Shaping the future of your water
and waste water services
Draft Strategic Projections
November 2012
www.scottishwater.co.uk/yourviewscount
Contents
Introduction
01
Chair’s statement
03
About Scottish Water
04
What might the future bring?
08
Listening to our customers
18
Our strategy 23
Providing continuous high quality
drinking water
24
Protecting and enhancing
the environment
30
Supporting Scotland’s economy
and communities
36
Investing in future water services
44
We have published a separate summary
consultation document, Your views count,
to help us understand your views about the
future of your water and waste water services.
The consultation will run for 12 weeks from
14th November 2012 to 12th February
2013. After this we will review all the
consultation feedback to help shape our
final strategic projections and our 5 year
business plan for 2015-20, which we will
publish in October 2013.
How to get involved:
In writing
You can provide your views in writing
to us at:
Freepost RTBT-EEXB-EJRT
Scottish Water
Daldowie Office
Uddingston
Glasgow
G71 7RX
Online
You can provide your views electronically,
or find out more, through our website
www.scottishwater.co.uk/yourviewscount
Shaping the future of your
water and waste water
services in Scotland
Our timeline
October-November
2012
WICS provides
preliminary views
on regulatory inputs
2013
14 November 2012
Your views count
consultation starts
and Draft Strategic
Projections published
12 February 2013
Your views count
consultation closes
30 October 2013
Final Strategic
Projections
December 2013March 2014
WICS issues
discussion papers
Scottish Water and the
Customer Forum start
customer engagement
April 2014
WICS, Scottish Water,
the Customer Forum,
SEPA and DWQR end
tri/quinti-partite
meetings
June 2014
WICS publishes its
Draft Determination
for consultation
August 2014
Consultation on WICS’
Draft Determination
closes
September 2014
Scottish Government
publishes its final
objectives, principles
of charging and
technical expression
November 2014
WICS publishes its
Final Determination
2015
March 2015
Scottish Water
publishes its Delivery
Plan for 2015-2020
This draft document sets out what
we think are the key challenges and
opportunities facing Scotland’s
water industry in the years to come.
To ensure we are prepared going
forward, the document also sets
out what we think our long term
strategy should be.
Business Plan 2015-20
2014
December 2013
WICS, Scottish Water,
the Customer Forum,
SEPA and DWQR start
tri/quinti-partite
meetings
Everyone in Scotland depends on
high quality, clear, fresh drinking
water and the safe return of waste
water to the environment.
January 2015
Scottish Water decides
whether or not to accept
the Final Determination
1 April 2015
New price limits
come into effect
We have published a separate
summary consultation document,
Your views count, to help us
understand your views about the
future of your water and waste
water services. We would welcome
comments on any aspects of the
projections set out in this document.
Introduction
Chair’s statement
Providing continuous
high quality drinking water
Protecting and enhancing
the environment
Supporting Scotland’s
economy and communities
Investing in future
water services
01
About Scottish Water
What might the
future bring?
Listening to our customers
Our strategy
Scottish Water provides high quality
drinking water, taken from sources such
as reservoirs and rivers and treated in our
works to remove impurities, for business
and household needs. We also take away
and clean waste water to the highest
standard before returning it safely to
the environment.
Providing
continuous high quality
drinking water
page 24
Protecting and
enhancing the
environment
page 30
Investing
in future
water services
page 44
Supporting
Scotland’s
economy and
communities
page 36
Draft Strategic Projections
Introduction
Chair’s statement
Providing continuous
high quality drinking water
Protecting and enhancing
the environment
Supporting Scotland’s
economy and communities
Investing in future
water services
03
About Scottish Water
What might the
future bring?
Listening to our customers
Our strategy
Chair’s statement
It gives me great pleasure to publish our draft
strategic projections document ‘Shaping the
Future of Your Water and Waste Water Services’.
This sets out our long term strategy for providing
water and waste water services to our customers
in Scotland. This supports our vision for
Scottish Water to become Scotland’s most
valued and trusted business, one that we can all
be proud of. It also supports some of the wider
‘Hydro Nation’ opportunities, using Scotland’s
water sources to support economic growth, that
are being progressed by the Scottish Government.
We are very proud of the significant improvements
we have made to your water and waste water
services over the past 10 years, and equally proud
that this has been achieved while reducing the
costs of these services by 40% such that our
average household charges at £324 are now
the lowest in Great Britain (£52 per household
below the average in England and Wales).
We have undertaken extensive research with
customers and stakeholders to understand what
is expected from our services in the future. We
were very pleased to hear from our customers
that they regard Scotland’s drinking water as
one of the best in the world and think that
Scottish Water provides good value for money.
However, we believe we can improve further
and, with our customers’ support, take further
steps to improve service levels across Scotland.
Most of our customers have never experienced
an interruption to the services they receive
and trust this will continue. We must not take
this for granted as future uncertainties will
present opportunities and challenges. It is
important that we recognise this so that we
can adapt to challenges, and take advantage
of opportunities, while ensuring that our
immediate business plans are aligned with
the long term aims set out in this document.
This document presents our current view of
priorities for the future to meet legislative
requirements, our customers’ expectations,
and the potential challenges we may face.
We will update this every 5 years to coincide
with the regulatory business planning cycle.
Updating our strategic projections every
5 years will be essential to consider new
challenges and opportunities that emerge.
In preparing this document we have conducted
extensive research and held discussions with
customer groups and stakeholders. We believe
it is important that we consult widely on our
future strategy so that you can influence the
future of your water and waste water services.
We aim to build on our track record for
improving services to our customers and
continue to develop new approaches to reliably
deliver the services our customers expect.
Central to this are three key strategies:
• Improving the resilience of water supplies to
ensure major towns and cities across Scotland
never run out of water;
• Engaging with our customers and other
parties to help deliver a better service; and
• Continuing to improve the efficient
maintenance and operation of our assets
to keep costs as low as possible.
I look forward to hearing your views on our
strategy and thank you for taking time to
participate in ‘Shaping the Future of Your
Water and Waste Water Services’.
Ronnie Mercer
Chair
Ronnie Mercer, Chair
Draft Strategic Projections
About Scottish Water
At a glance
Scottish Water was created in
2002
and is the
4th
largest water and waste water service provider
in the UK and is one of Scotland’s largest businesses.
Scottish Water provides over
1.3 billion
litres of high quality drinking water
every day and nearly one billion
litres of waste water is taken away
and treated before being returned
to the rivers and seas for around
2.4 million
domestic households and over
150,000
business users.
Draft Strategic Projections
Thousands of assets are operated and maintained
to provide these services, including:
113
266
70,000
29,762
31,477
1,863
reservoirs
water treatment works
acres of catchments
miles of water pipes
miles of
waste water pipes
waste water treatment works
plus numerous pumping stations, sludge treatment centres
and service reservoirs.
Introduction
Chair’s statement
Providing continuous
high quality drinking water
Protecting and enhancing
the environment
Supporting Scotland’s
economy and communities
Investing in future
water services
05
About Scottish Water
What might the
future bring?
Listening to our customers
Our strategy
Scottish Water provides vital services to the
people of Scotland, providing high quality
drinking water and waste water services for
around 2.4 million domestic households and
over 150,000 business premises.
To provide your water supply we capture rainwater
in reservoirs, or take water from rivers or lochs
which we then treat to ensure the water is clear
and fresh. We distribute this high quality treated
water through an extensive network of pipes and
storage tanks to meet our customers’ essential
household needs when they turn on their taps
for drinking, cooking, bathing and washing, for
business process requirements, and recreational
uses such as car washing and watering the garden.
We collect the waste water and surface water
from your homes and business premises along
with some of the surface water run-off from your
paved areas, roofs and roads, taking this away
and treating it so that we can safely return it to
rivers or the sea.
In providing these services we operate, maintain
and invest in treatment works, pipelines and
other assets that will last for many decades,
serving both current and future generations.
It is therefore essential that in planning for the
future we take the right actions today to meet
our customers’ future requirements.
The water industry in Scotland is regulated as
shown below. Regulators provide assurance
that Scottish Water meets the interests of their
customers, protects the quality of drinking water
and the environment, and is accountable for
their performance.
The Customer Forum has been created to
ensure that customers have a clear voice in the
business planning and price setting processes.
The water industry in Scotland
The Scottish Parliament
www.scottish.parliament.uk
www.scotland.gov.uk
www.watercommission.co.uk
www.dwqr.org.uk
www.customerforum.org.uk
www.sepa.org.uk
www.consumerfocusscotland.org.uk
www.spso.org.uk
Draft Strategic Projections
06
Scottish Water’s performance has been transformed since
its formation in 2002, as shown below:
Scottish Water
Customer service
experience
Protecting you
from flooding
Our focus on improving
our response to customer
enquiries has resulted in
a 40% improvement in
customer satisfaction.
We have improved
performance of our sewer
networks such that today 70%
fewer customers are affected
by flooding than in 2002.
Improving drinking
water quality
Continuity of
water supplies
Drinking water quality at
customers’ taps has been
improved significantly since
2002 and is an ongoing focus
for improvement.
We have reduced the number
of properties affected by
interruptions to supply
for greater than 6 hours
by two thirds.
Improving
water pressure
Improving the
environment
Through improved
management of our water
network we have reduced the
number of customers affected
by low pressure by almost 90%.
We have halved the number
of environmental pollution
incidents caused by our
operations since 2008.
Introduction
Chair’s statement
Providing continuous
high quality drinking water
Protecting and enhancing
the environment
Supporting Scotland’s
economy and communities
07
Investing in future
water services
About Scottish Water
What might the
future bring?
Listening to our customers
Our strategy
Performance improvements have resulted
in a continuous increase in customer service
levels, as measured by the Overall Performance
Assessment score, the regulatory measure of
our overall customer service.
Comparison with English and Welsh water
companies based on OFWAT published
average charge
Water and sewerage
companies
Average household
bill for 2012/13
By 2015 we expect our overall performance to
match the best companies in England and Wales.
South West
£543
Wessex
£455
These performance improvements have been
delivered while we have transformed our
efficiency, reducing operating costs by 40%,
and enabling us to provide increasingly good
value for our customers.
Welsh
£427
Anglian
£423
Southern
£416
United Utilities
£395
England and Wales average
£376
Yorkshire
£361
Northumbrian (North East)
£352
Thames
£340
Severn Trent
£326
Scottish Water
£324
Ten years ago, our average combined
household water and waste water charges were
the fourth highest in Great Britain, now they are
the lowest, and £52 (14%) below the average
charge in England and Wales.
Overall Performance Assessment
Maximum
400
Upper quartile performance in England and Wales
350
300
250
200
2006-07
2007-08
2008-09
2009-10
2010-11
2011-12
2012-13
2013-14
2014-15
Actual performance
Forecast performance
Draft Strategic Projections
08
What might the future bring?
At a glance
In considering the key priorities for water and waste water services in
Scotland, we need to understand the future opportunities and challenges
we may face in the next 25 years. We have involved our stakeholders
and our employees in developing potential future scenarios. This has
identified the critical issues that we believe are most significant to the
future of your water and waste water services in Scotland.
Scottish Water
Climate change
Demographics
A changing climate could impact on water and
waste water services in a variety of ways. We
must be able to adapt to potential changes if we
are to continue to meet customers’ expectations
for reliable services. Possible climate impacts
include changing quality of water sources,
availability of water resources, increased rainfall
in our sewers and restrictions to discharging
waste water back to the environment.
By 2035, Scotland’s population is expected
to grow by 10% overall and the number of
households by 21%, as well as a shift in the
population from the west to the east of
Scotland. Scotland’s population is continuing
to age, with a 50% increase in over 60s projected
by 2035. We are currently seeing a reduction in
business users’ water demand and expect this
to continue in the short to medium term.
Legislation
Resource availability
A number of pieces of both European and
Scottish legislation – such as the Water
Framework Directive and Water Resources
(Scotland) Bill – mean that continued investment
will be required to meet new standards. The
Scottish Government has ambitious plans to
develop Scotland as a Hydro Nation. This has
the potential to further use Scotland’s valuable
water resources to support economic growth.
Frequent rainfall means Scotland generally has
enjoyed a significant supply of water, which is
stored in natural lochs, rivers and man-made
reservoirs then treated to remove impurities
and supplied for drinking. Given the potential
effects of climate and population change we
need to consider whether we will have enough
capacity to store water in the future to provide
continuous treated drinking water for Scotland’s
homes and businesses.
Political, economic and regulatory environment
Science and technology
There will always be a requirement for essential
water and waste water services in Scotland. With
pressures on public spending likely to remain for
several years to come, the level of borrowing
available from the Scottish Government for
future water and waste water services could
be lower. We expect regulation to continue
to evolve assuring customers of the quality
of Scottish Water’s service and performance.
Significant advances in science and technology in
recent years have had a positive impact on the
quality and efficiency of water and waste water
services in Scotland. Science and technology will
continue to provide opportunities to improve
services and reduce costs.
Providing continuous
high quality drinking water
Introduction
Chair’s statement
Protecting and enhancing
the environment
Supporting Scotland’s
economy and communities
Investing in future
water services
09
About Scottish Water
What might the
future bring?
Listening to our customers
Our strategy
Climate change
From this we expect that:
Our understanding of climate change and how it
may impact on us has improved significantly over
the last two decades but uncertainties remain.
Projections2 indicate that rainfall patterns will
change and that temperatures are likely to rise
in both summer and winter. Sea levels are also
projected to rise around the Scottish coastline.
How might climate change affect your services?
Our assessment of the impact of climate change
demonstrates that a number of our assets
and services may be affected as shown in
the picture below.
2
Climate change will create greater
variability of weather patterns which
could impact on the reliability of our
services; and thereafter
We need to adapt our assets and
operations to ensure that our services
can always be delivered, irrespective
of the effects of a changing climate.
UK 2012 Climate Change Risk Assessment
Climate change impacts
1
3
2
Water treatment
and pumping
station
Reservoir
Ground water
infiltration
Waste water
treatment works
3
5
Drain
8
4
Treated
outlet
Storm
outlet
6
7
1. Changing rainfall
patterns may affect
the available quantity
of raw water supplies.
2. Changing raw water
quality (algae, colour)
may affect ability of
existing assets to treat
to the required drinking
water quality standards.
3. Potential flooding of
assets, or landslides that
affect access to operate
assets, or in some
locations coastal erosion.
4. Lower river flows in dry
periods may reduce our
ability to abstract water
and the ability of the
environment to accept our
waste water discharges.
Additional treatment
may be required.
5. Increased rainfall
frequency and intensity
results in more property
flooding from sewers.
6. Periods of dry weather
result in siltation leading
to blockages in sewers
or increased sewer
cleaning activities.
7. Increased rainfall
frequency and intensity
may result in more
storm water spills
to the environment.
8. Increased run-off
from agricultural land
may lead to greater
pollution of rivers.
Draft Strategic Projections
10
Demographics
The key points in the projections of
significance to Scottish Water are:
Changes in the size and structure of the
population will have important implications
for economic growth in Scotland and the
demand for our services.
The Scottish population is expected
to grow by 10% by 2035, primarily
due to net inward migration from
other areas of Europe;
The Office for National Statistics (ONS), on
behalf of the Registrars General, prepares
population projections which indicate that there
will be continuing overall growth in the Scottish
population and relatively greater growth in the
east of Scotland, suggesting a general migration
from west to east as shown in the chart below.
There will be a general shift in
the population from west to east
of Scotland;
The number of households is
expected to grow by 21% by 2035 as
the average household occupancy
rate reduces from 2.18 to 1.93;
Unless water consumption or industrial demand
reduces and/or further action is taken by Scottish
Water, this projected population growth could
affect the availability of the water supply in some
areas due to current capacity limits, which could
also be further affected by climate change.
Scotland’s population is continuing
to age, with a 50% increase in
over 60s projected by 2033 which
could have consequences for the
affordability of water charges; and
In the current economic climate it is difficult to
obtain reliable forecasts for demand for water
and waste water services in the business sector.
In recent years we have seen a reduction in the
demand for water as businesses drive to reduce
their costs and become more efficient in their use
of water; we expect this to continue for the next
few years. Given the many uncertainties facing
business customers and the opportunities that
Hydro Nation – using Scotland’s water resources
to boost economic growth – may bring, we have
assumed that overall demand will remain stable
in the longer term.
We expect to see some further
reduction in business demand over
the next few years and little growth
in demand for water and waste
water services in the longer term.
Projected demographic change (2010-based), by Council area, 2010-2035
40
Western councils
Central councils
Eastern councils
Percentage changed
30
© Crown copyright
20
10
0
Scottish Water
East Lothian
Perth & Kinross
Aberdeen City
Edinburgh, City of
Aberdeenshire
Stirling
West Lothian
Highland
Midlothian
Clackmannanshire
Glasgow City
Scottish Borders
Falkirk
SCOTLAND
Fife
Moray
Dundee City
Orkney Islands
Angus
South Lanarkshire
East Ayrshire
North Lanarkshire
Shetland Islands
Renfrewshire
East Renfrewshire
South Ayrshire
North Ayrshire
Dumfries & Galloway
Argyll & Bute
West Dunbartonshire
East Dunbartonshire
Inverclyde
-20
Eilean Siar
-10
Introduction
Chair’s statement
Providing continuous
high quality drinking water
Protecting and enhancing
the environment
Supporting Scotland’s
economy and communities
Investing in future
water services
11
About Scottish Water
What might the
future bring?
Listening to our customers
Our strategy
Legislation
Extensive legislation governs the quality of
the products that we supply and the impact
of our activities on the environment.
We have invested over £2 billion in the
past 10 years on new treatment works and
infrastructure to meet the standards set out
in drinking water quality and environmental
legislation. As we look to the future, legislative
obligations will continue to have implications
for the way we provide our services as
summarised below.
European legislation
Urban Wastewater Treatment regulations
These regulations aim to protect the environment
from the adverse effect of waste water discharges
by regulating the collection and treatment of
waste water from our homes and from industry.
Bathing Waters Directive
The revised Directive sets more stringent
bathing water quality standards and puts a
stronger emphasis on beach management
and the provision of information to the public.
Our waste water treatment works and networks
have the potential to impact on 70 of the 83
designated bathing waters in Scotland.
Water Framework Directive
This is a wide ranging directive that establishes a
framework for action to protect and enhance the
water environment through river basin planning
which brings together all of the activities that
impact on the water environment.
Blueprint for water
The blueprint will integrate the implementation
of action to deliver EU water policy objectives
and is likely to focus on better land management,
economic cost signals to influence behaviours,
efficient use of water resources and further the
improvement of the knowledge base for water
policy making.
European Union drinking water standards
We do not expect that any further standards
for drinking water will be introduced, but we
continue to actively monitor any developments.
Our understanding:
We expect to continue to invest
in and improve our activities to
meet environmental standards laid
down, or being developed, by the
European Union and the Scottish
Government; and
Hydro Nation could create
additional demands for services and
opportunities for Scottish Water.
Draft Strategic Projections
12
Scottish legislation
Reservoirs Scotland Act 2011
The Act represents a significant change in the
way reservoirs will be regulated and includes
measures to increase protection of the public
from the risk of flooding from reservoirs. This
will result in some smaller reservoirs being
brought under the regulatory regime.
Flood Risk Management (Scotland) Act 2009
The Flood Risk Management (Scotland) Act 2009
aims to reduce the risk of adverse consequences
of flooding. The illustration below shows how
managing the risk of flooding sustainably means
considering all sources of flooding and the
integrated actions that can be taken to reduce
the impact of flooding.
Water Resources (Scotland) Bill
The Scottish Government has ambitious plans
to develop Scotland as a Hydro Nation. In the
competitive global markets, Scotland’s valuable
water resources have the capacity to position
Scotland well to support the success of many
water dependent sectors and play a part in
attracting new businesses to Scotland. This
legislation brings greater focus on good
stewardship of our valuable water resources
in Scotland.
Climate Change (Scotland) Act 2009
The Act introduced a statutory target to reduce
Scotland’s greenhouse gas emissions by at least
80% by 2050 (and at least 42% by 2020). Scottish
Water is expected to deliver a continuing decrease
in energy usage and reduction in carbon footprint
in support of the Scottish Government’s objective.
Flood Risk Management
2
1
4
3
5
Groundwater
1. Land management
and restoration of natural
habitats, such as wetlands
and woodlands can
create more space for
water and help reduce
the flow of flood water
to areas downstream.
Scottish Water
2. Where flood defence
structures are necessary,
they play a critical role in
protecting communities
and infrastructure from
floods.
3. Good planning
policies will ensure that
homes and businesses
are located away from
high flood risk areas.
4. Sustainable urban
drainage systems will
reduce pressure on
drainage and sewer
systems.
Flood warnings help
communities to respond
to flood risks.
5. Using the natural
capacity of our coastal
areas and restoring
saltmarsh will improve
the protection of
coastal areas.
Introduction
Chair’s statement
Providing continuous
high quality drinking water
Protecting and enhancing
the environment
Supporting Scotland’s
economy and communities
Investing in future
water services
13
About Scottish Water
What might the
future bring?
Listening to our customers
Our strategy
Resource availability
Scotland has no shortage of rainfall which
provides significant potential natural raw water
supplies. It is our responsibility to meet the
needs of today’s customers through storing
and taking water from the environment
without compromising our ability to satisfy the
requirements of future generations. In this way
we are responsible for very valuable resources
which could provide a key future economic
advantage for Scotland.
Global position
“There is an intrinsic link between the challenge
the world faces to ensure food security through
the 21st century and other global issues, most
notably climate change, population growth and
the need to sustainably manage the world’s
rapidly growing demand for energy and water.”
Scotland’s opportunity
Scottish Water currently uses a small percentage
of Scotland’s natural water resources to provide
drinking water for the majority of Scotland’s
homes and business premises.
Scotland uses more of the world’s water through
importing water intensive goods such as food
and clothing, than Scottish Water provides for
your daily use. With growing pressure on water
resources in many other nations, it is conceivable
that new industries may be attracted to locate
in Scotland to take advantage of the significant
natural raw water resources, creating a major
economic opportunity.
Increased demand
50% by 2030 (IEA)
Energy
Climate
change
Food
Water
Increased demand
50% by 2030 (FAO)
Increased demand
30% by 2030 (IFPRI)
© Food, Energy, Water and the Climate: A Perfect
Storm of Global Events? – John Beddington CMG
FRS Chief Scientific Adviser to HM Government 2009
Draft Strategic Projections
14
Political, economic and
regulatory environment
Political
While the political environment and issues
such as taxation or constitutional changes may
require business adjustments, these are likely
to represent a low risk to Scottish Water as a
provider of essential services. We will remain
alert to how political change affects our business.
Economic
The Scottish Government’s Chief Economic
Adviser’s assessment of the medium to long
term outlook for public expenditure in Scotland
suggests that there will be significant pressures
on the availability of government borrowing for
the next 10-15 years. The Scottish Government
has advised us that lower borrowing, which is
used to finance part of our investment
programme, will be available in 2015-20
compared to the 2010-15 period.
Regulatory
The UK regulatory landscape is changing to
encourage water companies to take greater
accountability for their performance and
governance with a move to more risk-based
regulatory approaches that encourage innovation.
The retail water market for business customers
was created in 2008 in Scotland. The planned
extension of this market to England in 2017 may
encourage greater innovation to meet demand for
services/products in the wholesale water sector.
Scottish Water
Our understanding:
In any political environment we
provide essential water and waste
water services that will always be
required by the people of Scotland;
Borrowing availability from the
Scottish Government will be lower
than in the past;
Uncertain economic growth
prospects could have consequences
for the longer term affordability of
water charges;
The extension of the retail water
market to England may encourage
greater innovation in the water
industry; and
Regulation will continue to move
to a more risk-based approach,
placing greater accountability
on Scottish Water.
Introduction
Chair’s statement
Providing continuous
high quality drinking water
Protecting and enhancing
the environment
Supporting Scotland’s
economy and communities
Investing in future
water services
15
About Scottish Water
What might the
future bring?
Listening to our customers
Our strategy
Science and technology
There have been significant changes in the way
water and waste water services are delivered
thanks to technological advancements:
• Internet and mobile communications have
revolutionised how businesses can operate
and engage with customers.
• Water treatment technology has moved on
significantly providing a much higher quality
of water.
• In waste water treatment we have seen
significant improvements in technology
and the introduction of enhanced sludge
treatment and disposal.
• Computing technology has enabled
automation and control systems and
sophisticated hydraulic modelling of sewer
and water networks as well as the real-time
capture of data about our asset performance.
• The introduction of no-dig pipe repair and
replacement techniques has significantly
reduced costs and disruption to our customers.
So what might the future bring?
• What new treatment processes will be
developed that reduce the costs of service
provision and carbon emissions?
• Could developments in nanotechnology
(engineering involving tiny particles) enable
water pipes to repair themselves which will
help to reduce interruptions to supply, water
losses and long term maintenance costs?
• Will global shortages of water see significant
advances in low cost desalination technology
(to remove salt from water)?
• How far can we go towards zero waste,
extracting value from recycling, heat recovery
from sewers, as well as energy and minerals
extraction from waste water sludge?
• What might the home of the future look like
and how will that impact on the services that
we provide?
• How might future computing and
telecommunications technology influence
the development of control and monitoring
systems allowing real-time management
of smart water and waste water grids?
• Could changes in the way water is used in the
home – such as having specific water supplies
for uses such as drinking and washing – greater
local storage and recycling of grey water (waste
water from laundry or dishwashing or from
roofs) for cistern use and possibly treatment
at point of use?
• Will advances in hydrogen fuel cell
development change demand for water?
The diagram on page 16 shows a possible model
of the future where we view the urban water
cycle as a resource and look at ways of driving
towards recycling and value realisation from
the raw materials at our disposal.
Our understanding:
Technology will continue to advance
across all areas of our lives. We will
identify the opportunities that
this presents and will use these
where appropriate for the benefit
of our customers;
Environmental science continues
to develop and our understanding
will continue to evolve regarding
our impacts on the environment
and mankind; and
We will lead research and
development that supports the
achievement of our strategic aims.
• How will scientific knowledge influence the
introduction of risk-based decision making that
balances legislative objectives against carbon
emissions resulting in a whole new approach
to managing waste water discharges?
Draft Strategic Projections
16
Potential opportunities for reuse and value capture
1
5
3
2
4
6
7
Road drain
Soakaway or community
suds pond
8
Sewer
1. Bath and shower
Water efficient shower
heads and taps use
less water.
2. Combined toilet
and sink
Combined unit reuses
waste water from the
sink for toilet flushing.
Scottish Water
3. Grey water
storage tank
Waste water from baths,
showers and washing
machines, stored, heat
extracted and waste
water used for toilet
flushing.
4. Water efficient
washing machine
Uses beads combined
with a small amount of
water to clean clothes.
5. Customer
engagement
Providing advice to
customers on water,
energy efficiency
and waste disposal.
6. Rainwater butt
Captures water from roof
and reused for garden
watering, car cleaning and
toilet flushing – reduces
drinking water demand
and sewer flows.
7. Permeable driveway
or road surface
Reduces flow to sewers
and drains to soakaway/
suds pond.
8. Waste water
treatment works
Minerals extracted and
recycled, waste water
suds converted to energy.
18
Listening to our customers
At a glance
We have undertaken an extensive customer research programme
seeking the views of household and business customers. Summarised
below is our understanding of our customers’ overall priorities for
further service improvements.
Scottish Water
Service Area
Overall Priority
Leakage
High
Long term interruptions
High
Maintain drinking water quality
High
Internal flooding
High
External flooding
High
Short term interruptions
High
Pollution incidents
Medium
Discolouration
Medium
Taste and odour
Medium
Bathing water quality
Medium
Carbon emissions
Medium
Sewer maintenance
Medium
Customer service
Medium
Communication
Medium
Business price issues
Medium
Iron works/covers
Low
River water quality
Low
Low pressure
Low
Odour
Low
Introduction
Chair’s statement
Providing continuous
high quality drinking water
Protecting and enhancing
the environment
Supporting Scotland’s
economy and communities
Investing in future
water services
19
About Scottish Water
What might the
future bring?
Listening to our customers
Our strategy
Listening to customers’ views and
building these into our plans is part
of an ongoing customer engagement
approach that allows Scottish Water
to ensure that our customers’ needs
are at the heart of our service delivery.
We have undertaken an extensive customer
research programme which involved targeted
research activities, speaking with our customers
to find out what they think, listening to our
customers’ views and building this into our plans.
Findings from the research show that overall,
both household and business customers generally
have positive perceptions of Scottish Water,
even though their relationship with the brand
is often a distant one.
The drinking water provided in Scotland is
perceived to be of a superior quality to much
of the rest of the world, and waste water
services are conducted invisibly.
Customers generally view the services they
receive from Scottish Water as representing
good value for money.
Unprompted feedback throughout the Customer
Engagement Programme has shown that
customers are keen to maintain the service
levels they currently receive. As most customers
experience 100% service reliability, and trust that
they will continue to receive this, there is a lack
of knowledge or understanding regarding many
of the more complex aspects of the water and
waste water services provided by Scottish Water.
Listening to our customers
Customer Experience Score
Household and Business Panel
Validation Focus Groups
and Licensed Provider
Discussions
UK Customer Satisfaction Index
Stated Preference
Study
Brand Tracking Survey
Deliberative Groups +
Tele-Depth Interviews
Community Engagement programme
Complaints & Contact Volumes and RCA
Internal Focus Groups
Outputs
Business as Usual Insight Activities
Customer Engagement Programme
Draft Strategic Projections
20
In both the unprompted and quantitative
research household customers showed a
willingness to invest their charges to prevent
service failures that may affect other customers
or the wider environment.
The following summarises our understanding
of customers’ expectations of Scottish Water:
• Customers trust that they have a safe and
reliable supply of drinking water and expect
us to maintain current high standards.
• Customers expect that their waste water
will be taken away and returned safely
to the environment.
• Customers want the level of visible leakage
reduced, but were not willing to pay extra
to achieve this.
• Both household and business customers have
demonstrated that they have no desire to see
service levels reduce in any area, and overall
show desire, and place a value on, further
service improvement once prompted with
information about specific service areas.
Some business customers raised tariff structures
as an area for improvement.
Customers recognise that the quality of drinking
water is high, and whilst investments are required
in other areas to improve services, this should
not be at the expense of drinking water quality.
Most of our customers currently receive 100%
service reliability from Scottish Water. However,
there are occasions when issues arise. In relation
to specific areas for service improvement
research from both business and household
customers, findings show that:
Scottish Water
• Minimising interruptions to water supplies is
an important issue for customers due to the
inconvenience that this may place on daily life,
with long term interruptions having greater
impact than short term interruptions. For certain
business customers this would be a top priority
due to their business being dependant on water
to operate. Long term interruptions to supply
due to extreme weather were thought to be
difficult to prevent, but there is an expectation
that Scottish Water should plan ahead to
avoid or minimise the impact of these events.
• Reducing internal property flooding from
sewers is consistently a high priority for
improvement.
• External flooding represents one of the highest
volumes of contact received by Scottish Water,
and customers who discussed this issue in
qualitative research expected Scottish Water to
take steps to reduce its impact both in terms
of the overall number of customers affected
and those impacted by recurring issues.
• Despite the low levels of customer contacts
relating to pollution incidents, this is viewed
as an area for improvement, with a focus to
be placed on the more serious ‘category 1’
incidents.
• Reducing discolouration (the appearance)
and poor taste or odour from drinking water
supplies is a high priority for improvement as
these give concern to customers that water
quality has been compromised.
• Coastal and inland bathing water quality is an
important issue driven by the pride customers
have in Scotland and its natural environment,
but a relatively lower priority for improvement
for customers who rarely bathe in Scotland’s
water bodies.
Introduction
Chair’s statement
Providing continuous
high quality drinking water
Protecting and enhancing
the environment
Supporting Scotland’s
economy and communities
Investing in future
water services
21
About Scottish Water
What might the
future bring?
Listening to our customers
Our strategy
• There was high agreement that everyone should
be striving to cut down their carbon emissions,
and therefore customers, in particular business
customers, liked the idea of Scottish Water
aiming to lower their carbon footprint.
• While customers are keen for improvements to
river water quality they thought that Scottish
Water should prioritise investment where it
will have the biggest impact on the river, and
expect that other individuals or businesses
should also address their environmental impact.
• Low pressure was of low priority to both
customer groups, with many feeling that those
affected still receive a level of service and the
issue would be more of an inconvenience than
have a significant impact on daily life.
• Odour from waste water treatment facilities
was also seen as a relatively minor issue, as it
was considered to be primarily a temporary
issue for those affected.
From our overall research and
engagement programme we
understand that customers:
Value receiving a safe and plentiful
supply of drinking water, with their
waste water taken away and returned
safely to the natural environment;
Do not wish to see service levels
reduce in any area of service;
Wish to see investment to further
improve services across Scotland;
Value reducing further the level
of service failures associated with
flooding from sewers;
Value reducing further the
inconvenience caused by
interruptions to water supplies;
• Customer service was viewed as an important
element, but customers are not willing to pay
Scottish Water more to improve this as they
expect good customer service.
Value reducing further discolouration
and taste and odour problems in
drinking water supplies; and
We are currently carrying out research with
secondary school pupils, our customers of the
future, to understand their views, which we
will include in our final projections next year.
Expect a quick response and
resolution when there are any
problems.
Further details from our recent programme can
be found on our website in the report titled
‘Listening to our Customers’, November 2012.
Draft Strategic Projections
Draft Strategic Projections
Introduction
Chair’s statement
Providing continuous
high quality drinking water
Protecting and enhancing
the environment
Supporting Scotland’s
economy and communities
Investing in future
water services
23
About Scottish Water
What might the
future bring?
Listening to our customers
Our strategy
Our strategy
We believe that everyone in Scotland should receive a safe and
reliable supply of drinking water and have their waste water
collected and safely returned to the environment. We aim to
be a valued and trusted service provider, deliver ever improving
value for money and support Scotland’s economic growth.
Building on our successes over the past 10 years, our strategies
are geared to help us achieve these aims and further improve
our performance and efficiency. In developing these strategies
we have considered the potential future opportunities and
challenges and our customers’ views as summarised on
pages 8 to 21 of this document.
Providing
continuous high quality
drinking water
page 24
Protecting and
enhancing the
environment
page 30
Investing
in future
water services
page 44
Supporting
Scotland’s
economy and
communities
page 36
Draft Strategic Projections
24
Providing continuous high quality
drinking water
At a glance
Scottish Water customers are receiving the highest ever level of drinking
water quality thanks to significant investment. But we need to do more
to meet our statutory obligations. That’s why we want to improve water
quality even further while ensuring every customer can always receive
a safe and reliable supply of drinking water.
Our plan to improve water quality:
Scottish Water will monitor and maintain its
network to provide high quality drinking water.
We will work to protect our water sources from
pollution and, where necessary, invest in new
treatment works and pipes to improve the look
and taste of water and address the challenge of
climate change.
Key
Current supply
Future network
Our plan to supply water whenever
and wherever it is required:
The challenges of climate change and
population growth may increase the likelihood
of a long term (more than a week) interruption
to your water supply.
We will take steps to ensure that all customers,
regardless of where they live, are always able
to turn on their taps and receive the best
possible water.
Improving long term resilience could be
achieved by importing water using road tankers
and creating new links between supply systems
for larger communities. This will help ensure we
can always provide our customers with water
if there is a problem with their normal supply.
Scottish Water
Scottish Water is developing
better links between our water
treatment works to enhance the
resilience of water supply to our
customers’ properties.
We will work to reduce water leaks from our pipes
and encourage customers to use water wisely
– recognising that water is a precious resource.
Introduction
Chair’s statement
Providing continuous
high quality drinking water
Protecting and enhancing
the environment
Supporting Scotland’s
economy and communities
Investing in future
water services
25
About Scottish Water
What might the
future bring?
Listening to our customers
Our strategy
Most customers trust that they will always have
a safe and reliable supply of water that tastes
and looks good and supports the use of
modern appliances.
We aim to deliver this service for all our
customers across Scotland every day, meeting
the challenges of climate change and population
growth, and embracing new technology to deliver
services in the most efficient way possible.
Drinking water quality
Drinking water quality levels have improved
significantly since 2002 and now achieve
99.84% compliance with regulatory standards
as a consequence of significant investment
in water treatment over the past 20 years.
However, we can improve water quality further
and enhance the look, taste and smell of some
drinking water supplies.
Challenges to drinking water quality fall into two
categories: dealing with impurities that occur
naturally in the environment from which source
water is taken and those that relate to maintaining
the capability of our assets to continue to treat
water to current high standards.
In the future climate change may increasingly
affect the quality and quantity of our source
water supplies.
Drinking water availability
We have reduced short term interruptions to water
supply by two thirds over the past 10 years. This
has been achieved through improved response
to potential and actual interruptions, and our
ongoing programme to replace ageing water
pipes. In addition we have improved our support
to our customers when these events happen,
providing alternative water supplies and better
information about what is happening to restore
supplies. We have also reduced leakage in our
water networks by around 40% which has helped
us to meet growth in customer demand without
additional investment in new treatment works.
We know that there are some events that can
potentially cause a long term disruption to water
supply. For instance in early 2010 our water
sources were under pressure in parts of Dumfries
and Galloway due to a prolonged period of dry
weather. At the end of 2010 we experienced a
challenge in keeping all of our treatment works
operational because of exceptionally cold
weather which also caused freezing of pipes.
Elsewhere in the water industry, a 1995 drought
in Yorkshire had significant implications for
customers, while severe flooding at Tewkesbury
in 2007 resulted in the loss of water supplies to
around 160,000 homes for a week.
Projected population growth and population
movement in Scotland will increase pressure
on some existing water supplies. This could
require additional water to be taken from the
environment and the construction of larger
treatment works to meet customer demands in
the east of Scotland. Potentially, this could leave
us with a surplus of water supplies in the west.
Our strategy
To achieve our strategic aim of providing
continuous high quality drinking water in
the most efficient way we must focus on:
• Monitoring the risk to service;
• Improving compliance;
• Improving the resilience of supplies;
• Working with others to manage demand
on the water environment; and
• Investing to improve services.
Draft Strategic Projections
26
Monitoring risk to service
Improving resilience of supplies
We are improving our operations by linking new
monitoring systems to a central control system
and weather data. This will allow us to proactively
monitor performance of our assets and networks
and take action or carry out repairs before there
is any impact on services to our customers.
Many parts of Scotland are served by small
water treatment works. In the event of localised
water shortages or supply issues we can provide
alternative supplies by tankering water by road
from larger treatment works.
We use drinking water safety plans to
understand and manage the underlying risks to
public drinking water supplies, and to identify
and implement measures to further improve
drinking water quality. Using these plans we will
identify and prioritise activities to move towards
a proactive risk identification system so that
customers never experience an avoidable
water quality incident in the future.
Looking at the future availability and demands
on the water supply allows us to understand
the potential challenges that we face in relation
to the resilience of water supplies because of
population and climate change. We can then
consider a range of options to meet the
challenges identified, such as managing demand,
reducing leakage, educating on using water
wisely, tankering water and investing in new
assets or connectivity between supply systems.
Maintaining compliance
Central to our strategy for providing high
quality drinking water supplies is the ongoing
operation and maintenance of our assets. We
are forecasting increased asset maintenance
as a consequence of investment in enhanced
treatment works over the past 15 years to
improve water quality.
We will continue to develop our approach to
‘fail-safe’ operations – where if problems arise
with our assets we minimise their impact on
our ability to provide services – and ensure
employees are suitably trained and deliver
the best operational practices.
However, the majority of our customers receive
their water supply from larger water treatment
works through pipe networks with limited or
no connections to water supplies from further
afield. Should any of these water supplies fail
(for example due to flooding, freezing, or
unforeseen equipment failure) or water resources
diminish in quality or quantity; we would then
face difficulties in providing water supplies to
a significant number of customers. We have
identified improved resilience of water supplies
– to ensure the continuation of water supplies
in challenging circumstances – as one of our
key strategic priorities.
By installing additional links between water
supply systems for major towns and cities,
we can develop a more comprehensive water
network to serve the main urban areas of
Scotland. This will allow us to reduce long term
costs and provide operational flexibility to
meet future demand requirements and climate
change impacts. A more comprehensive
water network may also allow us to protect
our environment by using water more flexibly.
Our predecessors had great foresight when in
1859 the Katrine water supply was built to serve
Glasgow. Since then several regional water supply
schemes were introduced to meet significant
growth in industrial and domestic demand.
Our plans for extending the water network will
allow us to join up our water supply networks
in the central belt to significantly increase the
resilience of water supplies, and are illustrated
by the yellow arrows on the diagram to the right.
We expect to phase this development over the
next 20 years, taking advantage of opportunities
to reduce other investment to meet new demand
and close existing water treatment works.
Customers in Aberdeen are largely served by
water taken from the River Dee. To improve the
resilience of supplies in the north east in the
event of the loss of a water treatment works or
water source pollution, we expect to develop
a new upland storage reservoir and links that
connect the water treatment works in this area.
As we develop proposals and costs for this
option we will compare these with the cost of
connecting to supplies from Perth and Dundee.
Scottish Water
Introduction
Chair’s statement
Providing continuous
high quality drinking water
Protecting and enhancing
the environment
Supporting Scotland’s
economy and communities
Investing in future
water services
27
About Scottish Water
What might the
future bring?
Listening to our customers
Our strategy
Working with others
Current water supply links
An important part of our strategy is to encourage
everyone to use water wisely and consider
how their behaviour and usage impacts on
the water environment.
While Scotland’s natural water resources are
typically high quality, on occasion, substances
such as pesticides, nitrates and colour can be
found in water sources. Surface water run-off
from land and farmland is often the cause of
these impurities which can affect the quality of
our raw water supplies. Working in partnership
with the farming community and others to
protect raw water sources by managing
catchment areas has the potential to provide
real, sustainable results for our customers
across Scotland.
Dundee
Perth
Glasgow
Ayr
Potential additional water supply links
We are currently working with various agencies
to encourage customers to use water wisely,
explaining the positive effect that using water
wisely can have on their energy bills and the
water environment. We are also piloting a variety
of incentives and water efficiency measures for
the home to understand the relative benefits and
costs of these and how customers respond to
them. The findings from this pilot will inform
our ongoing water efficiency plan.
In addition to measures that will reduce
demand there is significant potential to recycle
water used in the home. For example, we will
work with relevant industry stakeholders and
organisations to encourage changes in bathroom
fixtures and fittings and plumbing that will allow
water used for showering and bathing to be
reused for toilet flushing. We will encourage the
use of water butts to capture rainwater to fill
watering cans and wash cars. Such measures
could reduce overall water demand by up to
30%, and therefore reduce the volumes of
water taken from the environment and pumped
through our water and sewer networks.
We continue to look for ways to efficiently reduce
leakage levels in our water networks and are
working with industry to improve prevention
and detection measures.
Stirling
Grangemouth
Edinburgh
Elgin
Turriff
Peterhead
Inverness
Aberdeen
Dundee
Perth
Stirling
Grangemouth
Edinburgh
Glasgow
Ayr
Katrine Scheme (1859)
Carron Valley & Turret Scheme (1939-1961)
Lomond Scheme (1971)
Ayrshire Scheme (1950)
Lanarkshire Scheme (1956)
Edinburgh & Lothian Scheme (1905/1983)
Inverness System
Badentinan System
Turriff System
Forehill System
Aberdeen System
Potential Interconnection Schemes
Alternative Raw Water Source
Draft Strategic Projections
28
We work with Licensed Providers to look at ways
to reduce business customers’ demand for our
water supplies in order to increase the resilience
of our supplies and reduce the need for capital
investment. This can create benefits for business
customers through lower bills.
We are also working with planning authorities
and developers to encourage development in
locations with existing capacity to supply water
and waste water services, and to encourage
more sustainable use of water and waste water
in buildings.
Investing to improve services
We will enhance our maintenance and operational
activities, and invest in new treatment assets that
reduce the risks identified through our drinking
water safety plans to address impurities that
occur naturally in the raw water environment.
We will also invest to deal with the risks
associated with the reduction in performance
of our assets as they get older, as well as:
• Providing enhanced water treatment
processes to ensure the quality of drinking
water will consistently exceed 99.9%;
• Ongoing cleaning, and where appropriate,
relining or replacing cast iron water mains
to improve the look of drinking water;
• Improving the operational control of water
disinfection and seeking new disinfection
techniques that ensure there are minimal
taste and odour issues;
• Understanding and responding to the effects
of climate change on raw water quality; and
• Seeking innovative technology and real-time
monitoring of water quality in our networks.
Scottish Water
The majority of our future investment to improve
drinking water services is to further improve
drinking water quality and improve the look and
taste of drinking water across Scotland. The
other main area of investment is to increase the
resilience of water supplies against long term
interruptions by extending the water network.
Typical use of water in the home
Other (including drinking)
Outdoor
Toilet
Washing
up
7%
5%
31%
8%
14%
Clothes
washing
13%
Showers
Source: Waterwise
22%
Baths and taps
Introduction
Chair’s statement
About Scottish Water
What might the
future bring?
Listening to our customers
Our strategy
Providing continuous
high quality drinking water
Protecting and enhancing
the environment
Supporting Scotland’s
economy and communities
Investing in future
water services
30
Protecting and enhancing
the environment
At a glance
Scottish Water’s environmental performance has been transformed over
the last decade. But there is further work we must do to protect and
enhance the environment, meet legislative requirements and achieve
further reductions in flooding and pollution from sewers.
Our plan to prevent flooding from sewers:
If climate change results in even more wet
weather, building bigger sewers would help
deal with increased rainfall. But we will explore
more sustainable and lower cost ways of
managing rainwater from roofs, roads and
car parks, where feasible.
We will work with customers and promote
the best ways of disposing of household and
business waste such as nappies, wipes and used
fats and oils to reduce the extent of flooding
from sewers.
Our plan to protect and enhance
the environment:
We will operate and maintain our waste water
treatment works to reduce the likelihood of
pollution and protect the natural environment.
We will play our part in tackling climate change
by acting to reduce our carbon emissions.
We will encourage farmers and landowners
to play their part in preventing pollution in
the water environment.
We will reduce leaks from our pipes and
encourage recycling of water to reduce demand
on supplies stored in lochs and reservoirs.
We will look for ways to operate our treatment
works and networks in greater harmony with
the environment. We will seek to influence
others to remove chemicals and substances
that find their way into waste water to avoid
expensive treatment.
Scottish Water
Over 80% of flooding from sewers
is caused by inappropriate items
being disposed of in toilets and
drains. Encouraging customers to
properly dispose of waste items
will help prevent flooding of other
customers’ properties and improve
the environment.
Introduction
Chair’s statement
Providing continuous
high quality drinking water
Protecting and enhancing
the environment
Supporting Scotland’s
economy and communities
Investing in future
water services
31
About Scottish Water
What might the
future bring?
Listening to our customers
Our strategy
We rely on the natural environment by using
its resources to provide your drinking water.
Environmental performance has been transformed
over the past 15 years through investment of over
£1 billion in waste water treatment and collection.
Our discharges are no longer the principal
environmental pressure on Scotland’s waters.
There remains significant work for us to further
protect and enhance the environment. We
need to reduce the instances of flooding and
pollution caused by discharges from our sewers,
meet the further environmental obligations set
out in legislation, and find ways to further
reduce the carbon footprint of our services.
Preventing flooding and
pollution from our sewers
Sewers are the main way of taking storm water
from roads and pavements and waste water
away from homes and business premises. Our
sewer capacity is becoming more and more
under pressure because of increased rainfall,
growth of our towns and cities and blockages
caused by inappropriate items being flushed
down toilets or put in drains.
We are starting to reduce the volume of
surface water entering our sewers from new
developments through the use of sustainable
urban drainage systems (SUDS) where the
excess surface water is returned locally to
the natural environment.
While building bigger sewers may be part
of the answer, we will have to find more
sustainable ways of managing surface water to
deliver services to our customers at the lowest
possible cost and minimise our carbon emissions.
Improving Scotland’s
water environment
We rely on a healthy water environment in
providing water services. We must be responsible
and control the amount of water we take from
natural sources in the environment to protect
the future sustainability of our water resources.
Historically, major environmental legislation such
as the Urban Wastewater Treatment Directive
set the required standards for waste water
discharges to the water environment. We are
moving towards a more sophisticated approach
to environmental protection, where increasingly
we are only part of the solution. Providing
sustainable environmental protection and
improvement will require us to work more
closely with others to meet the challenge as set
out in Scotland’s River Basin Management Plan.
Our strategy
We aspire to continue to improve the environment
in Scotland by:
• Improving waste water network management
and controls;
• Being responsible in the way we use
Scotland’s water resources;
• Using our knowledge and expertise to
champion a ‘prevention is better than cure’
approach to protect the environment in a
sustainable manner;
• Delivering full compliance with environmental
responsibilities and obligations in the operation
and maintenance of our assets; and
• Investing where appropriate to protect and
enhance the natural environment in Scotland.
Draft Strategic Projections
32
Network management and control
We have made great progress in the past 10 years
to deliver improved performance and we are
working to introduce intelligent control and
monitoring systems across our asset base linked
to a central control system. This will allow us to
proactively monitor the performance trends of
our assets and networks and help us to take action
or carry out repairs before there is any impact on
services to our customers or the environment.
Responsible use of resources
Water, waste water and the sludge produced in
the treatment of these are resources that need
to be managed effectively and efficiently on
behalf of our customers to deliver greater value
for money. In doing this, we aim to safeguard
our water resources, minimise our need for
chemicals and energy, recycle or recover value
from our waste (such as heat extraction, mineral
recovery) and minimise residual waste.
We have developed weather monitoring systems
and other tools that give us early warning about
rainfall that may be about to fall on our catchment
areas across Scotland and how it may impact on
our networks and customers.
We will seek opportunities to recycle water both
strategically (surface water management and
reuse) and locally (water butts in homes and
business premises) to reduce the demand on
Scotland’s freshwater resources. We are also
piloting a range of water efficiency measures that
may help our customers to use water more wisely.
Our modelling of sewer flows allows us to identify
places where our sewers may become overloaded
due to the effects of climate change or new
development in towns and cities across Scotland.
This modelling allows us to consider areas where
we should attempt to reduce surface water flows
getting into the sewer network or invest to
increase the capacity of our sewers.
We are developing integrated drainage plans
for all major cities in Scotland, working with key
stakeholders to allow us to understand the
interaction between surface waters, burns and
our sewers. This allows us to identify the most
sustainable way of controlling the impacts on
the built and natural environment, and managing
the flooding that can arise from severe rainfall
in partnership with other organisations.
We are developing models to allow us to
identify and clean sewers to reduce blockages
and flooding to customers’ properties or
pollution of the water environment.
We will encourage housing associations and
other large scale landlords to consider water
efficient and water recycling measures when
they are refurbishing their housing stock. We
will also seek to influence building standards
for new homes and extensions to ensure there
is an increasing focus on water efficiency. We
are also considering the incentives that may be
appropriate to encourage customers to adopt
water efficient measures.
We continue to work with industry partners to
identify more efficient ways to prevent, detect
and repair leaking underground pipes. Recent
innovations to detect leaks in our pipe networks
have reduced our costs of leak detection and
repair. Trials of platelet technology (a way
of locating and sealing leaks in pipes without
digging them up) may, if successful allow us
to efficiently reduce water losses and the costs
of supplying treated water.
We also expect activities such as sustainable land
management, surface water management and
variable consenting of waste water discharges –
giving us flexibility to meet our obligations –
can further help to reduce our costs.
Scottish Water
Introduction
Chair’s statement
Providing continuous
high quality drinking water
Protecting and enhancing
the environment
Supporting Scotland’s
economy and communities
Investing in future
water services
33
About Scottish Water
What might the
future bring?
Listening to our customers
Our strategy
Prevention rather than cure
More than 80% of flooding incidents are
due to blockages which have been caused by
inappropriate items such as nappies and wipes
being flushed down toilets, or cooking fats, oils
and grease being poured down sinks or drains.
Helping our customers understand the proper
ways to dispose of these items is essential to
helping reduce flooding. We will actively
encourage our customers, and future generations
through our education programme, to properly
dispose of these items in their household waste
to avoid causing flooding within their community.
The Water Resources (Scotland) Bill makes
it an offence to put fat, oil or grease into the
public waste water network from business
premises. This should help to encourage
good behaviour from business customers
and reduce property flooding.
Building bigger sewers will only be part of the
solution to deal with the challenge of increased
surface water run-off arising from climate change
and the growth of communities. We also need to
change how we manage surface water run-off,
and reduce the amount entering the sewer
network; otherwise the problem will continue
to grow. We will therefore work with all relevant
stakeholders in Scotland to look at how we create
sustainable urban drainage systems, including
permeable roads (which better absorb water),
improved land drainage, surface water retention
and reuse for flushing toilets, washing cars and
watering the garden. We intend to pilot surface
water management techniques to understand
the practicality of implementing these; their
effectiveness, costs and benefits to customers
and the environment. These approaches provide
opportunities to reduce the risk of flooding and
uncontrolled waste water discharges to the
environment as well as reducing our pumping
costs, electricity demand and carbon emissions.
Maintaining compliance
Maintaining our assets to prevent pollution
in rivers and burns is a critical element of our
environmental compliance strategy. We are
forecasting an increasing demand for asset
maintenance for the new and upgraded treatment
works we have built over the past 15 years.
We are working on innovative pilots in the
regulation and operation of waste water
treatment. If these pilots are successful, they
may provide opportunities to reduce our
overall waste water treatment costs and
carbon emissions, while operating in greater
harmony with the environment.
2009-2012 sewer flooding incidents
Hydraulic
overloading
Customers’
debris
Asset
failure
4% 7%
23%
Tree
roots
Customers’
fats, oils,
and grease
4%
14%
48%
Customers’ sanitary products
Draft Strategic Projections
34
Investing to enhance our environment
In some instances we will need to invest in
additional operations or assets to protect
and enhance the environment.
Our future investment to protect and enhance
the environment is driven by our current
understanding of the legislative requirements
facing Scottish Water. Before we invest, we will
demonstrate that improving our assets is the
most sustainable way of achieving the desired
environmental outcomes for Scotland.
Our investment projections assume that
sustainable land management will achieve
significant improvements to the quality of
Scotland’s rivers and burns, and protect
our raw water sources by reducing the risk
of contamination from pesticides and
diffuse pollution.
We also assume that environmental objectives
can be met by reducing the level of harmful
chemicals that are found in waste water by
encouraging industrial manufacturers to
remove these from the source household
products and medicines.
Along with these innovative approaches we will
still require to invest to enhance the quality of the
waste water discharges from our assets to help
to continue to improve Scotland’s environment
and meet our legislative obligations.
There are some significant exclusions from
our investment projections in relation to
environmental obligations as listed below:
• We assume that the Priority Substances
Directive can be met mainly through removal
of the substances at source (e.g. changing
the chemicals used in certain household
cleaning and pharmaceutical products).
However, if it is established that the overall
benefit to society is greater by continuing
with certain pharmaceutical products because
there is no substitute that causes less harm
to the environment, we may need to install
new treatment processes to remove these
substances from waste water. If this were
the case then we may require to invest up
to £1.8 billion in additional waste water
treatment processes.
• If new bathing waters are designated at
locations where there are existing waste water
discharges we may need to invest in additional
waste water treatment or move discharges away.
• Historically we have stored sludge arising from
drinking water treatment processes in lagoons
near water treatment works sites, and we
monitor these to ensure that they are not
causing environmental harm to nearby rivers
and burns. If this was to change we may require
to remove all the sludge and dispose of this
elsewhere (which could cost up to £170 million).
• The introduction of new hygiene standards
for shellfish would result in a need for further
enhanced waste water treatment to waste
water discharges at or near designated shellfish
waters (which could cost up to £360 million).
• Lower frequency spill standards for intermittent
discharges from the waste water network could
be introduced by the EU, requiring significant
changes to our sewer networks (which could
cost up to £14 billion).
Scottish Water
36
Supporting Scotland’s economy
and communities
At a glance
Since 2002 Scottish Water has transformed Scotland’s water
infrastructure, investing in the economy to support jobs and growth
while reducing charges to customers. We plan to build on this while
meeting new demand for our services and delivering a positive
customer experience.
Our plan to keep costs low:
We will find new technologies and ways of
working to further improve the efficiency
of our activities. We will continue to pursue
opportunities to develop renewable energy
from our land and assets.
Our plan to meet new demand quickly
and effectively:
Encouraging customers to use water efficiently
and reducing leaks from pipes can help
maximise available water resources. We will
encourage the development of new homes
and businesses in areas that are well served
by existing water supplies.
We will invest to ensure our treatment works
and networks can meet the demands of new
development.
Scottish Water
Scottish Water is supporting the
growing requirements for housing
in Scotland by meeting the demand
for new connections to the water
and waste water networks.
Our plan to support communities:
Our plan to deliver a positive
customer experience:
We will seek opportunities to share our knowledge
to help communities prosper, while providing
education resources that increase awareness of
how valuable water and the environment are. To
support employment we will continue to provide
opportunities for training and apprenticeships.
We will continue to improve our communications
with customers to keep them informed when
problems occur and restore services as fast as
possible. We will also seek to better understand
our customers priorities and provide services
they want.
Introduction
Chair’s statement
Providing continuous
high quality drinking water
Protecting and enhancing
the environment
Supporting Scotland’s
economy and communities
Investing in future
water services
37
About Scottish Water
What might the
future bring?
Listening to our customers
Our strategy
We seek to support economic growth in a way
that protects the environment and maintains
service levels for existing customers.
We aim to always deliver a high quality service
and a positive experience for our customers
building value and trust in the services we
provide and supporting local communities by;
• Keeping charges as low as possible and
affordable;
• Meeting new demand quickly and efficiently;
• Supporting communities across Scotland;
• Providing an excellent response and
resolution;
• Engaging with customers;
• Offering services that customers want; and
• Reducing our carbon emissions.
Keeping charges as low as
possible and affordable
We always focus on delivering value for money,
reducing our costs and improving our services.
The cost of water may become a more pressing
matter in the coming years and we continue
to look for ways to reduce our costs and pass
these savings back to customers through the
regulatory price control process.
As Scottish Water is a monopoly business,
we are independently regulated by the Water
Industry Commission for Scotland (WICS) which
is responsible for assuring that Scottish Water
delivers a high quality service and value for
money to our customers. Periodically the WICS
set limits on the prices that Scottish Water can
charge by assessing the lowest reasonable
overall cost of delivering our services, taking
account of the efficiencies that Scottish Water
have delivered in the previous period and the
scope for further efficiencies in the future. WICS
also monitors Scottish Water’s performance,
to make sure that we deliver the services that
customers are paying for.
With the creation of the Customer Forum we
now have a greater opportunity to ensure that
customers’ views regarding value for money
are fully explored in the price setting process.
Using the findings from our customer research,
we are able to discuss and agree with the
Customer Forum the appropriate balance for
customers between future price, investment
and service levels.
To keep water charges affordable for customers
and avoid significant fluctuations we must manage
the level of capital investment over the long term
and secure access to the necessary borrowing.
If, in future, Scottish Water borrows from the
financial markets then our financial strength
would dictate the interest rates that Scottish
Water (and hence customers) would pay on the
required borrowing. It is therefore important that
Scottish Water has a strong financial position
so that any borrowing that is required from the
financial markets can be secured at competitive
rates that minimise the cost to our customers.
Affordability of charges
Average household charges in Scotland at
£324 for 2012/13 are £52 less than the average
in England and Wales and the lowest in Great
Britain. Scottish Water can only achieve this
through being efficient in how it delivers its
services and acknowledging the key differences
in its financing and charging arrangements from
elsewhere in Great Britain.
We want to deliver services that are affordable
and offer excellent value to current and future
generations of customers, and this requires that
our overall charge levels reflect customers’ ability
to pay. We fully support the current principles
of charging for water and waste water services
established by the Scottish Government which
require that charges be set to:
• Recover costs;
• Be fair and equitable;
• Provide stability of revenue; and
• Be simple and predictable.
We believe that maintaining the current
household charging arrangements with the use
of council tax bandings and associated discounts
and exemptions (e.g. single occupancy discounts,
and a reduction scheme linked to Council Tax
benefit) provides the best social protection of
any water charging arrangement in Great Britain.
We will continue to work with the Scottish
Government and other consumer bodies to
review the affordability protection within the
charging arrangements.
Draft Strategic Projections
38
Efficiency and innovation in delivery of services
Looking forward there remain some further
opportunities for improving the efficiency of our
services. In some areas we will need to invest in
reconfiguring our assets to allow longer term
efficiencies to be realised; in others we will
continue to improve the productivity of our
processes, or take advantage of new innovations
and technology to achieve better outcomes. We
will continue to pursue these opportunities to help
to minimise our total costs and therefore keep
the charges for our customers as low as possible.
Some of the opportunities that exist are set
out below.
Efficient water supply
The creation of additional links in our water
network across parts of Scotland will allow
us to use our water treatment capacity more
efficiently, by implementing production
planning techniques that enable the use of
the cheaper water supplies to their maximum
before topping-up to meet peak demands with
relatively more expensive water supplies. As our
water supply networks currently have limited
connectivity, our water treatment works are
sized to meet peak demand of specific areas. As
we develop greater connectivity between water
supply systems, it may be possible to reduce
the current number of water treatment works.
This would allow us to reduce both operating
and longer term maintenance costs as well as
providing increased reliability of our supplies.
Our ongoing work to reduce leaks from our
water network has created significant additional
capacity for water supply across Scotland as
well as reducing the costs of service for existing
customers. Looking forward we are supporting
research and development that may bring
new technology and products that would
allow us to make further reductions in leaks
from our networks.
Our water efficiency plan sets out how we aim
to encourage customers to use water wisely.
Scottish Water
Energy costs
We use around £40 million of electricity per
year in delivering our services, especially
in pumping water and waste water through
our pipe networks. We have a pump efficiency
programme underway and will continue to invest
in the replacement of inefficient pumps. Ongoing
work to reduce leakage from our underground
pipes plays a significant role in reducing the
energy we consume in treating and pumping
water. We will also assess the potential for surface
water management schemes to reduce our waste
water pumping and treatment costs.
We continue to pursue opportunities to
generate renewable energy where appropriate
on our own land or assets – for example hydro
power, wind turbines and solar panels. We are
exploring the possibility of extracting heat
energy from our sewers and securing greater
benefits from the energy in the waste
by-products of waste water treatment.
Chemicals
We use chemicals in our treatment processes
to ensure that the water our customers receive
is safe to drink and that our waste water
discharges do not harm the environment.
We are always looking for alternative ways of
achieving these outcomes in a more sustainable
manner. For example, our plan to reduce the
chemicals used to treat water, where it is cost
effective, by replacing lead pipes in some of
our water networks instead of treating water.
We are also involved in several research projects
that are looking at new ways of treating water
that may provide opportunities to reduce the
costs of service.
Introduction
Chair’s statement
Providing continuous
high quality drinking water
Protecting and enhancing
the environment
Supporting Scotland’s
economy and communities
Investing in future
water services
39
About Scottish Water
What might the
future bring?
Listening to our customers
Our strategy
Business process and innovation
We continue to look for and deliver operational
productivity improvements. For example, our
squads are now inspecting sewers with cameras
to resolve blocked sewers. This improves service
to customers and reduces the likelihood of
costly repeat visits. We continue to embrace
the use of technology to support our employees
being more efficient in their daily tasks, such as
providing mobile communication tools linked to
control and management systems, which allow
us to efficiently schedule tasks for our teams.
The introduction of the intelligent control centre
should create further productivity and efficiency
opportunities, as work becomes increasingly
planned and less reactive, and we can deliver
faster responses.
Research and development
We are working with universities and academic
institutes on further innovative development
in the water sector. Of particular interest are
alternative low cost, low carbon forms of
treatment and ways to help reduce leakage
from our water network.
Maximising value from our assets
As well as the energy generation initiatives
there are many other opportunities for us to get
additional value from our assets. Opportunities
as varied as hiring our assets as film locations,
developing biogas plants, renting our land
for telephone masts, to installing broadband
cables inside our sewers. We are always open
to exploring new opportunities that in the long
term will benefit our customers.
Meeting new demands
quickly and efficiently
Integrated development planning
We work with planning authorities and
developers to encourage sustainable
development, such as encouraging new
development in areas where there is surplus
capacity in our existing assets. To assist this,
we publish a capacity report that identifies the
areas where new development can be readily
supported. We work with local authorities on
their local development plans to understand
where there could be future constraints and
identify the most efficient ways to resolve these.
We work closely with SEPA to ensure that we
balance supporting new development with
appropriate consideration of our impact on
the environment. We will explore providing
localised treatment to large industrial sites
as a cost effective way of providing capacity
for new developments.
Building on the sustainable urban drainage
system approaches that are required for all
new developments, there may be potential for
retrofitting surface water management systems
to free up capacity in the sewer networks to
meet demand for growth. We plan to pilot this
to understand the practicalities, costs and
benefits of such approaches.
Draft Strategic Projections
40
Investing to support economic growth
Whilst we aim to work with other parties to
find sustainable ways of supporting economic
growth in Scotland, we expect to make investment
that supports connection to our network at
reasonable cost, increases the size of strategic
infrastructure and provides additional treatment
capacity particularly for waste water.
One of the biggest challenges we face is dealing
with new waste water demand from customers
arising through ‘urban creep’ (the increase in
paving of the urban landscape which increases
the surface water run-off into our sewers). To
maintain our current levels of service to our
customers we need to increase the capacity of
sewers or find other ways to deal with surface
water, otherwise we will see an increase in
flooding from sewers. Recent changes to planning
legislation on permeable paving could help to
reduce this demand, assuming that customer
awareness grows and more households use
permeable paving, which better absorbs water,
or other sustainable materials for driveways etc.
We assume that we will not need to make
significant investment in new water treatment
capacity because we expect to see the individual
demand for treated water supplies reduce by
working with our customers to encourage
everyone to use water wisely and reducing
losses from our water supply network further.
Supporting communities
across Scotland
Our ongoing investment programme provides
significant employment for the construction
industry in Scotland, supporting wider
employment in many communities.
Working with communities
Currently much of our work with communities
relates to investment projects in their local area.
Looking forward there are also opportunities
for us to share our knowledge and skills to help
communities to secure opportunities in areas
such as renewable energy from mini hydro
schemes, district heating systems – which take
heat from within the sewers to heat homes or
businesses – and sustainable land management.
Scottish Water
Supporting education in Scotland
Scottish Water plays a part in the lives and
education of our current and future customers
through raising awareness that water is one
of Scotland’s, and the world’s, most valuable
resources.
We are working with Education Scotland to
further develop our education programme
to ensure this links with the Curriculum for
Excellence, which helps future generations
develop the skills they need for learning, life and
work. We are also working with organisations
such as Eco Schools, STEM and WaterAid to
ensure our resources will complement, support
and reinforce their educational messages.
This, in conjunction with exploring innovative
educational opportunities and partnerships such
as ‘Water Ways’, our exciting exhibit in The Big
Explorer area at Glasgow Science Centre which
has had over 300,000 visitors since it opened in
2010, ensures that we continue to play our part
in educating future generations about the value
of this important resource.
Our skills development strategy is also clearly
linked to the national economic strategy and
Curriculum for Excellence. As a major employer
in Scotland, we are committed to inspiring the
next generation of engineers, scientists and
technicians and promoting the careers
opportunities within the water industry in
Scotland, through our modern apprentice,
graduate and work experience programmes.
We are committed to modern apprenticeships
that support youth development in Scotland
and have placed a focus on work experience
in Scottish Water by supporting placements
for 14-17 year old pupils across Scotland.
Introduction
Chair’s statement
Providing continuous
high quality drinking water
Protecting and enhancing
the environment
Supporting Scotland’s
economy and communities
Investing in future
water services
41
About Scottish Water
What might the
future bring?
Listening to our customers
Our strategy
Providing an excellent
response and resolution
Our customers have told us that, when their
services are interrupted, they expect us to
attend and deal with the issue right away and
inform them of the timescale to fix the issue
and restore their normal service.
We are improving our response times and
communications with our customers to ensure
that we keep them informed about restoration
of services when there is an operational incident.
We are placing additional focus on preventing
repeat issues by further investigating the root
cause of service failures.
We have seen customer satisfaction levels
improve significantly but believe we can achieve
even more. We expect that the introduction of
our new intelligent control centre will allow us
to proactively monitor the performance of our
assets and networks to help us take action and
respond more quickly to carry out repairs before
there is any impact on services to our customers
or the environment.
Engaging with customers
Our customer research has indicated that
customers want more information from Scottish
Water. We will publicise our services and ways
customers can become more efficient in the
use of, and knowledgeable about, their water
and waste water services. We will continue to
engage with customers in local communities
regarding investment in their area.
This includes, but is not restricted to, information
on our Price Promise and Guaranteed Service
Standards, and the supply pipe repair scheme.
Listening to customers
As most of our customers benefit from 100%
service reliability, they have no direct contact
with us and happily use our products every day.
As we look to the future we want to involve our
customers more in how we deliver sustainable
services for all of Scotland. We want to
understand better our customers’ needs and
priorities for improving the services they receive,
proactively inform our customers about their
services, and encourage our customers to use
our services sustainably.
We are committed to using a variety of
communications channels, to give our customers
a choice in how they communicate with us.
We will continue to use traditional methods of
communication such as letters and telephone, as
well as using other channels such as our website,
email and social and digital media as appropriate
to communicate with our customers. We are
also looking at the potential of applications
for service reporting and information.
Offering services that customers want
An underlying principle is that all household
customers, regardless of where they live, should
receive the same level of service, although
businesses may choose to vary from the
standard offering.
Given the competitive structure of the business
market there will be differences in how we
interact with different customer groups. We
anticipate that most requests from the business
sector will come through Licensed Providers
and that how we communicate with them may
be different from how we communicate with
our household customers. We expect to see
a greater desire for self-service systems from
business customers.
Draft Strategic Projections
42
We will seek to identify additional product
offerings or tariff options that Licensed Providers
and their customers would find valuable. We
recognise that the uptake of such offerings will
vary between sectors; e.g. a raw water supply
may be offered where it is practicable, and may
only be of value to a large industrial end-user.
It is conceivable that some of the ideas that
emerge in the business market may lead to
innovative offerings for the domestic market and
we will always be open to making these available
for our household customers if there is a clear
appetite for new offerings.
We are currently developing online service
options for septic tank emptying services.
As part of our water efficiency plan we will offer
household customers advice about reducing
their overall household costs through using
water wisely (reducing water use is likely to
result in lower energy bills through using less
energy to heat water).
In 2010 we introduced our Price Promise,
which goes beyond the normal water industry
guaranteed standards of service payments.
Our Price Promise is an important strand of
our value for money offering to customers. This
provides a refund of charges when customers
do not receive our usual high quality services
under normal operating conditions, up to the
maximum of charges paid in that year. Currently
customers are required to apply for these
refunds. However, we are looking to introduce
automatic payment where possible to improve
this offering for our customers.
Reducing our carbon emissions
We seek to deliver our services in a way that
helps Scotland achieve its carbon reduction
targets.
Currently, around 450,000 tonnes of CO2
(carbon dioxide) per annum are emitted in the
delivery of services to our customers – mainly
from the use of grid electricity to pump and
treat water and waste water. It is important that
we take steps to manage these greenhouse
gas emissions.
Our overall forecasts suggest that our
opportunities for further energy efficiency may
match the new energy demands arising from
the additional treatment and pumping required
to improve services and the environment.
In our investment projections we have identified
around £85 million of investment associated
with developing further renewable energy from
within our assets (for example, hydro power
from water mains and energy from sludge).
This, combined with energy produced from
wind potential on our assets, could lead us to a
position where we contribute more renewable
energy to the grid than we consume, significantly
reducing our net carbon footprint.
Scottish Water greenhouse gas emissions footprint 2011/12
Self-generated
renewable electricity
Process
emissions
0.4%
12.9%
63.0%
9.8%
Grid electricity %:
• Water network 15.0%
• Water treatment 21.0%
• Waste water network 18.8%
• Waste water treatment 43.0%
• Admin 2.1%
Others
Scottish Water
9.8%
3.1%
1.1%
Gas
Chemicals
Transport
and travel
Introduction
Chair’s statement
Providing continuous
high quality drinking water
Protecting and enhancing
the environment
Supporting Scotland’s
economy and communities
Investing in future
water services
43
About Scottish Water
What might the
future bring?
Listening to our customers
Our strategy
Draft Strategic Projections
44
Investing in future water services
At a glance
Household water charges in Scotland are the lowest in Great Britain.
Our plan is based on maintaining stable charges (charges that
increase in line with inflation only) to allow investment to further
improve services.
Most of Scottish Water’s annual budget – and
the charges customers pay – is currently spent
on maintaining existing service levels for
customers and meeting legislative obligations.
Maintaining
existing
service levels
18p
Our expectation of future costs:
We will continue to look for ways to be more
efficient in how we deliver services but we
expect that our maintenance costs will rise as
existing treatment works – built in the last 15 to
20 years – are refurbished. However, we expect
the number of customers will also rise, which
could help to keep costs for everyone stable
while maintaining services.
In our projections we have assumed that
investment to meet statutory obligations will
reduce over the next 25 years. We expect that
our future capital investment requirements will
be between £450-500 million (in 2012/13 prices).
Over the years Scottish Water has taken out loans
to finance investment, to make improvements to
services and meet statutory obligations. We will
continue to incur interest costs on these loans
over the coming years and on new loans taken
out to finance our proposed plans.
68p
10p
4p
Interest costs
for historic
investment in
your services
Meeting
new statutory
obligations
Improving
our service
provision
Every £1 of customers’ charges in the
future contributes to these 4 areas.
Our plan to improve services:
We plan to increase investment for service
improvement to around 4% of what you pay
to further improve services in the areas of:
• Reducing flooding from sewers
• Reducing interruptions to water supplies
• Reducing discolouration of tap water
• Encouraging water efficiency
• Investment to support reducing
long term costs
Scottish Water
Introduction
Chair’s statement
Providing continuous
high quality drinking water
Protecting and enhancing
the environment
Supporting Scotland’s
economy and communities
Investing in future
water services
45
About Scottish Water
What might the
future bring?
Listening to our customers
Our strategy
Most customers trust that they we will continue
to receive 100% service reliability, and that we
will make further improvements where required.
Our financial projections are therefore based on
meeting those customer expectations and our
anticipated statutory obligations.
Should circumstances be significantly different
to our assumptions we would expect to adjust
our investment levels, which could affect the
rate at which we deliver the planned service
improvements, or seek additional borrowing
facilities to allow planned investment to continue.
We have reviewed long term investment
requirements and efficiency opportunities.
We believe that we should be able to meet our
statutory obligations and deliver the proposed
improvements to services that our customers
expect while keeping charges broadly constant
in real terms (i.e. excluding the impact of
inflation). This assumes that the Scottish
Government will make available facilities for net
new borrowing of around £75 million per year
to support an overall investment programme
of around £450 million (in 2012/13 prices) rising
to around £500 million per annum by 2040.
Operations and maintenance costs
Our projections are based on assumptions
about future economic circumstances and the
day to day costs of running the business. For
example, the overall number of customers we
serve can have a significant effect on the long
term charges’ projection, as can significant cost
increases such as business rates or long term
interest costs.
Around two thirds of the total annual costs to
deliver your water and waste water services is
spent on operations and maintenance to deliver
current service levels. Our forecast expenditure
to operate and maintain our assets take account
of expected efficiency opportunities and our
strategies for asset rationalisation and
productivity improvement.
We expect that the real terms cost of
maintaining current service levels will increase
by around 0.5% per year. The main reason for
this is the cost of refurbishing many of the new
treatment works that were built over the past
15-20 years to improve the quality of services.
However, as our customer base is also forecast
to increase by around 0.5% per annum, we
expect that the real costs per customer will
remain broadly the same.
Forecast average annual costs
Base operation and
maintenance costs
Financing costs
New demand costs
New statutory
obligations costs
Service improvements
costs
£m per annum (2012/13 prices)
1,400
1,200
1,000
800
600
400
200
0
2010-15
2015-20
2020-25
2025-30
2030-35
2035-40
1200
1000
Draft Strategic Projections
800
46
New demand costs
Improving services costs
We expect the costs of providing services to
meet new demand from both households and
business premises to remain broadly stable.
However, there remain significant opportunities
and risks associated with our assessment and
over time we will understand the scope of full
benefits that can be realised from our water
efficiency and surface water management
approaches. If successful, these could reduce the
longer term demand for investment to provide
additional capacity to meet new demands.
The table on page 47 sets out our forecast service
levels in the areas that customers have identified
as a priority for further improvement that are not
otherwise addressed by new statutory obligations
investment. In our projections we have assumed
that we will improve services in all these areas.
Many of our planned improvement approaches
are innovative and require collaboration with
customers and other stakeholders to achieve
the outcomes shown.
New statutory obligations costs
We expect our investment to meet statutory
obligations associated with environmental
legislation to reduce over time allowing more
investment for improving service levels in other
areas and investing to reduce long term costs.
We expect our investment to meet statutory
drinking water quality standards to continue over
the next 25 years due to our programme of works
to upgrade unlined iron water mains (the main
cause of drinking water discolouration problems).
Financing
Around 18% of bills paid by customers go
towards paying for the historic and ongoing
debt that underpins the historic investment
in the assets that deliver your services today.
These costs may reduce as some of the debt
is cleared and opportunities to refinance are
realised. However, a rise in interest rates could
affect longer term costs.
Scottish Water
Getting the balance right
In our draft projections we have planned service
improvements at a rate that is supported by
prices that rise in line with inflation.
We are consulting with customers through Your
views count to understand if we have got the
balance correct. It may be that customers wish
improvements delivered sooner, or greater
improvements, or that prices should be lower and
less improvements delivered over this period.
Introduction
Chair’s statement
Providing continuous
high quality drinking water
Protecting and enhancing
the environment
Supporting Scotland’s
economy and communities
Investing in future
water services
47
About Scottish Water
What might the
future bring?
Listening to our customers
Our strategy
Scottish Water’s 2010-15 business plan sets out service improvements in a number of
areas. Set out below are some of the key service improvements we expect to deliver
by 2015, as well as our proposed plan for further service improvements.
Forecast service level
2015
Future service level
2040
Short term interruptions to supply
By 2015 we expect to reduce the number of properties
affected by short term interruptions to water supply
(up to 6 hours) to around 60,000 a year.
By 2040 we plan to reduce this further.
Discolouration of tap water
By 2015 we expect the number of contacts regarding
discolouration of tap water to reduce to around 12,000.
By 2040 we plan to reduce this significantly.
Internal flooding
The number of properties affected by internal flooding
from sewers is around 8001.
By 2040 we plan to work with customers to reduce
this towards zero.
External flooding
The number of properties a year affected by flooding
from sewers that affects gardens and open spaces
is around 24,0001.
By 2040 we plan to work with customers to reduce this.
Inadequate water pressure
By 2015 we expect to reduce the number of properties
affected by inadequate water pressure to around 250.
From 2015 when such issues arise we plan to resolve
them as quickly as possible.
1
ver 80% of such flooding is caused by inappropriate
O
items being disposed of in toilets or drains (page 33).
Draft Strategic Projections
48
Scottish Water
Designed by Tayburn
For more information on Scottish Water and our services contact our
Customer Helpline on 0845 601 8855* or visit www.scottishwater.co.uk.
Alternative formats of this leaflet can be made available free of charge.
For information on Braille, large print, audio and a variety of languages,
please call our Customer Helpline.
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SWDSP 11/12