
IN FOCUS:
IMPLEMENTING
THE NATIONAL
ENVIRONMENT
PROGRAMME
The National Environment Programme
(NEP) lists the environmental
improvement schemes that water
companies need to fulfil to ensure
that European and national WFD
targets are met.
•
Each water company’s NEP is different, and the types of
actions that we may need to take include:
•
Improving the quality of water that is discharged
from sewage treatment works.
•
Investigating the risk from certain chemicals and
assessing the best treatment options preventing
chemicals from entering groundwater.
•
Protecting the waters where there are shellfish, which
will improve the quality of shellfish that people eat.
•
Ensuring that abstractions do not impact adversely
on habitats that are protected by law.
Improving the quality of bathing waters.
Undertaking these activities may prove very expensive.
We take our legal obligations to protect and enhance
the environment very seriously, but we need to make
sure that any investment results in real improvements to
the environment before asking customers to pay more.
We also recognise that at a time of continued economic
uncertainty, we need to ensure that bills are affordable
and represent value for money.
COLLABORATION
Consequently, we have been working closely with the
Environment Agency to ensure that our investment
decisions regarding environmental improvements are
based on robust evidence, and that we are only making
investment where there is clear evidence either that
our activities are causing harm, or that investment will
deliver clear benefits for customers.
In addition, we have worked with the Environment
Agency within the guidelines set out in their Managing
Uncertainty guidance to understand and manage the risk
of further environmental obligations that may appear in
Phases 4 and 5 of the National Environment Programme.
These obligations will not be known until after our
Business Plan has been submitted. We will work with the
Environment Agency to challenge the robustness of the
evidence for further investment, and where we agree
investment is justified we may seek an adjustment to the
Final Determination cover these obligations.
ANGLIAN WATER
OUTCOMES IN DETAIL
77
SATISFIED
CUSTOMERS
FAIR
CHARGES
SAFE, CLEAN
WATER
RESILIENT
SERVICES
SUPPLY MEETS
DEMAND
MEASURES AND
INCENTIVES
Existing incentives
Key behaviours
The Environment Agency and other regulators
adequately incentivise compliance with our statutory
obligations through both reputational (for example,
publishing compliance statistics) and financial (for
example, enforcement action or prosecutions)
incentives. Such incentives work well in ensuring that
we meet our statutory obligations such as the effects
of our abstractions, discharges and operations on
both the natural environment and ecology. A suite of
environmental measures are also included in Ofwat’s
current KPIs.
However, we recognise that customers do not value
compliance with our statutory obligations for their
own sake. Customers value the environment and
ecology itself. In some cases, a focus purely on the
effects of our operations on the environment results in
significant investment of customers’ money to improve
compliance, but without resulting in improvements
in either the environment or ecology. This is because
there are normally contributions to environmental or
ecological detriment from a number of sources that
interact in complex ways, and we are only one of
those contributors.
Therefore, we are proposing incentives that encourage
us not only to consider our own compliance, but also
to understand the wider effects of all contributors to
environmental detriment. Once we understand where
problems originate, we also feel it is right that we do our
best to encourage others to address these problems.
Only in this way will our customers see the benefits from
improvements we make to our assets and operations
in terms of real improvements in the environment and
ecology that they value.
We must be mindful, however, that we do not assume
responsibility for the activities of others. It is not fair
that our customers should fund all environmental
improvements. So, whilst we will work to understand
what needs to be done, and encourage others to
play their part, we will do so only to ensure that the
investments we make in our assets and activities flow
through into genuine benefit to customers in terms of
the things they value.
Value to customers
The amount of investment we make to drive
environmental improvements is primarily driven by
our statutory obligations. Customers’ support for legal
standards seems to be strongest where there are clear
economic benefits for local people, and where the costs
of improvements do not impact unduly on bills. Reducing
pollution and improving water resources for the benefit
of wildlife are also priorities.
RiverCare volunteers improving stretch of River Purwell
in Hitchin, Hertfordshire.
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ANGLIAN WATER
OUTCOMES IN DETAIL
FLOURISHING
ENVIRONMENT
A SMALLER
FOOTPRINT
CARING FOR
COMMUNITIES
INVESTING FOR
TOMORROW
FAIR
PROFITS
Proposals
Given that the key driver for environmental
improvement is through statutory obligations, and
that adequate regulatory pressure and incentives
already exist from the Environment Agency and
other regulators, we do not feel that further financial
incentives are appropriate to ensure that we continue
to meet our obligations. We will continue to monitor
and report to our regulators on our performance in
terms of abstraction and discharge compliance, and
place a particular emphasis on pollution incidents,
which our customers have told us is a priority concern.
These same regulators will also continue to ensure
that we make the investments necessary to meet our
obligations, funded by customers through price limits.
However, we do not feel that such measures adequately
incentivise the key behaviours identified above.
Therefore, we are proposing a further two measures of
success against which we have set committed levels
of performance relating to bathing waters and Sites of
Special Scientific Interest (SSSIs) which meet criteria
above the minimum statutory requirement. We will
publish our performance against these commitments,
which will provide a reputational incentive for us to fulfil
our commitments. In both cases we have obligations to
ensure that our assets and activities do not prevent a
bathing water or SSSI from attaining the legal minimum,
but even so, we can invest in improvements to our assets
or operations but see no corresponding improvement
in the area. This can be because there are other parties
whose activities also affect the area.
These measures will encourage us to work with others
to understand wider issues and collectively work on
making improvements. We believe this will result in
investments that actually deliver better-quality bathing
waters and SSSIs rather than simply meeting an
abstract obligation with no tangible benefit delivered to
customers. However, working in partnership with others
means that meeting our commitments is not entirely
within our control.
We have also taken up the challenge from Ofwat to
implement an Abstraction Incentive Mechanism (AIM),
which recognises that the water we take from water
sources can have an impact on the environment. At
specific sites that meet the criteria set by Ofwat, we
will monitor our abstraction, and if abstraction is above
the established historic level for that source, we will
pay a small financial penalty, and we will publish our
performance against these historic levels to provide
a more powerful reputational incentive. Given the
uncertainty around this mechanism, over measurement,
customer valuation and how it will operate, we believe
that only a small penalty (and no reward) is appropriate.
As confidence grows we would expect to increase the
financial penalties and possibly introduce an option to
earn rewards for improvement in future AMP periods.
COMMITTED PERFORMANCE LEVELS AND INCENTIVES
Committed
Performance
Level
2019–20
Price control
Measure of success
Incentive type
Units
End of AMP5
prediction
2014–15
% of bathing
waters attaining
‘excellent’ status
Reputational
%
58%
67%
Sewerage
% of SSSIs
(by area) with
‘favourable’ status
Reputational
%
45%
50%
Water and
sewerage
Abstraction
Incentive
Mechanism (AIM)
Penalty only
Ml/d
Site specific
No increase on
historic level
Water
ANGLIAN WATER
OUTCOMES IN DETAIL
79
SATISFIED
CUSTOMERS
FAIR
CHARGES
SAFE, CLEAN
WATER
RESILIENT
SERVICES
SUPPLY MEETS
DEMAND
A SMALLER
FOOTPRINT
LEADING BY EXAMPLE ON REDUCING EMISSIONS AND
CONSERVING THE WORLD’S NATURAL RESOURCES
CUSTOMERS SAID...
“There is widespread awareness of fluctuating
weather patterns. While many customers link these
fluctuations to climate change, a minority question
the evidence base for this.
There is support for Anglian Water to reduce its
own carbon footprint, as the biggest consumer of
energy and emitter of CO2 in the region. However,
opinion is divided about whether the company has
a leading role to play more widely (for example, in
campaigning or influencing the behaviour of others).
This is an area in which many would like to see the
company working in partnership with Government,
customers and suppliers.
There is widespread concern about securing future
energy supplies; many customers are supportive
of developing cleaner sources of energy (including
from waste).
Customers often make a link between tackling
climate change and addressing leaks and conserving
water already in the treatment system.
There is limited evidence about views on water footprinting. However, some customers express interest
in this area and would like information on the topic
to be more widely disseminated.”
Quoted from the report Discover, Discuss, Decide:
Summary of research into household and business
customer and stakeholder views: version 10, prepared by
OPM on behalf of Anglian Water. The report is available at:
www.discoverdiscussdecide.co.uk.
OPM is an independent organisation that specialises in market research.
WE WILL...
As one of the largest emitters of greenhouse gases in
the East of England, we must play our part to mitigate
climate change.
Over the last five years we have seen how targeting
ambitious reductions in our carbon footprint drives
innovation, which delivers substantial benefits to
customers: costs are lower than they would have been,
and services are more resilient. We will continue this
approach but we also plan to work even more closely
with our suppliers to encourage and help them reduce the
footprint of the products and services they provide to us.
We expect this to deliver even greater benefits.
? WANT TO KNOW MORE?
See Strategy in focus: Reducing our carbon and
water footprint.
P84
We will continue to collaborate with government
and industry to promote low-carbon construction
and procurement. We will continue to chair the
Infrastructure Working Group of the Government’s
Green Construction Board.
We already generate substantial amounts of renewable
energy, primarily from gas generated when we process
sewage sludge. We plan to increase the capacity and
reliability of these processes. We will also explore
options for the development of wind and solar energy
generation on our sites.
Reducing leakage will also reduce our carbon and water
footprints because we have to produce and treat less
water. We plan to reduce our leakage significantly using
a range of methods.
? WANT TO KNOW MORE?
See Strategy in focus: Leakage.
P68
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ANGLIAN WATER
OUTCOMES IN DETAIL
FLOURISHING
ENVIRONMENT
A SMALLER
FOOTPRINT
CARING FOR
COMMUNITIES
INVESTING FOR
TOMORROW
FAIR
PROFITS
CASE
STUDY
It’s win–win for wind turbines
In September 2012, we commissioned our first large
wind turbine. Located on our March wastewater
treatment works, this 2.3 MW turbine will be used
to power the onsite treatment processes, with any
excess power being sent to the grid. We have two
further turbines of the same size under construction.
We expect to commission these early 2014, giving a
total installed capacity of 6.9 MW, and generating a
further 14.5 GWh of renewable energy per year.
Allocating expenditure to outcomes:
We have allocated 100% of our capital maintenance to
‘Investing for tomorrow’, because this is about maintaining
our current level of service. Together with operating costs
and retail costs, this expenditure falls into the category
‘Running the business and maintaining services’.
We have not allocated any expenditure to ‘A smaller
footprint’ because this outcome is all about doing things
differently, rather than spending money. We have already
demonstrated that, instead of costing more, reducing our
use of finite resources results in cost savings.
Similarly, we have not allocated any expenditure to ‘Fair
profits’. We believe that a fair profit depends on driving
efficient performance throughout the whole business
rather than increasing costs for customers.
We worked with ASC Renewables – an established
ethical developer of renewable energy projects –
to construct a single wind turbine on land within
the wastewater treatment works under a planning
consent granted by Fenland District Council in 2009.
Work commenced on site in February 2012 and the
turbine started generating power in September,
following final testing and commissioning.
The annual electricity generated by the March wind
turbine will be approximately 4.45 GWh of renewable
electricity per year, which is enough to power 12% of
all local households, or approximately 1,000 homes.
Domestic and household water consumption is an
important source of carbon emissions, especially from
water heating. We will work closely with business and
household customers to support them to reduce their
water consumption, and we will support developers to
build sustainable homes.
? WANT TO KNOW MORE?
See Strategy in focus: Water efficiency.
P66
ANGLIAN WATER
OUTCOMES IN DETAIL
81
SATISFIED
CUSTOMERS
FAIR
CHARGES
SAFE, CLEAN
WATER
RESILIENT
SERVICES
SUPPLY MEETS
DEMAND
A SMALLER
FOOTPRINT
LEADING BY EXAMPLE ON REDUCING EMISSIONS AND
CONSERVING THE WORLD’S NATURAL RESOURCES
KEY GROUPS
Global and
regional environment
Customers (household
and business customers)
Government, regulators
and public bodies
(including local authorities)
BUSINESS GOALS
Exceed a 7% reduction in real terms in gross
operational carbon by 2020 from a 2015 baseline.
Land managers
Deliver a 70% reduction in capital (embodied)
carbon by 2030 from a 2010 baseline.
Supply chain
Frontier performer in the UK.
Developers
WE THINK THAT...
1.
2.
82
The world’s natural resources
are increasingly under stress.
These include fresh water, fossil
fuels, chemicals, aggregates
and minerals.
The emission of greenhouse
gases is causing global climate
change. We are one of the
biggest emitters of greenhouse
gases in the East of England,
and our region is one of the most
vulnerable to the impacts of a
changing climate. Therefore it is
important that we play our part in
mitigating climate change.
ANGLIAN WATER
OUTCOMES IN DETAIL
3.
As a nation we are currently
consuming resources at an
unsustainable rate. In addition
to this, a changing climate
and growing population are
putting increasing pressure
on the availability of
freshwater resources.
4.
Responsible use of finite resources
is good for the environment and
good for our customers.
• By reducing our reliance on finite
resources we will mitigate the
increasing costs associated with
their use.
• By becoming less reliant on external
supplies of energy we will make our
business more resilient.
• By challenging ourselves and
our supply chain to reduce our
dependence on finite resources
we will drive innovation.
5.
By taking a leading role and
collaborating with others we will
create a smaller footprint and help
others to do the same.
FLOURISHING
ENVIRONMENT
A SMALLER
FOOTPRINT
STRATEGY:
A SMALLER
FOOTPRINT
Reducing our energy use and
carbon footprint:
Collaborate with all key groups to measure,
manage and reduce energy and carbon.
Reduction strategies include:
Investing to improve the efficiency of our
existing assets.
Reducing the carbon in the new assets
we build.
Increasing our production and use of
renewable energy.
OUTPUTS
• Energy efficiency investment programme.
• Carbon is a key consideration in the
investment and design process.
• Renewable energy optimisation and
investment.
Reducing our water footprint:
Collaborate with all key groups to measure,
manage and reduce our water footprint.
Strategies include:
Measure the volumes and scarcity
of freshwater used in providing water
and wastewater services and building
new assets.
Reduce our water footprint against a
fixed baseline.
OUTPUTS
• Industry-leading awareness of our
water footprint.
• Informed strategy for water footprint
measurement and reduction.
• Water footprint is a key consideration in
the investment and design process.
Leakage:
Continue to reduce leakage through
rapid leakage repair, proactive leakage
detection, and proactive management of
our network to reduce the risk of leaks
developing. Reducing our leakage will
save water, energy and carbon.
OUTPUTS
• Leakage figures down to 15% of the water
we put into our network by 2020, and less
than 10% by 2040.
Building knowledge and understanding:
Undertake a joint innovation and research
programme (with industry and academia)
to mitigate the impact of using finite
resources, and to reduce our dependence
upon them.
OUTPUTS
• Water Innovation Network.
• Implementation of innovative solutions.
CARING FOR
COMMUNITIES
Working with our supply chain to reduce
the use of natural resources:
Encourage our suppliers to measure,
manage and reduce carbon emissions
and the water footprint of their own
organisations and in the products and
services they provide to us, and to others.
OUTPUTS
• Carbon emissions and water footprint
measured and reduced across
the supply chain.
Integrated catchment management
(working with others to protect water in
the environment):
Drive integrated catchment management
approaches within our region to reduce
the need for carbon-intensive water and
wastewater treatment solutions. Work to
change practices within catchments to stop
pollutants entering water sources. This
will involve working with land managers
(including farmers), the Environment
Agency, supermarkets and others to
ensure best practice is understood
and implemented.
OUTPUTS
• Catchment-based advice and education at
farm level (all surface water catchments).
• Modelling and investigatory work.
• Test product substitution in selected
higher-risk catchments.
Working with customers to reduce their
water consumption:
Work with household and business
customers to help them reduce their water
consumption.
OUTPUTS
• Behavioural change campaigns
(for example, Drop 20).
• Where physically possible, all household
customers are metered.
• Smart meters and monthly meter
readings.
• Water efficiency audits and equipment.
• Water strategy services for businesses.
INVESTING FOR
TOMORROW
FAIR
PROFITS
Developing policy and legislation:
Ensure that the impacts of water quality
legislation are properly considered at the
point of development, interpretation and
implementation.
OUTPUTS
• Evidence base for policymaking.
OUTCOMES FOR
THE KEY GROUPS
Global and regional environment:
The impacts of our activities on the global
and regional environment are minimised.
Customers:
Customers are assured that we are doing
our bit to reduce society’s use of natural
resources, and develop a sustainable
economy in our region. Customers benefit
from cost savings and increased resilience.
Government regulators and
public bodies:
We do our bit to help the UK achieve
environmental targets and support the
development of a green economy. UK
plc creates a competitive advantage
internationally.
Land managers:
Land managers are supported by us to
develop a sustainable and cost-effective
use of their land.
Supply chain:
Our supply chain meets challenging targets
to reduce the use of natural resources in
their products and services.
Developers:
Developers are supported to achieve
the Code for Sustainable Homes. This will
encourage sustainable growth.
Working with developers:
Support and encourage developers to
build water-efficient homes by abolishing
infrastructure charges for homes that
achieve 80l/p/d (equivalent to levels five
and six in the Government’s Code for
Sustainable Homes).
Work with developers and others to ensure
that surface water is drained sustainably
from new developments.
OUTPUTS
• Provision of infrastructure.
• Water-efficient homes.
• Sustainable Drainage Systems.
• Water reuse initiatives.
A GOOD OUTCOME
WOULD BE...
We lead by example on mitigating climate
change and protecting natural resources.
Decarbonisation and resource efficiency
are central to investment and operational
decisions. We continue to reduce energy
consumption and carbon emissions
related to water production, consumption
and disposal. Water footprinting is
established as a social and business norm
and drives down usage.
ANGLIAN WATER
OUTCOMES IN DETAIL
83
SATISFIED
CUSTOMERS
FAIR
CHARGES
SAFE, CLEAN
WATER
STRATEGY IN
FOCUS: REDUCING
OUR CARBON AND
WATER FOOTPRINT
The most effective way for us to
measure our emissions of greenhouse
gases and consumption of freshwater is
in terms of carbon and a water footprint.
RESILIENT
SERVICES
Carbon footprint
In 2010, we set ourselves ambitious targets to reduce
our carbon footprint, and we have made significant
progress against them:
Reduce our operational
carbon emissions by
10% in real terms
between 2010 and 2015
By 2012–13, annual net
operational carbon
emissions had reduced
by 2.1%.
Halve the embodied
carbon in new assets in
2015 compared to 2010
In the third year of this
five-year regulatory
period, we recorded
a 39% reduction in
embodied carbon,
savings that reduced the
cost of projects too.
INNOVATION
Our carbon and water footprints are measured in two
parts: the operational footprint (also known as ‘direct
water’), and the ‘embodied’ footprint (also known as
‘capital carbon’).
Operational footprint:
•
•
The carbon associated with the day-to-day operation
of our assets, such as the energy required to pump
and treat water.
The water that we use to treat and supply a
litre of drinking water; this includes water lost
through leakage.
TRANSFORMATION
In line with our commitment to long-term planning we
have set new goals across a much longer time horizon.
Operational carbon:
To exceed a 7%
reduction in real terms
in gross operational
carbon by 2020 from a
2015 baseline.
Embodied (capital)
carbon:
To deliver a 70%
reduction in capital
(embodied) carbon
by 2030 from a 2010
baseline.
Embodied footprint:
•
The sum of all the carbon and water required to build
new assets (treatment works, pipes, etc).
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ANGLIAN WATER
OUTCOMES IN DETAIL
SUPPLY MEETS
DEMAND
FLOURISHING
ENVIRONMENT
A SMALLER
FOOTPRINT
CARING FOR
COMMUNITIES
INVESTING FOR
TOMORROW
FAIR
PROFITS
CASE
STUDY
CASE
STUDY
Saving energy, carbon and cost by
smarter electricity metering on sites
Innovating with new materials
The installation of smarter electricity metering on
our smaller sites and sub-metering of our larger
sites has allowed us to identify and respond to
wastage much more rapidly. One example is the
main pumping station for our Cambridge sewage
treatment works where we fitted meters to measure
the energy efficiency of individual pumps. This gave
us the opportunity to save £53,000 per annum by
ensuring the pumping station always operates in the
most efficient way.
We will continue to work to develop more initiatives like
these, working closely with our suppliers to capture and
introduce innovative ideas quickly and effectively.
Water footprint
We are leading the way in terms of developing a
methodology to measure our water footprint. Our water
footprint includes the volume of freshwater used to
treat and supply each litre of potable water, and it is
measured over the entire supply chain.
We developed, in collaboration with one of our
suppliers, an innovative recycled plastic manhole cover
and frame, which has a much lower carbon content
than the ductile iron manholes used in the past.
The cover and frame contain 75% less embodied
carbon than the ductile iron covers. They also weigh
less, allowing for easier installation. As the plastic has
no scrap value, it also reduces the risk of theft.
COLLABORATION
Our water footprint also considers environmental
impact. When calculating our water footprint, we
need to consider not only the total volume of water
consumed, but where and when that water was
abstracted from the environment. This is important
because abstractions have a very different impact
depending on where and when they are taken.
Our strategy is to measure, manage and reduce our
water footprint. Water footprinting is a relatively new
concept, and the first step is to come up with a robust
measurement method. From 2015, we will begin to
report our water footprint annually, and we will set
targets for both direct and embodied water, and take
action to reduce our total water footprint.
ANGLIAN WATER
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85
SATISFIED
CUSTOMERS
FAIR
CHARGES
SAFE, CLEAN
WATER
RESILIENT
SERVICES
SUPPLY MEETS
DEMAND
MEASURES AND
INCENTIVES
Existing incentives
Key behaviours
As well as broad incentives from Government and
society to reduce carbon emissions, we have publicly
targeted reductions in both operational and embodied
carbon through our Love Every Drop leadership
platform. We are achieving these ambitious goals by
targeting reductions that also provide cost savings,
giving a financial as well as reputational incentive
to reduce our footprint. Ofwat’s KPIs also include
reputational incentives to reduce emissions.
We wish to encourage innovation in reducing our carbon
and water footprints where doing so also provides cost
savings. In addition this makes us less dependent on
natural resources that may have varying availability in
the future, thereby increasing our resilience and also
reducing our exposure to future cost shocks.
Being a low-lying region, we are particularly susceptible
to the dangers of climate change. By leading on carbon
reduction we are better able to influence others to
reduce their emissions.
Reducing our water footprint also improves our ability
to influence environmental policies, secure future
supplies when needed, and to influence customer
behaviour and value of water.
Value to customers
We are seeking to reduce our carbon and water
footprints where this also reduces our costs. This provides
its own financial benefit to customers through lower bills,
and reduces the risks they face from climate change.
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ANGLIAN WATER
OUTCOMES IN DETAIL
FLOURISHING
ENVIRONMENT
A SMALLER
FOOTPRINT
CARING FOR
COMMUNITIES
INVESTING FOR
TOMORROW
FAIR
PROFITS
Proposals
We are proposing to continue our industry-leading
approach to targeting reductions in our carbon
footprint and to extend this to also consider our water
footprint through two reputational incentives for
carbon and one future measure on water. Financial
incentives are not appropriate since we are only
seeking reductions where they also provide cost
reductions. Cost reductions provide us with a financial
incentive in the short term and customers with financial
benefit over the longer term. We have set committed
performance levels for carbon based on our own
business goals developed as part of our Love Every
Drop commitments.
For embodied carbon we will continue to report on
reductions from a 2010 baseline to recognise the
significant movement made in this area under Love
Every Drop.
We have stated that water footprinting is a future
measure because our measurement of our footprint
is still under development. However, we hope to
be in a position to publish performance against a
water footprint measure in AMP6, but a committed
performance level is not appropriate at this stage.
COMMITTED PERFORMANCE LEVELS AND INCENTIVES
Committed
Performance
Level
2019–20
Measure of success
Incentive type
Units
End of AMP5
prediction
2014–15
Operational carbon
(% reduction from
2015 baseline in
real terms)
Reputational
%
0%
7%
Whole
business
Embodied carbon
(% reduction from
2010 baseline)
Reputational
%
50%
60%
Whole
business
Water footprint
(% reduction
from baseline in
real terms)
Future
measure
%
–
–
Whole
business
Price control
ANGLIAN WATER
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SATISFIED
CUSTOMERS
FAIR
CHARGES
SAFE, CLEAN
WATER
RESILIENT
SERVICES
SUPPLY MEETS
DEMAND
CARING FOR
S
E
I
T
I
N
U
M
M
CO
WORKING RESPONSIBLY WITH AND FOR YOUR COMMUNITY
CUSTOMERS SAID...
“Customers are surprised at the extent of the
company’s activities in the community. While some
customers are strongly supportive of this work,
it tends to be regarded as less important than
delivering the core service.
There is support for additional (practical)
assistance for vulnerable customers, from those
who receive it and those who don’t. Although
awareness of this support is currently limited,
evidence suggests it is increasing.
Anglian Water’s recreation parks are popular.
Customers appreciate being able to use reservoirs
for leisure activities, however they make a number
of suggestions for improvements to facilities, for
example reducing parking costs (which are seen as
a barrier to access for some groups).
The company’s schools’ programme is widely
supported as a way of creating a generation of
responsible future customers. There is support for
expanding the programme to include more schools
and different groups of young people.
Complaints about the company’s negative impact
on the community tend to focus on leaks in public
places, and isolated cases of bad smells from
treatment works (though this does not seem to
be a major problem). Some customers feel the
biggest positive impact the company can have is
on local employment; they would like it to do more
to help tackle unemployment, especially among
young people.”
Quoted from the report Discover, Discuss, Decide:
Summary of research into household and business
customer and stakeholder views: version 10, prepared by
OPM on behalf of Anglian Water. The report is available at:
www.discoverdiscussdecide.co.uk
OPM is an independent organisation that specialises in market research.
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WE WILL...
We will continue to provide and promote additional
practical support for vulnerable customers such as our
WaterCare register and we will look at ways in which we
can publicise these services more widely.
We will continue to provide exemplary recreational
facilities at our water parks. Customers have told us that
this is not a priority area for investment, and so we will
ensure that our recreation business remains self-financing.
Our schools and community education programme is
a central part of our wider Love Every Drop campaign
that aims to fundamentally change our relationship with
water, and we are pleased that customers recognise the
value of this important work and support an expansion
of the programme. In response, we plan to open two new
community education centres in Norfolk and Lincolnshire
so that we can reach even more schools and offer
educational services to school children of all ages.
We recognise that reducing leakage is very important
to our customers, and that they view leakage as a sign
that we aren’t ‘doing our bit’. Consequently, we plan
to reduce our leakage significantly through a variety
of measures. We will continue with our current policy
of repairing leaks within 24 or 48 hours of them being
reported (depending on the size of the leak)
? WANT TO KNOW MORE?
See Strategy in focus: Leakage.
P68
We will invest at a small number of sewage treatment
works and points on the sewerage network to resolve
bad smells experienced by some customers in some
weather conditions.
We will continue to create employment opportunities for
young people, including our high-quality graduate and
apprentice schemes.
FLOURISHING
ENVIRONMENT
A SMALLER
FOOTPRINT
CARING FOR
COMMUNITIES
INVESTING FOR
TOMORROW
FAIR
PROFITS
Allocating expenditure to outcomes:
We have allocated 100% of our capital maintenance to
‘Investing for tomorrow’, because this is about maintaining
our current level of service. Together with operating costs
and retail costs, this expenditure falls into the category
‘Running the business and maintaining services’.
We have not allocated any expenditure to ‘A smaller
footprint’ because this outcome is all about doing things
differently, rather than spending money. We have already
demonstrated that, instead of costing more, reducing our
use of finite resources results in cost savings.
Similarly, we have not allocated any expenditure to ‘Fair
profits’. We believe that a fair profit depends on driving
efficient performance throughout the whole business
rather than increasing costs for customers.
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SATISFIED
CUSTOMERS
FAIR
CHARGES
SAFE, CLEAN
WATER
RESILIENT
SERVICES
CARING FOR
S
E
I
T
I
N
U
M
M
CO
WORKING RESPONSIBLY WITH AND FOR YOUR COMMUNITY
SUPPLY MEETS
DEMAND
KEY GROUPS
Household customers
Vulnerable household
customers
Future household
customers
BUSINESS GOALS
100% of our customers very satisfied with our service.
Business customers
and developers
Frontier performer in the UK.
Lead and champion the effective management of the
impact of growth and climate change.
No accidents.
Employer of choice.
Zero waste. Get it right first time, every time.
Make a positive difference to the communities
we serve.
WE THINK THAT...
1.
2.
90
We have a responsibility to all our
customers to achieve excellence
in everything we do, because our
customers depend upon us to supply
an essential service. We are the
monopoly provider to our household
customers, and although our
business customers and developers
will have a choice about which
retailer they buy their services from,
the wholesale part of our business
will still provide the service.
We must ensure that the provision
of water and its recycling back into
the environment should not block
the successful growth and quality
of life in our region.
ANGLIAN WATER
OUTCOMES IN DETAIL
3.
4.
Our operations can cause
a nuisance to neighbouring
communities. Specific
annoyances include road
works, traffic, noise, odours
(from sewage treatment works),
flooding from sewers and
service interruptions.
We have a responsibility to
minimise these nuisances
and to be considerate to our
neighbouring communities.
Our reservoirs provide important
accessible open spaces for
recreation as well as habitats
for wildlife.
5.
6.
We play an important role in the
regional economy, employing
around 3,800 people, and many
more thousands are employed
directly and indirectly through
our supply chain. We have
a responsibility to keep our
employees safe and well.
In order to prepare for a
challenging future, and for
society to be able to play
its part in a sustainable
water cycle, it is vital for a
water company to engage in
activities such as schools
and community education
programmes.
FLOURISHING
ENVIRONMENT
A SMALLER
FOOTPRINT
CARING FOR
COMMUNITIES
INVESTING FOR
TOMORROW
FAIR
PROFITS
STRATEGY: CARING
FOR COMMUNITIES
Working with developers:
Responding to the individual needs of
our household customers:
We will continue to offer WaterCare
services, which include the provision of
extra help when supplies are interrupted,
alternative ways of getting information and
reassurance against bogus callers.
Continue to offer the WaterSure tariff and
the Anglian Water Assistance Fund.
OUTPUTS
• WaterCare services and the WaterSure
tariff are promoted and available.
• Anglian Water Assistance Fund.
Water resources planning to facilitate
sustainable regional growth:
Collaborate and work in partnership with
others (such as local authorities, planners,
the Environment Agency and Local
Enterprise Partnerships) to integrate
spatial planning, and planning of water and
wastewater services.
Engage with others (including industry
and agricultural water users) to explore
opportunities for how infrastructure
schemes could deliver storage and
resilience benefits to multiple sectors.
Work with local agencies to proactively
encourage new business into our region.
OUTPUTS
• Water Resources Management Plan.
• Integrated spatial and water resources
planning.
• Multi-sectoral planning and ventures.
Support developers through the planning
process, providing the infrastructure
required to meet new housing demands.
Support and encourage developers to
build water-efficient homes (80l/p/d or
equivalent).
Work with developers and others to ensure
that surface water is drained sustainably
from new developments.
OUTPUTS
• Provision of infrastructure.
• Water-efficient homes.
OUTCOMES FOR
THE KEY GROUPS
Household customers:
We offer an inclusive and accessible
service, sensitive to the needs of individual
customers. Our operations do not unduly
disturb the community. Our water parks
and nature reserves provide valued
recreational benefits.
• Support the developers of water
re-use initiatives.
Vulnerable household customers:
We offer proactive help to vulnerable
household customers, and provide for their
special needs.
Reducing the negative effects of
our operations:
Future household customers:
The next generation has a real personal
belief in the value of water.
• Sustainable Drainage Systems.
Organise our operations so that the negative
impacts upon neighbouring communities
and their local environment are minimised,
for example by managing and reducing
odour at sewage treatment works, engaging
with local residents before and during
construction projects, and keeping road
works to a minimum.
Continue to reduce sewer flooding through
a combination of traditional solutions,
retrofitting Sustainable Drainage Systems
(SuDS), behavioural change campaigns and
increasing resilience of systems.
OUTPUTS
• Odour reduction.
• Community engagement.
• Planning work to minimise disruption.
• Storm tanks, increased sewer capacity,
SuDS.
• Keep it Clear campaign.
• Preventative maintenance.
Connecting our customers to
the environment:
Business customers and developers:
Our infrastructure underpins and contributes
to a successful regional economy.
A GOOD OUTCOME
WOULD BE...
An inclusive and accessible service,
sensitive to the needs of individual
customers. Our infrastructure underpins
and contributes to a successful regional
economy. Our operations do not unduly
disturb the community. Our water parks
and nature reserves provide valued
recreational benefits. Our sites are
maintained to ensure the health and
safety of visitors and our staff. The next
generation has a real personal belief in
the value of water.
Engage with communities through schools
and community education to inspire and
educate the next generation, emphasising
beneficial links between using our services
sustainably, keeping bills affordable and
preserving the environment.
Inspire visitors at our water parks to adopt
sustainable behaviours through positive
experiences of the environment and the
demonstration of exemplary water and
energy-efficient facilities.
OUTPUTS
• Schools and community education
programme.
• Accessible water parks with exemplary
leisure facilities and resource-efficient
buildings.
ANGLIAN WATER
OUTCOMES IN DETAIL
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SATISFIED
CUSTOMERS
FAIR
CHARGES
SAFE, CLEAN
WATER
RESILIENT
SERVICES
SUPPLY MEETS
DEMAND
STRATEGY IN
FOCUS: SCHOOLS
AND COMMUNITY
EDUCATION
In order to prepare for a challenging
future and to ensure water resources are
sustainable, in 2010 we launched Love
Every Drop, our long-term initiative to
put water at the heart of a whole new
way of living. Our aim is to transform the
way we all use and value water.
We are in a unique position to support and encourage
others to adopt more sustainable behaviours, and
our community and schools education programme
is a central part of this. The programme focuses on
understanding the beneficial links between using
our services sustainably, keeping bills affordable and
preserving the environment. We also highlight other
related environmental issues such as climate change.
TRANSFORMATION
Customers are enthusiastic about our schools education
programme, and support its extension. We therefore
plan to construct two new community education
centres in Norfolk and Lincolnshire so that we can
reach more schools, and offer educational services to
schoolchildren of all ages. We will also continue to offer
and develop online resources that will reinforce and
create behaviour change.
In addition to the work we do with schools, we will
continue to work with the wider community. For
example, over the last three years we have built tailored
training packages for Environmental Health Officers
and the Health and Safety Association, and worked with
groups of apprentice plumbers. We also are piloting a
project with Norfolk County Council to train 36 youth
ambassadors from secondary schools around the
county. Each will undertake peer-to-peer learning
with three primary schools in the county, promoting
positive action on water efficiency, including a water
efficiency audit.
COLLABORATION
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FLOURISHING
ENVIRONMENT
A SMALLER
FOOTPRINT
CARING FOR
COMMUNITIES
INVESTING FOR
TOMORROW
FAIR
PROFITS
The community education team at Bedford Alameda Middle School.
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93
SATISFIED
CUSTOMERS
FAIR
CHARGES
SAFE, CLEAN
WATER
RESILIENT
SERVICES
SUPPLY MEETS
DEMAND
MEASURES AND
INCENTIVES
Existing incentives
Key behaviours
Most of the communities in which we operate are also
our customers. A failure to act responsibly towards
these communities will therefore have adverse effects
on failure demand and such measures as the Service
Incentive Mechanism. But not all members of a
community are our customers. Traffic disturbances and
odour problems, for example, do not solely affect our
bill-paying customers.
Whilst these existing incentives encourage us to
behave responsibly in avoiding disturbances to
the communities in which we operate, they do not
adequately reflect the positive work that we undertake
in communities. For example, we reach out to
communities through education, and our employees
devote considerable personal time to RiverCare to
improve the aesthetic, environmental and recreational
value of our local watercourses.
Negative externalities associated with our business are
already incentivised in the form of Traffic Management
Act (TMA) charges for traffic disruptions, abatement
notices, failure demand to deal with complaints and
reputation effects from negative publicity.
Recreation revenues also incentivise positive
community involvement.
Such activities form a core part of our engagement
with communities to demonstrate our commitment
to running a considerate and responsible business,
and to encourage our customers to also consider
their behaviour and their potential impact on services
on which other members of the community will rely.
Messaging from us to convince customers to avoid
flushing fats, oils and grease into the sewers, or to
promote the efficient use of water are dependent on
the perception of our business to those communities
we are trying to engage. If we are not seen to be
responsible, these messages are likely to be ineffective.
We are also rightly seen to be a key player in
underpinning the local economy. As well as being a
major regional employer, we underpin the economic
development of the region.
Value to customers
Customers are not necessarily aware of the additional
activities we undertake within communities, although
recreational services are popular and work undertaken
to educate the next generation of customers in schools
is widely supported. Understandably though, delivery of
core services should be our focus.
Odour from treatment works and visible leaks are
some of the operational issues that are highlighted and
are the focus of our negative impact on communities.
A focus on these areas would therefore provide value
to some communities.
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FLOURISHING
ENVIRONMENT
A SMALLER
FOOTPRINT
CARING FOR
COMMUNITIES
INVESTING FOR
TOMORROW
FAIR
PROFITS
Proposals
We are proposing a survey of customer perception of
how successful we have been in acting responsibly within
the communities in which we operate. We will publish
the results of the survey, which act as a reputational
incentive to improve them. The design of the survey,
and the frequency and wording of questions will be
developed with expert input, and then independently run
on our behalf. We anticipate publishing an annual result.
This survey will be conducted for the whole service
(water, sewerage and retail) as each part of the business
can have an effect on perception, and it is not clear how
this could be allocated amongst different controls.
The existing incentives cause us to focus more on
avoiding disturbances. This incentive would encourage
us to also focus on the positive impact of our operations
and be mindful of the community as a whole’s
perception of our business. A financial incentive is
not appropriate as this is a new measure and we do
not intend to set specific targets, although we are
committing to achieving an improvement over our endof-AMP5 rating by the end of AMP6.
Community perception may be affected by factors
outside our control. However, this can be mitigated
through effective engagement with our communities
and understanding what is important to their perception,
and through the provision of real benefits and minimal
disruption to the communities we serve.
COMMITTED PERFORMANCE LEVELS AND INCENTIVES
Measure of success
Incentive type
Units
Survey of customer
perception
Reputational
–
End of AMP5
prediction
2014–15
We have
not yet
commenced
the survey
Committed
Performance
Level
2019–20
Improvement
over 2014–15
baseline
Price control
Whole
business
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SATISFIED
CUSTOMERS
FAIR
CHARGES
SAFE, CLEAN
WATER
RESILIENT
SERVICES
SUPPLY MEETS
DEMAND
INVESTING FOR
TOMORROW
PROVIDE THE SERVICES OUR CUSTOMERS
EXPECT OVER THE LONG TERM THROUGH
RESPONSIBLE ASSET STEWARDSHIP
CUSTOMERS SAID...
“Customers want to know the company is planning
ahead, investing in infrastructure to safeguard water
supplies and strengthen the wastewater system,
to prevent costs storing up for the future. Good
stewardship of assets is seen as a core responsibility
of the company.
Evidence from the Domestic Customer Survey
suggests investment in current and future
maintenance is an important customer priority (after
tackling leaks).
Some customers would like further information
on how the company makes investment decisions.
However, most feel it is Anglian Water’s job to
determine appropriate levels of investment, drawing
on their expert understanding.
Customers tend to link debates about the
appropriate level and pace of investment in
infrastructure to profits. It is common for customers
to say that Anglian Water should be investing more
in assets, rather than asking customers to fund
this (especially as investment is seen to be in the
company’s own long-term commercial interests).
Those customers who anticipate that they may need
to pay more in future are keen to ensure that the
impact on bills is minimised.
The extent to which current customers are prepared
to pay now for benefits which may be enjoyed by
future customers is not very clear.”
Quoted from the report Discover, Discuss, Decide:
Summary of research into household and business
customer and stakeholder views: version 10, prepared by
OPM on behalf of Anglian Water. The report is available at:
www.discoverdiscussdecide.co.uk.
OPM is an independent organisation that specialises in market research.
96
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OUTCOMES IN DETAIL
WE WILL...
We will continue to proactively manage our water and
sewerage assets, and plan ahead to ensure investment
is made in a timely, efficient and effective manner to
maintain services to customers. We consider asset
costs, value and performance from the design stage
right through until decommissioning. Identifying where
investment is needed requires detailed information
about our assets and how likely they are to require
investment in the future, so we will invest in improved
asset management models to make best use of the
data we have available to support our decision making.
This includes data about the individual components
that make up an asset to enable us to target investment
exactly where it is needed, rather than undertaking
wholesale refurbishment of the entire asset when it may
not be necessary. We agree that good asset stewardship
is one of our core responsibilities, and we are committed
to adhering to leading asset management standards.
We will therefore attain ISO 55000 Asset Management
certification when it is introduced.
As well as proactively managing and maintaining our
assets, it is also important to react quickly when things
go wrong. That is why we will be investing in real-time
monitoring of our networks, and remote operation of
our assets, to enable an agile response and minimise
any impact on customers.
Our investment decisions are based firmly on customer
and stakeholder priorities and valuations. Once a need
for investment is identified, we carefully consider our
options to assess which provides the best balance
between value to the customer, cost (including
environmental costs such as carbon), performance and
risk. Taking all these factors into account enables the
right decision to be made. However, the right decision
under today’s assumptions may be the wrong decision
for tomorrow, so we test our decisions against a range
FLOURISHING
ENVIRONMENT
A SMALLER
FOOTPRINT
CARING FOR
COMMUNITIES
INVESTING FOR
TOMORROW
FAIR
PROFITS
of future scenarios, taking into account the potential
impacts of a changing climate. By acknowledging that
the future is uncertain, and planning for this uncertainty,
we can minimise the chance that decisions taken
today will not be applicable in the future if today’s
assumptions prove to be incorrect.
the moment we are seeing a steady increase in the
number of burst water pipes and sewer collapses. We
are currently managing this through programmes of
replacement and inspection, to ensure we step in to
prevent failure before it occurs, and to avoid placing
unnecessary stresses on our systems.
We understand that customers are concerned about the
cost of investment, and how much they are being asked
to pay for it. However, making efficient investments to
maintain our assets is in our customers’, and our, longterm interests. We seek to keep costs down through
the use of standard products, innovative solutions to
problems, by deploying a wide variety of responses
to maintenance needs to prolong the serviceable life
of assets, and by working in alliance with our delivery
partners who are also incentivised to find efficiencies
when delivering solutions. Efficiencies enable us to
maintain a greater stock of assets for less, reducing the
amount that must be funded through any increase to
customer bills. However, it is essential that our assets
are properly maintained, as under-investment would
inevitably lead to a fall in the level of service – something
our customers have told us they are not willing to accept.
Our treatment works require continual maintenance, as
they run and are maintained 24 hours a day, 365 days
a year. However, there will occasionally come a point
when a complete refurbishment is required. Some of
the complex treatment plants we have installed over
the last two decades to help us improve the quality of
drinking water, and to meet tougher drinking water and
environmental standards, are now at a point where they
require investment to upgrade them.
? WANT TO KNOW MORE?
See: Fair profits.
P102
Paying now to maintain assets into the future can
cause some customer concern. However, services that
customers benefit from now have been partially funded
by investment made by past customers. Some of our
assets date back to Victorian times, and have continued
to provide a service to generations of customers through
ongoing maintenance investment. It is our role to ensure
that we get the most out of our assets, but we must
not forget that the service we offer today would not be
possible without this long-term approach to investment.
Therefore, we think it continues to be right that
customers today should contribute to the continuation
of the service into the future.
We still operate pipes that are very old: 10% of our
water pipes and 20% of our sewers are over 100 years
old. These will need to be replaced in the future. At
Allocating expenditure to outcomes:
We have allocated 100% of our capital maintenance to
‘Investing for tomorrow’, because this is about maintaining
our current level of service. Together with operating costs
and retail costs, this expenditure falls into the category
‘Running the business and maintaining services’.
We have not allocated any expenditure to ‘A smaller
footprint’ because this outcome is all about doing things
differently, rather than spending money. We have already
demonstrated that, instead of costing more, reducing our
use of finite resources results in cost savings.
Similarly, we have not allocated any expenditure to ‘Fair
profits’. We believe that a fair profit depends on driving
efficient performance throughout the whole business
rather than increasing costs for customers.
ANGLIAN WATER
OUTCOMES IN DETAIL
97
SATISFIED
CUSTOMERS
FAIR
CHARGES
SAFE, CLEAN
WATER
RESILIENT
SERVICES
SUPPLY MEETS
DEMAND
INVESTING FOR
TOMORROW
PROVIDE THE SERVICES OUR CUSTOMERS
EXPECT OVER THE LONG TERM THROUGH
RESPONSIBLE ASSET STEWARDSHIP
KEY GROUPS
Current customers
and stakeholders
Future customers and
stakeholders
BUSINESS GOALS
100% of our customers very satisfied with our service.
No incidents.
Frontier performer in the UK.
Lead and champion the effective management of the
impact of growth and climate change.
Zero waste. Get it right first time, every time.
No pollutions.
No accidents.
WE THINK THAT...
1.
2.
98
Assets include machinery, equipment,
buildings, IT systems and vehicles.
Customers perceive the maintenance
of our assets to be one of our core
responsibilities and, in general, support
long-term planning and investment to
safeguard water supplies and reduce
costs in the future.
Maintenance should be targeted and
efficient, and the level of investment
should only be increased where
there is evidence to show that the
increase is warranted. An optimum
maintenance plan balances the cost
of maintaining assets with their
performance and the risk of asset
failure (today and in the future).
ANGLIAN WATER
OUTCOMES IN DETAIL
3.
The affordability of our bills is a
critical factor in developing our
plans for the future. Many of
our customers are telling us
about their concerns, and it
is clear that incomes are not
keeping up with the cost of
living. We need to balance these
concerns against the need
to maintain our services for
current and future customers.
4.
Many of our treatment plants
use advanced technologies
to meet drinking water
and environmental quality
standards. These technologies
are often short lived and
consequently require constant
refurbishment to ensure that
performance is maintained.
5.
We need to keep reviewing
and updating our asset
management approaches
in order to become more
efficient in maintaining
our assets.
FLOURISHING
ENVIRONMENT
A SMALLER
FOOTPRINT
CARING FOR
COMMUNITIES
INVESTING FOR
TOMORROW
FAIR
PROFITS
STRATEGY: INVESTING
FOR TOMORROW
Applying the following principles when
making investment decisions:
Develop the most appropriate solutions that
meet the need for investment.
Use whole-life costing approaches to
choose the most economic option.
Build on learning from completed projects.
Our activities do not disturb the
communities we serve.
Health and Safety is a central
consideration in both our daily activities and
the design of new assets.
OUTPUTS
• Application of investment principles.
Proactively identifying where action is
required:
Understand and monitor our assets from
design to decommissioning to determine
the most efficient ways to maintain and
replace them, and continue to invest in
asset-planning models to support better
understanding of costs, performance
and risk.
Continue to consider the risk of failure at
the most detailed component level, and
target maintenance components at risk,
rather than refurbish the entire asset. This is
data intensive but maximises the benefit of
investment.
OUTPUTS
• Asset Life Cycle Planning approach
implemented to understand the whole-life
costs of assets.
• Asset-planning models.
• Component-level information to support
maintenance decisions.
Apply the best governance and
practices to continuous improvement in
our asset management approach across
the organisation.
OUTPUTS
• Lower maintenance costs and better
understanding of standard products,
and innovative solutions to meet
challenging demands.
• Range of activities to ensure assets
continue to provide service to customers
(for example, sewer jetting, refurbishment
or replacement as appropriate).
• Sustainable, cost-beneficial solutions
that perform well across a range of
possible futures.
• ISO 55000 Asset Management
accreditation.
Delivering our maintenance programme
efficiently:
Manage our supply chain to improve
efficiency and drive down costs of our
solutions. Evolve our groundbreaking
incentive-based alliance approach to
focus on whole-life cost and risk across
other areas.
OUTPUTS
• Alliance delivery partnerships with our
contractors and suppliers.
Reacting quickly when things go wrong:
Install more real-time monitoring of
networks and remote operating capability.
This allows us to identify problems and
react quickly to minimise the impact to
customers if problems occur.
OUTPUTS
• Real-time monitoring of networks and
remote operation of our assets.
OUTCOMES FOR
THE KEY GROUPS
Current customers and stakeholders:
Current services have not deteriorated due
to under-investment in previous periods.
Future customers and stakeholders:
Future services are protected from underinvestment in current periods.
A GOOD OUTCOME
WOULD BE...
Assets (such as our pipes, works,
buildings and equipment) are
maintained effectively so they provide the
services customers expect both
now and in the future.
Choosing the right option:
Where possible, use standard products
and consistent engineering practices to
ensure that maintenance costs are efficient.
Continue to challenge and innovate to
develop better, low-carbon, solutions.
Balance our planned routine and
preventative maintenance (for example,
jetting sewers to ensure they operate
efficiently and effectively) and more
expensive refurbishment.
Make all maintenance and replacement
decisions considering value to customers
and society, whole-life costs, carbon and
water footprints, performance and risk.
Rigorous selection considering a range
of possibilities about what might happen in
the future.
ANGLIAN WATER
OUTCOMES IN DETAIL
99
SATISFIED
CUSTOMERS
FAIR
CHARGES
SAFE, CLEAN
WATER
RESILIENT
SERVICES
SUPPLY MEETS
DEMAND
MEASURES AND
INCENTIVES
Existing incentives
Key behaviours
This outcome is about maintaining levels of service to
customers from our operations and assets. In previous
AMP periods, the serviceability assessment has been
the primary incentive for companies to maintain
service levels. It has been left to companies to propose
how they will demonstrate that services are being
maintained for AMP6.
We wish to continue to maintain our assets efficiently,
and proactively identify where interventions will be
necessary. When things go wrong, we want to respond
quickly. Overall, we want to ensure that the service
experienced by customers is maintained and we can be
trusted to deliver core services.
Value to customers
Good stewardship of assets is seen as a core
responsibility of the company, and customers today
benefit from assets built and maintained over previous
periods. It is our responsibility to ensure that these
assets and operations continue to deliver for today’s
customers and are available to provide the same service
to tomorrow’s customers as well. Customers would be
concerned if costs were being stored up for the future.
Proposals
We think the existing approach to serviceability
has worked well on the whole, and is effectively an
outcomes approach. We are therefore proposing to
continue to specify a suite of indicators, and define
reference levels and control limits, which are used as the
basis for us to make a judgement on the serviceability
of our assets. We expect this judgement to be subject
to external scrutiny through an assurance process, and
for Ofwat to take appropriate regulatory action if a subservice was deemed to be less than stable. Regulatory
action could include a penalty of up to 50% of the
capital maintenance budget for that sub-service.
We have suggested minor alterations to the measures
used to assess serviceability, details of which are found
in the narrative of our Plan. Longer term we would like to
see a further evolution of these measures, and we have
included an indication of some measures we intend to
trial during AMP6 for possible inclusion in AMP7.
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ANGLIAN WATER
OUTCOMES IN DETAIL
FLOURISHING
ENVIRONMENT
A SMALLER
FOOTPRINT
CARING FOR
COMMUNITIES
INVESTING FOR
TOMORROW
FAIR
PROFITS
COMMITTED PERFORMANCE LEVELS AND INCENTIVES
End of AMP5
prediction
2014–15
Committed
Performance
Level
2019–20
Price control
Measure of success
Incentive type
Units
Water infrastructure
assessment
Penalty only
Stable/
Marginal etc
Stable
Stable
Water
Water noninfrastructure
assessment
Penalty only
Stable/
Marginal etc
Stable
Stable
Water
Sewerage
infrastructure
assessment
Penalty only
Stable/
Marginal etc
Stable
Stable
Sewerage
Sewerage noninfrastructure
assessment
Penalty only
Stable/
Marginal etc
Stable
Stable
Sewerage
The relevant indicators to be used in AMP6 in this assessment are below:
Water infrastructure
Water non-infrastructure
Unplanned interruptions > 12hrs
Water treatment works with coliforms detected
Reactive mains bursts
Service reservoirs with coliforms detected in > 5% of tests
Customer contacts – discolouration
Number of water treatment works with turbidity
95 percentile > 0.5 NTU
Distribution Maintenance Index
Sewerage infrastructure
Sewerage non-infrastructure
Pollution incidents
Equivalent population served by sewage treatment works in
breach of consent
Sewer collapses
(including rising mains bursts)
Sewage treatment works failing numeric standards
Internal flooding
(overloaded and other causes)
Sewer blockages
ANGLIAN WATER
OUTCOMES IN DETAIL
101
SATISFIED
CUSTOMERS
FAIR
CHARGES
SAFE, CLEAN
WATER
FAIR
PROFITS
A FINANCIALLY RESPONSIBLE, EFFICIENT
BUSINESS EARNING FAIR PROFITS
CUSTOMERS SAID...
“There is patchy understanding of how the
company is managed and governed; in general
businesses and stakeholders seem better informed
than household customers.
Some people are strongly against private ownership
of water companies; more are concerned that
monopoly status means companies have no incentive
to keep prices affordable and continuously improve
the service. There is some concern about foreign
ownership and current levels of company debt.
Customers want assurance that current levels of
profit are ‘fair’ and reasonable (given the need to
invest in infrastructure and tackle future challenges
while keeping bills affordable). There is demand
for more transparent information about company
targets, performance and profit. It is important to
customers to know that they will share in the benefits
of good performance.
Despite these findings, over 90% of each of the
customer groups surveyed in the Acceptability
research judged Anglian Water’s proposed plan
relating to ‘Fair Profits and Smarter Ways of Working’
to be acceptable. Vulnerable customers were less
likely than other customers to find plans acceptable,
while younger people (aged 18-25) were more likely
to find them acceptable than older groups.
Among business customers, there is some
awareness of planned changes to the industry
involving opening up of the market to competition
from 2017. Customers say their main consideration
in choosing a future supplier will be price. Some
stakeholders are concerned that competition will
allow businesses to ‘cherry pick’ the cheapest
supplier, leading to higher costs for customers who
choose to remain (or cannot switch).
There is limited understanding of the system
designed to regulate water and wastewater
services. Some customers are concerned that
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ANGLIAN WATER
OUTCOMES IN DETAIL
RESILIENT
SERVICES
SUPPLY MEETS
DEMAND
having several organisations involved means issues
may ‘fall between stalls’; others are reassured that
important decisions about pricing, quality and
investment are examined by a range of different
parties. Some of those taking part in research feel
Anglian Water should do more to help customers
understand the regulatory environment in which
the service is delivered.”
Quoted from the report Discover, Discuss, Decide:
Summary of research into household and business
customer and stakeholder views: version 10, prepared by
OPM on behalf of Anglian Water. The report is available at:
www.discoverdiscussdecide.co.uk.
OPM is an independent organisation that specialises in market research.
WE WILL...
Anglian Water is a private company that provides an
essential public service. We recognise that we have a
monopoly in providing those services. In the two decades
since the industry was privatised, substantial benefits have
been brought to customers in the form of better services,
more investment in infrastructure, and maintenance and
efficiency gains passed on in customers’ bills. We are
a very tightly regulated industry, and our freedom to
operate is rightly constrained. Our licence sets out specific
obligations, duties and restrictions on what we can do.
This framework, which has worked well over the last
20 years, is designed to protect customers.
We understand that what we do and how we do it within
this framework matters to our customers, because
customers’ bills underpin what we do, and customers
must be convinced that what we do is legitimate. We have
tried to be open in our consultation about issues like trust,
fairness and the profits we make. These conversations
have convinced us that we need to do more in four
specific areas.
First, we need to be transparent and open about the
way in which our business is structured and managed.
We will lay out clearly our ownership structure, the way
that decisions are made (what we call ‘governance’), our
performance, the profits we generate, what we pay our
executives, and what we pay in taxes each year.
We have already taken steps to provide more information
about governance and other matters in our latest Annual
Report and Accounts. We also think this consultation
process itself is a very important part of creating an open
and transparent relationship with our customers. We
intend to continue to talk with our customers in a similar
way in the future.
FLOURISHING
ENVIRONMENT
A SMALLER
FOOTPRINT
CARING FOR
COMMUNITIES
Second, we need to be a responsible long-term steward
of water and wastewater services in our region. For us
this means embedding long-term planning and thinking
in our business, balancing effectively the needs of
customers, the environment and the economy and, above
all, demonstrating leadership. We think that what we
have put in place with Love Every Drop since its launch in
2010 encapsulates this approach. Under Love Every Drop,
we have set ourselves 10 challenging goals to deliver
efficiency and sustainability in everything we do.
We have published a progress report against these goals,
and we will continue to talk openly about our progress,
and where we have more to do. Our performance report
can be found here: www.anglianwater.co.uk/about-us/
our-performance
We are fully committed to our approach, which links clearly
to the outcomes we aim to achieve in the long term.
Third, we need to make sure that we are as efficient as we
can possibly be. Better efficiency is the key to achieving
better outcomes. What we decide to do, whether at a
strategic level or in day-to-day operations, ultimately
comes down to balancing the service we deliver to
customers, the risks taken, and the costs of providing
those services. Better efficiency will help us on all these.
INVESTING FOR
TOMORROW
FAIR
PROFITS
We have included in our Plan an innovative sharing
mechanism that restricts the impact of higher than
expected Retail Prices Index (RPI) inflation on customer
bills, whilst retaining the essential link to Regulatory
Capital Value (RCV). Subject to Ofwat accepting our Plan
in the round, we will absorb half of any increase in RPI
between 3.0% and 4.5%.
For outturn rates of inflation that are above our Plan
assumption of 3%, but below 4.5%, we will only apply to
bills 50% of the difference between out turn and 3% in the
period. For example, if RPI outturns at 4% in the November
before the charging year, the bill increase applied to the
wholesale element of bills for inflation will only be 3.5%.
RCV would still be adjusted by 4% in this example.
At rates above 4.5% there will be no automatic sharing,
but the impact of higher inflation on costs will be
reviewed to determine the appropriate course of action,
and we would expect to explain to customers and
stakeholders the impact on our business. At rates below
3% bills will be adjusted by the lower rate of inflation and
the company would bear the consequences of this.
Being more efficient will lower bills for customers, yet
without compromising our outcomes. As incomes fail
to keep up with inflation and benefits are squeezed,
many of our customers will continue to feel the effects
of the economic crisis. So we will continue to challenge
our business to do more with less, and deliver the best
possible deal for customers.
Fourth, we need to address the issues of fair profits.
Profits are essential so that we can attract the necessary
private investment – customers’ bills alone could only
fund a fraction of the investment we make each year.
We would not be able to attract the kind of long-term
investment that we do if we were not able to deliver a
reasonable return on that investment. We also believe that
it is appropriate that excellent performance should be
reflected in higher profits.
We recognise, though, that profits can increase or
decrease due to factors that are not directly related
to excellent performance – for instance, the level of
interest rates, the rate of inflation, or unexpected new
legal obligations.
We recognise that when inflation outturns at a higher
rate than was assumed at a determination, this can
be a benefit to companies, and this may be perceived
to be unfair or unwarranted. However, we believe that
the link to inflation is a fundamental feature of the
regulatory regime in water (and other sectors), and
is a key driver of the relatively low costs of capital
from which customers benefit. Conversely, if inflation
outturns significantly lower this can adversely impact
the company’s financial position.
Allocating expenditure to outcomes:
We have allocated 100% of our capital maintenance to
‘Investing for tomorrow’, because this is about maintaining
our current level of service. Together with operating costs
and retail costs, this expenditure falls into the category
‘Running the business and maintaining services’.
We have not allocated any expenditure to ‘A smaller
footprint’ because this outcome is all about doing things
differently, rather than spending money. We have already
demonstrated that, instead of costing more, reducing our
use of finite resources results in cost savings.
Similarly, we have not allocated any expenditure to ‘Fair
profits’. We believe that a fair profit depends on driving
efficient performance throughout the whole business
rather than increasing costs for customers.
ANGLIAN WATER
OUTCOMES IN DETAIL
103
SATISFIED
CUSTOMERS
FAIR
CHARGES
SAFE, CLEAN
WATER
RESILIENT
SERVICES
SUPPLY MEETS
DEMAND
FAIR
PROFITS
A FINANCIALLY RESPONSIBLE, EFFICIENT
BUSINESS EARNING FAIR PROFITS
KEY GROUPS
Owners and investors
Debt providers
BUSINESS GOALS
Customers
100% of our customers very satisfied with our service.
Zero waste. Get it right first time, every time.
Society and Government
Frontier performer in the UK.
Pioneer responsible water stewardship.
WE THINK THAT...
1.
Profits should be fair and
proportionate.
• In order to fund the large-scale
investment programmes that are
required to maintain assets and
meet legal obligations, water
companies must attract funding
from competitive financial markets.
There is no obligation for investors
to invest in water companies, and
therefore companies must be able to
provide a return that is similar to other
investment opportunities and in line
with the risks of long-term investment.
3.
• The ability to make a profit from
delivering services more efficiently
drives innovation, and ultimately
lowers bills.
4.
• Shareholders take risks investing
in the business, and a fair level of
returns is required to reflect this.
2.
As a monopoly provider it is
important that everything we
do is seen to be legitimate
and reasonable.
• Our level of profits needs to be
seen to be fair and proportionate,
because our customers depend on
us to provide an essential service,
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ANGLIAN WATER
OUTCOMES IN DETAIL
and we are the monopoly provider
to our household customers.
Commitment, the Environmental
Improvement Unit Charge and the
transfer of private sewers into water
and sewerage company ownership,
and increasing levels of bad debts.
• Profits that are perceived to be
excessive would damage our
relationship with our customers.
• The benefits of outperformance are
shared between companies and
customers. Companies can keep
the benefits of outperformance for
a period of time (which incentivises
them to innovate), but at the end of
this period the benefits are passed
to customers.
Defining what a ‘fair profit’ is, is
difficult. We think that a ‘fair profit’
should:
• Balance risk and reward appropriately
between customers, investors and
debt providers.
• Reward excellent performance.
• Be in line with industry norms,
economic circumstances and
societal expectations.
It is right to ask whether the
regulatory regime balances
risk and reward appropriately
between customers, investors
and debt providers.
• At present, when prices are fixed at a
price review the risk from unforeseen
costs passes from customers to
companies, and can only be passed
back to customers in very limited
circumstances. During the current
regulatory period, we have borne
the additional costs associated with
mitigating the 2010–12 drought,
meeting the Carbon Reduction
5.
6.
• In some cases it is right for the
company to go beyond what is
required and to share benefits
with customers beyond the level
required by the regulatory regime.
In order that profits are perceived
to be ‘fair’, we need to be
transparent and honest with our
customers about our profits and
how they are derived.
Tax-efficient strategies in line with
national legislative tax frameworks
and incentives for investment are
reflected in customers’ bills.
FLOURISHING
ENVIRONMENT
A SMALLER
FOOTPRINT
STRATEGY:
FAIR PROFITS
Running our business efficiently:
Maintain tight financial and budgetary
discipline.
Where cost effective, make investment to
reduce costs through initiatives such as
improving energy efficiency.
Ensure efficient capital delivery
through partnership with our contractors
and suppliers.
OUTPUTS
• Efficiency programmes.
• Robust capital delivery process.
• Locking in benefits of low interest rates
and energy bills where it makes financial
sense to do so.
Financing our business efficiently:
Ensure that our financing strategy
minimises the cost of raising debt finance
and allows us to continue to finance our
business in the future.
OUTPUTS
• Efficient financing of our business.
CARING FOR
COMMUNITIES
Managing risk effectively:
In managing risk, we will seek to balance
the need to attract low-cost investment,
with the need for innovation required to
achieve outperformance.
We will manage risks outside of our control
(such as inflation) diligently and effectively.
OUTPUTS
• Optimal risk profile.
A culture of transparency:
Continue to develop a business culture of
openness and transparency. This includes
providing easy access to information
about our performance, the way in which
our business is run, company profits and
executive pay. Inform customers, regulators
and stakeholders immediately if there are
any issues that may affect human health or
the environment.
OUTPUTS
• Website.
• Performance reports.
• Annual reports.
• Governance code.
Paying our taxes:
The tax that we pay will be in line with
national legislative tax frameworks.
OUTPUTS
• Tax paid in line with national legislative
tax frameworks.
INVESTING FOR
TOMORROW
FAIR
PROFITS
OUTCOMES FOR
THE KEY GROUPS
Owners and investors:
Return on investment is stable and
predictable. Efficiencies are shared through
dividends. Risk levels remain low over the
long term. We are able to cover cost of capital.
Debt providers:
Our performance is good and risks are
managed so that we can repay our loans, and
our rating with credit agencies remains stable.
Customers:
The service customers pay for is efficient,
meaning that they do not pay more than is
necessary for a given level of service.
We can raise finance efficiently at relatively
low costs to ensure enough money to fund
future investment and keep bills low. Our
business is financially stable over the long
term and we demonstrate responsible
stewardship of financial resources.
Society and Government:
We can raise finance efficiently at relatively
low costs to ensure enough money to fund
future investment. Our business is financially
stable over the long term, avoiding the costs
that would fall to the taxpayer should the
company experience financial distress. We
deliver investment to the benefit of UK plc.
A GOOD OUTCOME
WOULD BE...
We deliver our services efficiently
compared to other leading companies.
We can raise finance efficiently at relatively
low costs to ensure enough money to
fund future investment. Our business is
financially stable over the long term and we
demonstrate responsible stewardship of
financial resources.
ANGLIAN WATER
OUTCOMES IN DETAIL
105
SATISFIED
CUSTOMERS
FAIR
CHARGES
SAFE, CLEAN
WATER
STRATEGY IN
FOCUS: RUNNING
OUR BUSINESS
EFFICIENTLY
We have proven our ability to deliver
cost efficiencies
•
We have made efficiencies across our business.
Examples of the range and type of savings we make are:
•
Improving the productivity of our field operations
by implementing new systems and processes, and
centralising operational decision making.
•
Changing our final salary pension scheme.
‘Offshoring’ back-office customer service operations
to benefit from lower costs.
•
•
•
Using ‘no-dig’ methods to replace pipelines.
•
Using plastic rather than metal manhole
chamber covers.
Working with our supply chain to deliver the majority
of our capital programme through an Alliance model.
Our income is fixed under the regulatory price control,
and lowering our costs is how we maximise our profits.
•
•
There are reputational benefits associated with being
known as an efficient company.
Generating efficiencies allows us to have a buffer
against unforeseen and unfunded risks. For example,
since 2010 we have incurred additional costs as a
consequence of the Government’s decision for water
and sewerage companies to adopt private drains and
sewers. By using efficiencies made elsewhere, we have
been able to absorb these additional costs within the
period without passing them on to customers.
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SUPPLY MEETS
DEMAND
Incentives for efficiency apply throughout our
organisation. Customers benefit from efficiencies
through lower bills and they can contribute to higher
profits so that shareholders benefit from investing to
achieve these efficiencies. Employees at all levels in the
company are incentivised to make efficiency savings and
rewarded for doing so.
Operating efficiently means we can
deliver more for less. Customers need
the reassurance that our costs – and
therefore their water bills – are no
higher than they need to be. Customers
would have legitimate questions if our
costs are higher than those of other
water companies, even if there are
good reasons for the difference such
as a different operating environment or
because customers want higher levels
of service.
We have a culture of continually
seeking cheaper ways to deliver our
service, and there are strong incentives
for us to do so.
RESILIENT
SERVICES
INNOVATION
FLOURISHING
ENVIRONMENT
A SMALLER
FOOTPRINT
CARING FOR
COMMUNITIES
INVESTING FOR
TOMORROW
FAIR
PROFITS
CASE
STUDY
Efficiency in our capital
investment programme
Sharing efficiencies with customers
We ensure that efficiencies already achieved are passed
to customers. Our projections of costs in our Plan fully
reflect the savings we have achieved to date. In this way,
those efficiencies are fully ‘captured’ and returned as
benefits to customers through the contribution they will
make to lower bills from 2015.
In 2009, Ofwat assessed us as one of the most
efficient companies in delivering our capital
investment. Our ability to continue to drive cost
efficiency in our capital investment programme
allows us to deliver more with the money allowed
for in customers’ bills. For example, in the last three
years, we have been able to deliver an additional
£185 million of investment value funded through
efficiencies. This additional investment includes
£35 million prioritised to reduce the future risk to
customers of severe drought, over £80 million to
reduce risk at our treatment sites as well as over
£14 million to support our leakage work.
In developing our Plan we have been considering the
areas where we think there may be scope for efficiencies.
We do not share the detail of these here. In part, this is
because the plans are still in development – if the plans
were already fully developed, we would have proceeded
with their implementation by now. In outline, our plans
include opportunities in the following areas:
•
Learning from inside and outside
our industry
Making further improvements to the way we prioritise,
schedule and implement jobs (our ‘operating model’).
•
•
Understanding how others operate, learning and
drawing on others’ experience, is an integral part of
how we innovate. We continually strive to learn from
others, through:
Exploiting our purchasing power to leverage savings
from our suppliers.
•
Looking outside our industry to others who are
seen as experts in particular fields, for example,
Experian on customer debt management, Unipart for
logistics management and the AA for scheduling and
customer service.
•
Asking others to challenge us to help us analyse our
performance and that of others, including Nera on
Totex analysis, PwC on relative performance, European
Benchmarking (to highlight areas where we could
learn from other countries) and Barringa LLP, who are
challenging our business assumptions and helping to
identify further opportunities.
Different ways of thinking, for example utilising
CapGemini’s leading Accelerated Solutions
Environment to support business and national
decisions. We used this approach during the drought
in 2012 leading work across the industry and to
support our AMP6 business planning ambition.
•
•
Getting the benefit of investment we have made in
new IT systems.
•
Reducing our energy consumption and getting greater
benefit from our renewable generation capacity.
Upgrading assets to reduce our running costs (‘invest
to save’ schemes).
As well as offering opportunities for efficiency, the future
will differ from the past in ways that we cannot yet
predict, and we are likely to have to absorb costs that
we cannot forecast. Over the period between 2010 and
2015, we are absorbing some significant costs without
passing these on to customers – for example, the costs
of adopting private sewers.
TRANSFORMATION
ANGLIAN WATER
OUTCOMES IN DETAIL
107
SATISFIED
CUSTOMERS
FAIR
CHARGES
SAFE, CLEAN
WATER
RESILIENT
SERVICES
SUPPLY MEETS
DEMAND
MEASURES AND
INCENTIVES
Existing incentives
Key behaviours
The cost performance incentives and menus included
in the regulatory regime adequately incentivise us
to submit efficient costs in our business plan and to
seek further efficiencies within the period. The move
to Totex makes these incentives more balanced and
more effective.
We want to encourage innovation and further
efficiencies in how we run our business, and we believe
that the regulatory changes introduced for AMP6 will
deliver this.
Ofwat’s KPIs currently include metrics relating to
financial performance.
There is considerable public interest in the behaviour
of corporations in general, and so profits and tax
remain highly sensitive issues and receive significant
public scrutiny.
We also want customers to understand and value the
risk sharing that occurs between us. We want to do
more to create an understanding of the benefits of
this system, and to ensure that when we are managing
risks successfully we are rewarded, and when we are
unsuccessful, it is our shareholders who bear the cost.
An exception is where rewards can accrue to us due
to factors outside our control. Understandably, these
may be resented by customers and stakeholders if
they occur frequently. We want to demonstrate our
commitment to earning fair returns by agreeing to share
any such benefits with customers, but still do what we
can to protect them from possible downsides.
Value to customers
Customers see the value of efficiencies through lower
bills now or in the future. Customers also benefit when
we are able to absorb some costs, which in part is due
to our ability to outperform in other areas. Finally, we
are proposing to share windfall gains in some areas.
108
ANGLIAN WATER
OUTCOMES IN DETAIL
FLOURISHING
ENVIRONMENT
A SMALLER
FOOTPRINT
CARING FOR
COMMUNITIES
INVESTING FOR
TOMORROW
FAIR
PROFITS
Proposals
We are not proposing additional incentives to
encourage innovation and efficiency over and above
those inherent in the regulatory regime.
We will publish annually a summary of any benefits
(in £m) that have been provided to customers, that
were not funded through bills. During this five-year
period we have absorbed the costs of operating
transferred sewers for example. This is only possible
if we are able to outperform in other areas, which
provides protection to customers from possible
unexpected bill increases within the period. By
publishing these figures, it will encourage us to provide
these benefits in the future, rather than resort to
interim determinations to recover all unexpected costs.
It also encourages us to depend less on regulatory
mechanisms and more on our own ability to manage
and offset risks.
Finally, for the wholesale controls, we are proposing a
sharing mechanism to take effect if the actual rate of
inflation exceeds our assumptions. Further details of
this proposal are given in the narrative of our Plan.
COMMITTED PERFORMANCE LEVELS AND INCENTIVES
Measure of success
Incentive type
Units
End of AMP5
prediction
2014–15
Committed
Performance
Level
2019–20
Price control
This outcome is incentivised through alternative mechanisms, such as our proposed RPI impact sharing,
cost out-performance incentives and through the publication of unfunded benefits.
ANGLIAN WATER
OUTCOMES IN DETAIL
109
Anglian Water Services
Anglian House
Ambury Road
Huntingdon
PE29 3NZ
www.anglianwater.co.uk
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OUTCOMES IN DETAIL