WFCP MEETING 3 JULY 2013 - AGENDA ITEM 3.1
MINUTES OF MEETING
Location: Peninsula House
WaterFuture Customer Panel
Date: 3 July 2013 Time: 14:00
Attendance:
Tim Jones (TJ) (DCBC), Alan Burrows (AB) (Environment Agency) (deputising for
Richard Cresswell), Dennis Osborne (DO) (CCWater), James Diamond (JD) (Natural
England), Steve Meakin (SMe) (Citizens Advice Bureau), Lady Mary Holborow (LMH),
Chris Loughlin (CL) (SWW), Susan Davy (SJD) (SWW), Monica Read (MSR) (SWW), Dr
Stephen Bird (SCB) (SWW), Iain Vosper (IV) (SWW), Andrew Roantree (AR) (SWW),
Grace Williams (GW) (SWW), Gillian Mayhew (GM) (CCWater), Sally Mills (SMi) (SWW),
Iain McGuffog (IMcG), Jonathan Middup (JM) and Lynn Maindonald (LMa).
Apologies:
Chris Ridgers (CR), Charles Howeson (Chair) (CH), Richard Cresswell (RC)
(Environment Agency), Tracey Roose (TR) (Age UK), Jacky Atkinson (JA) (Drinking
Water Inspectorate).
Distribution: WaterFuture Customer Panel members
Item
Details
1.0
Impact of consultation plans on customer bills
1.1
SD and IMcG provided a presentation to the Panel regarding sustainable
financing for 2015 - 2020.
3.0
Chairs introduction including minutes and actions
3.1
All introduced themselves. TJ explained that the additional attendees JM and
LMa have been invited to attend in the capacity of the new report writer role as
appointed by the Chairman Charles Howeson.
3.2
TJ asked if the Panel were happy with the minutes and actions from the last
meeting.
3.3
TJ asked about the longevity of the WFCP.
Action: Agenda item to be added to the next WFCP meeting that highlights the
future requirements of the Panel.
Action
IV
Action completed – included within agenda on Ofwat update section.
3.4
DO asked when there will be further discussions at the R&ESC about menu
choices and incentives. IV said this will be discussed at a later date.
IV
Action: IV to include menu choices at a future meeting.
Action on-going – this has been scheduled for 23 October.
3.5
TJ highlighted that in the previous meeting there was a brief disucssion about
the challenges linked with sewer flooding. SCB said that SWW are involved
with ongoing contingency planning however the topic will be an issue to
discuss in future. SCB said it will be useful to discuss the level of resilience,
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3.6
Details
affordability and practicality aspects. He confirmed that Defra have made their
aspirations clear for the price review and in some instances there may need to
be a dialogue with Defra, Ofwat and SWW.
Action
JM explained that he is a Partner at Ernst and Young who is qualified as a
chartered accountant, specialising in forensics. He explained that he has
experience of the water industry and Ofwat and his intentions are to provide a
concise and robust report for the Panel’s consideration. LMa explained that she
has worked across water industry and with Ofwat, she said that she will review
documents and assist JM throughout the process. LM asked if JM will review
previous papers. JM said that he will examine the process to date and going
forward. TJ said that it is important for there to be a clear and regular dialogue
between the report writer, the Panel and SWW.
4.0
Update from Legislative Drivers Sub Group
4.1
AB said that the EA and SWW are broadly aligned in that a reduced NEP has
been discussed which has a local EA agreement but could fall through should
national EA/Defra push for inclusion of the NEP.
AR said that there is continued development of the NEP and work has been
done in a number of areas such as:
4.2
4.3
PR14 Steering group
PR14 Sewage Task & Finish Group
Quarterly meetings
Various Specialist Meetings – Bathing Water, Shellfish, Catchment
Management, Eels, Invasive Species.
AR said that that the latest position over the Quality Programme has just come
in. He said that there remains a significant discrepancy between the figures
SWW have costed in and the list that is included in the NEP. Additionally he
explained that of 270 lines, half of them SWW intend to deliver as described
within the £45m figure, he said some have been removed because SWW have
identified them as not having a risk and some will form part of the Event
Duration Monitoring (EDM) programme. AR said that the EDM information that
is generated over the K6 period will be needed for K7.
4.4
AR said that another issue is if SWW don’t intend to meet the requirements of
the NEP there is uncertainty over the action that may be taken from various
bodies i.e. EA, Ofwat and Defra.
4.5
SM asked for clarification over the spend. AR explained that it will be £45m
over the 5 year period. AR said that another area to consider is the investment
in Plymouth of which a conclusion has not been reached. He said that this is
because SWW’s investigations are ongoing. AR said that Torbay and Instow
have been excluded from SWW investment, but they are included on the NEP,
therefore this is a potential risk.
4.6
AR said that there are certain areas linked with managing uncertainty, he said
the timescales do not meet the PR14 process. In response to this SWW are
trying to interpret the potential investment requirements.
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4.7
Details
JD asked for clarification about missing information for habitat / phosphate
investigations.
Action
AR
Action: AR to check with AB and SWW to feedback to JD.
Action completed – information was included as part of other areas
4.8
AR said that the South West area has over 40% of the Shellfish waters in the
UK and 30% of the bathing waters. AR said that SWW are aiming to achieve
guideline standards, at present these are not being met however the EA
recognise the issues surrounding this problem.
4.9
CL asked how the risk surrounding the NEP will be formalised. AB said that
until advised otherwise by Defra the NEP will contain all shellfish water drivers
with an end date of 2018, however there are still ongoing discussions with
Defra over this matter. CL said that this is a pragmatic method but it needs to
be formalised. TJ said that evidence of the audit trail is very important. SCB
said that the issues over Shell Fish are not just linked with an environmental
aspect but also with the Department of Health and Food Standards Agency.
4.10
4.11
5.0
AR drew the group’s attention to slide 8. He said that a challenge made in the
LDSG meeting surrounded the £2.1m investment for Plymouth that is not
included in the Business Plan. DO asked if the EA are confident with SWW’s
analysis. AB asked how accurate the £2.1m was for Plymouth to move from
Good to Excellent and that is should be subject to willingness to pay. SCB said
that willingness to pay is also linked with Torbay and the challenges of moving
it to excellent status. AR explained that the rationale behind Instow is linked
with issues over the river and catchment and it will be difficult to achieve
‘sufficient’ status in any circumstances.
AR said that there have been presentations on Upstream thinking that the
WFCP have already attended. He said that another focus has been on Eel
regulations and so SWW are looking at investments in this area. AB said that
the EA are writing to everyone who are causing obstructions and also
assessing areas internally as a business. GM asked if there will be any
enforcement action if the rules are not adhered to. AB said that there will be
something but this has not been determined yet. GM said that it is important
because if water customers are paying for the required improvements and
others are not then there is an issue over the costs picked up by customers.
Research & Engagement Sub Committee
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5.1
Details
DO stated that he has been impressed by the breadth and depth of the
research & engagement work undertaken to date and the company should be
commended for this. He said that the updated WTP report has been reviewed
and there were numerous changes that the R&ESC requested which have
been done. DO said that he would like to see some changes to the
segmentation, IV said this is being worked on.
Action
Action: Three page summary of WTP report to be added as an agenda item
for future WFCP meeting.
SMi
Action completed – included as part of the R&ESC update section on the
agenda.
5.2
DO said there was a meeting and presentation from ICS which himself and GM
were impressed with. DO said that in the R&ESC a discussion took place
about seperate focus groups that CCW are currently organising. Additionally
DO highlighted that there is an underlying issue that there may be a difference
of opinion between the WFCP and National CCW. GM said that CCW have
engaged consultants to undertake work and look at a level of customer
acceptability which will pilot next week. She said there will be six focus groups
across England and Wales. Once this has been developed companies will be
allowed to send a representative to attend the sessions. GM said that when
she has more information about what will be discussed she will feedback to the
sub-committees and WFCP. MSR said that it would be useful for SWW, CCW
and ICS to have a meeting and discuss further.
GM
Action: GM to set up a meeting with CCW, ICS and SWW to discuss
CCWater’s approach to acceptability testing.
Action completed – CCW and SWW met to discuss – update given in RESC
update part of the agenda.
5.3
CL said that he doesn’t understand the motivation behind the work CCW are
undertaking. GM said that it was a CCW Board decision. TJ asked what can be
done to get clarity. GM said that once the pilot has taken place she will
feedback. DO said he will ask the CCW Board what the objective and motive is
and will feedback to the Panel.
DO
Action: Update from CCW to be given to the Panel regarding CCW
acceptability testing.
Action completed – update circulated by email to all Panel members.
5.4
6.0
DO said that CCW, SMe and SMi have had a discussion with SWW about the
online engagement tool. He highlighted that CCW have some significant
reservations about the value of the tool as it stands. SMi confirmed that it will
not be used in acceptability testing research.
Ofwat update
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6.1
6.2
6.3
Details
Draft August Submission
SD said that in addition to work SWW have to submit on a statutory basis,
Ofwat have also requested additional data which help them to assess
companies costs. She said that the technical briefing provided to the Panel
draws on some of the information that will be submitted within the August
Submission. SD said that in the last meeting there was a discussion about
KPI’s and the August Submission is also an extension of this. IV said that
SWW have made the decision to submit a commentary with the August
Submission which explains why SWW costs may be different from other
companies i.e. higher in a particular area. IV said that Ofwat are expecting the
submission on the 9th August. IV iterated to the Panel that the document they
have been given is a draft which is still being audited.
SD explained that Ofwat have asked for the data in a prescribed format which
SWW are required to complete. SD said for this reason the data is full of the
acronyms however the first four pages draw on summary notes and are linked
with presentations given by SWW to the city every year.
IV said that SWW welcome comments from the Panel. He explained that SMC
are also auditing the information and the financial data is being audited by
PWC. IV said the design follows a similar theme as the 25 Year Future
Outlook.
Action: WFCP members to send their comments on how the document looks
to GW by Wednesday 17th July. Action completed.
6.4
7.0
7.1
7.2
7.3
Action
ALL
IV explained that the paper on Company Information for CCG’s has been
included to summarise the information that has been published on Ofwat’s
website.
July Consultation
SD said that the Customer Consultation builds on what was submitted for the
25 Year Future Outlook document. SD stated that various comments have
come back from customers and stakeholders which SWW have reflected in the
July Consultation. SD said that SWW are looking at the range of potential
investments which are being drawn together and the company is considering
aspects of the communication to customers.
IV said that the key aspect is to make sure that the documents are customer
friendly and understood by a range of different audiences. IV said that a Water
Level Publication (summary version of July Consultation) will be posed to all of
the SWW customers.
DO queried the use of the wording ‘accessible to all customers’. IV said that
this is Ofwat’s language. He said that SWW are are trying to do as much as
possible to make the proposal as accessible as possible to customers. AB
asked how SWW will know if customers understand the document. MSR said
that SWW have been doing language testing in focus groups. She said this
was done for the 25 Year Future Outlook, will be done for the 5 Year Business
Plan and also was done in a recent R&ESC meeting. MSR said that there is
assurance from a number of different sources. DO said that he thought this
approach was excellent and had highlighted language issues. IV said that the
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7.4
7.5
Details
other aspect is to consider is the communication with business customers.
Action
IV said that for each section there will be questions for customers and that
there aren’t any significant changes from the 25 Year Position. IV said that the
bill impact diagram is being adapted and refined so that everyone can
understand it.
DO said that that the £50 commitment has been queried through a number of
different channels.
ALL
Action: WFCP to feedback their thoughts by Thursday 11th July.
IV
Action completed
Action: IV to send out full version of the draft July Consultation to the WFCP.
Action completed
7.6
IV
DO asked about the use of the word sustainable. SD said although the word
sustainable was in the 25 Year Future Outlook it can be adapted in the next
document.
Action: Summary of the feedback received to be presented at the next WFCP
meeting.
8.0
8.1
Action completed – on agenda
WFCP Interim Report
IV said the draft report that has been included in the pack was provided by
CCW. GM said this is because CH has wanted a standardised template across
the CCG’s for which he is the independent Chairman. It was agreed in the
group that the template is something JM will develop.
8.2
TJ asked when both documents will be needed. IV said that the interim report
will be needed by the end of August so that Ofwat can see before the Business
Plan is submitted.
8.3
IV said that feedback on the template should be within the next two weeks.
8.4
AB asked how simliar the template is to ones other companies are developing,
highlighting that areas of the environment have not been included. GM said
that when the draft was sent to IV it had not been tweaked and so this will need
to be done. SD said it is for the Panel and JM to take ownership of the
template.
Action: WFCP to send comments to the WFCP inbox regarding comments on
the template. GW to pass onto JM.
9.0
9.1
ALL
Action completed
LEP Update
TJ provided a detailed LEP update regarding the following points:
Skill is a big area and the government single funding pot is protected,
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9.2
10.0
10.1
Details
some work with employers is potentially available
Colleges who don’t recognise employer engagement may lose funding
Housing, transport, broadband, skills and education are all critical areas
Government has issued the scheme ‘help to buy’ with the 20%
intervention the results are coming in – growth in housing market
expected
For the Department of Work and Pensions the LEP are working to
access innovation funding
MET office received £100m to upgrade their computers.
SCB said that the areas TJ has covered under Capital Investment i.e.
household, resilience, renewables, and energy are all in the Capital Plan. SCB
said that SWW are working with local partners and companies to encourage
engagement. TJ said this is linked to both SWW upstream and downstream
thinking investments.
AOB
£60m Investment
DO queried how SWW outperformance is shared with customers.
10.2
SD said that outperformance and sharing efficiencies in a 70 / 30 ratio with
70% to customers and 30% to SWW is linked with incentives and risks. She
said this will be discussed at a later date.
10.3
DO said that sharing of efficiencies with customers is good news and queried
where the money is going, what will be logged up in K6 and what bill impact is
expected?
10.4
The £60m reflects additional capital investment, operating and financing costs
for items that could have been included in an IDoK submission by SWW. The
allocation is:
10.5
Private sewer adoption:
Bathing water schemes:
Customer debt financing:
10.6
SWW has made and will continue to make the investment in K5 without any
increase to customer bills in this period.
10.7
Action
£30m
£20m
£10m
SWW will submit a change protocol to Ofwat so that the additional outputs and
capital expenditure for bathing water schemes and private sewers will be
recognised at K6 price setting c£38m, but this will not increase customer bills in
K5. The cost of financing the capital expenditure and all operating costs
incurred has been borne by shareholders estimated at c£29m, with £22m
considered to be the amount that would have been included within an IDoK
submission with a £25 impact on customers bills - none of this expenditure will
ever be borne by customers.
10.8
The bathing water and private sewers change protocol will be scrutinised by
Ofwat, with any resulting change impacting customer bills from K6. CCWater
will also see the submission and will have the opportunity to comment on it.
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10.9
10.10
10.11
Details
The £20m investment in improving bathing water quality (a key priority of
customers) will be spent in a variety of locations to bring waters up to the
"satisfactory" standard by 2015. Combe Martin, Torbay, Liskeard and Ivybridge
will all benefit from this investment and the communities have welcomed the
decision. The impact on K6 bills is estimated at c.£2/3.
Action
The £10m into schemes "aimed at helping those customers in most need" is
money already spent on customers with affordability issues. It does not include
the money SWW will put into administration of their social tariff or any costs for
the administration of the £50 government contribution scheme.
This approach means that a potential increase to recover costs in 2014/15 bills
that would have been the result of using the IDoK mechanism has been
avoided. Only the capital cost of private sewers and additional bathing water
schemes will form part of the customer bill impact at PR14 as at this point the
expenditure will be included in the RCV.
Regulator Report
10.12
SCB said that every year there is a review of performance with Ofwat and the
EA which will be generating an increased profile in the media. SCB said that he
will share the conclusions over this with the WFCP via email later in the week.
He explained that because some areas were good and others were
disappointing SWW would like to explain the background. SCB said SWW are
heading in the right direction but there is still more to do.
Date of next meeting – 16 September 2013
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