jon rathjen scottish government water industry team · scottish water • 5.3m people - 2.4m...
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Jon Rathjen
Scottish Government
Water Industry Team
Scotland The Hydro Nation
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Scottish Water • 5.3m people - 2.4m
households
• 150 000 business customers
• 95% population connected to mains sewerage
• 98% to mains water
• 1.3 billion litres water
delivered per day
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• Three regional water authorities
• Huge challenge to meet EU Directives
• Heavy reliance on PFI for wastewater investment
• English privatisation challenge
Scottish Water : History 1996-2002
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Overall 2002-2010
• Service costs have been reduced by 40%
over last decade
• Savings around £2.5 billion
• Average annual household bills around
£105 lower than they would have been.
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2015-2021
• Household charges set at CPI-1.8%
across the period.
• Average annual household bills over £100
lower than they would have been without
efficiencies made since SW created and
are £54 lower on average than those in
England and Wales.
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What the charges pay for
• Scotland economy and communities –
Over £3bn capital investment over the 6
year period.
• Improved environmental performance,
reduced flooding and pollution.
• Drinking Water Quality – min standard
99.88% samples passed – public supply
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Water Industry in Scotland
Delivery Organisation
Customer
Representation
Quality regulation
Economic regulation
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Scottish Ministers must: ‘take such reasonable steps as they consider appropriate for the purpose of ensuring the development of the value of Scotland’s water resources’ Concept of Scotland the Hydro Nation
– ‘a nation which manages its water environment to the best advantage, employing its knowledge and expertise effectively at home and internationally.’
Scotland The Hydro Nation
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Objectives, Principles and The Final Determination
• Ministers have set the key principles and objective for the industry through to 2021
• The economic regulator has responded
• The industry has accepted the framework and will deliver the outputs with predictable charging revenues and investment levels as the cornerstones of performance improvement.
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Customers at the heart of decision making
• At the start of the 2015-2021 period customers played a key role in setting the price level and agreeing service improvement targets.
• Directive compliance and other essential works are of course not negotiable but customers now lead where we have choice.
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What next?
• Next we are exploring the idea of using efficiency gains within the next operating period to fund new customer priorities in period.
• We are researching customer preferences for how they receive water and waste water services and do they want a role in their provision.
• Testing new technology to re-imagine rural provision to raise performance and reduce costs in a world of less certain weather and water availability.
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Summary
• We have worked as a Government and an Industry to reduce cost burden on the customer through steadily reducing charge levels. [CPI-x previously RPI-x]
• Bringing the Customer directly into the price negotiation process has been beneficial.
• Stable investment and stable (falling) charges can still deliver performance improvement if the water company is incentivised and regulated to be more efficient.