service delivery report 2018-1 9 - ofwat · service delivery report 2018-19 3 twelve companies...

October 2019 Trust in water

www.ofwat.gov.uk

Service deliveryreport 2018-1 9

Service delivery report 2018-19

2

At the 2014 price review (PR14) we required water and wastewater companies (‘companies’) to develop plans based on engaging with their customers about the:

• services customers wanted their company to deliver over the long term (‘outcomes’); • specificlevelsofservicetheyexpectedcompaniestodeliver(‘performancecommitments’);and• valueofanyoutperformancepaymentsandunderperformancepayments(‘outcomedeliveryincentives’or‘ODIs’)companieswouldincurforexceedingorfailingthem.

InPR14finaldeterminations,wesettheprice,investment(expenditure)andservicepackagethatcompaniesdeliverandcustomersreceivebetween2015and2020.Eachcompanymustreportannuallyontheirexpenditureandoutcomedeliveryinanannualperformancereport(APR).

Theservicedeliveryreportprovidescomparativeinformationontotalexpenditureandoutcomesdeliveredtocustomersreportedbythe17largestcompanieswithinEnglandandWales.Thisreportprovidescomparativeinformationonimportantareasofperformanceandisintendedtosupplementthemoredetailedinformationincompanies’APRs.Thisinformationwillhelpus–andstakeholderssuchascustomergroups,environmentalgroupsandinvestors–toholdcompaniestoaccount.

Werecentlypublished‘Timetoact,together:Ofwat’sstrategy’.Oneoftheobjectivesofournewstrategyistoturnthedatawehold,alongwithinformationfromothersources,intoinsight.For2018-19,wehaverevisedtheapproachtoreportingonperformanceintheservicedeliveryreporttobetterillustratetheindustry’sperformanceandtrendsovertime.

Key changes that we have made are:

• providing comparative rankingofcompanies’performance;• presenting overall performanceontotalexpenditureandoutcomesinasingle,tabulatedview;and• examininglonger-term changesonkeyindicatorssince2012-13.

Introduction

https://www.ofwat.gov.uk/publication/time-to-act-together-ofwats-strategy/


3

Twelve companies meet, or are on track to meet, their leakage performance commitments in 2018-19. Eightcompanieshavemademodestreductionsinleakagebutthesearemorethanoffsetbytheincreasesmadebythepoorerperformingcompanies.However,thesectorhasmadelittleprogressonreducingleakagesince2012-13.

Ouranalysesofcompanies’relativeperformancein2018-19demonstratethatAnglian Water,Wessex Water and Portsmouth Waterarethebetterperformingcompanieswithinthesector.Thereareaspectsofleadingperformanceinmostcompanies,asmanycompaniesrankinthetop25%inatleastonekeyarea. ThedeliveryofservicesbyHafren Dyfrdwy and Thames Waterisnotablyworsethantherestofthesectorandrequiresimprovementinmultipleareas.

In summary:

Key messages

The sector has made some progress in reducing water quality contacts, sewer flooding and pollution incidents. However improvementsstagnatedin2017-18and 2018-19.Forsewerfloodingandpollutionincidents,mostcompaniesachievetheirperformancecommitmentlevelsin2018-19andhavedonesoforaconsecutiveyear.However,mostcompaniesfailtheirwaterqualitycontactscommitmentforasecondconsecutiveyear.

Customers’ satisfaction has increased since 2015-16 but deteriorated in 2018-19.In2018-19thebestperformingcompanies–AnglianWater,SouthWestWater,UnitedUtilitiesandPortsmouthWater–furtherimproveormaintaintheirperformance.However,significantdeteriorationinthescoresofSevernTrentWater,ThamesWaterandHafrenDyfrdwyresultsinadeteriorationofthesector’saverageperformancein2018-19when comparedto2017-18.

Performance of companies in Wales in 2018-19 was similar to 2017-18. DŵrCymru’sperformanceonleakagehasimprovedbutitsperformanceonwaterqualitycontactshasdeteriorated.

The sector overspent against its total wholesale expenditure allowance by 6% in 2018-19.Overthe2015-19period,thereremainsacumulativeunderspendof2%,althoughthishasdecreasedoverthefouryearsofthepricecontrol.

Just over half of supply interruptions targets were achieved in 2018-19, despite morecompaniesachievingtheirtargetsin2018-19incomparisonto2017-18.Performancein2017-18wasadverselyimpactedbythefreeze-thawevent.Since2012-13thesectorhasreduced the total supply interruption minutesexperiencedbycustomersby24%,orfiveminutesperproperty.


4

Wehaveassessedandcomparedcompanyperformanceacrosskeyserviceareasandtotalexpenditure(wholesaleandresidentialretail).

Fortotalexpenditureweusecumulativeperformancesince2015,giventhemovementofexpenditureacrossyears.Foroutcomesweexamineperformanceinthemostrecentyear,2018-19.Wealsoindicatethedirectionofchangefrom2017-18,forexamplewhetheroutcomesperformancehasimproved(p),forexampleareductioninleakagebetweentheyears,anincreaseinthepercentageofperformancecommitmentsachieved,orgotworse(q),forexampleanincreaseinleakageorareductioninthepercentageofperformancecommitmentsachieved.

Wehavegroupedcompaniesintothreecategories(betterperformers,averageperformers,andpoorerperformers)basedontheirintheroundperformanceinrelativeassessments:

• Anglian Water, Wessex Water and Portsmouth Waterarebetterperformers.Thesecompaniesdemonstratetop25%ormiddle50%performanceacrossmultipleareas.South West Waterfallsshortonitsperformanceonwaterqualitycontactsandsignificantlyshortonitsperformanceonpollutionincidents.Asaresultitsitsbetweenthebetterandaverageperformercategories.

• Thames Water and Hafren Dyfrdwyarepoorerperformers.Theperformanceofthesecompaniesisinthebottom25%inmultipleareas.

• Theperformanceoftheremainingcompaniesismixedandtheyarebroadlyinlinewithaverageperformanceofthesectoroverall.

MostcompaniescurrentlyhavebroadlycomparableperformancecommitmentsfromPR14withsimilar,butnotidenticaldefinitions.ToallowanindicativecomparisonbetweencompaniesofdifferentsizewehavenormalisedperformanceacrossthePR14performancecommitments,forexamplebykilometreofwatermainorsewer.Forthenextpricecontrol,weareintroducingcommonperformancecommitmentswithconsistentdefinitionsforallcompanies.Thiswillincreasecomparability.

Our method of assessing companies’ performance


5

Overall assessment of efficiency and effectiveness of service delivery

Total expenditure OutcomesWholesale Retail Customer

serviceMeeting

performance commitments

Earning financial

incentives

Leakage Supplyinterruptions

Water quality contacts

Internal sewer

flooding

Pollution incidents

Better performance

AnglianWater q q p q q q p p p

WessexWater q q q p p p q q

PortsmouthWater q p p p q p p p - -Marginal performance – better/average

SouthWestWater q p p p p p p

Average performance

DŵrCymru q q p q p p p q

NorthumbrianWater q q q q p q q p

SevernTrentWater1 2

SouthernWater q p p p q q p p p q

United Utilities p q p p p p p q

YorkshireWater q q p q p q q q

AffinityWater q p p q q p p - -BristolWater q q p q p p q - -SouthEastWater q p q p p p p - -SouthStaffsWater q p p p p p q - -SESWater q q p q q q q - -Poorer performance

HafrenDyfrdwy1 -2

ThamesWater q q q q q p q p p

1.SevernTrentandHafrenDyfrdwywereformedon1July2018followingtherealignmentofthegeographicalboundariesofthelegacycompaniesDeeValleyWaterandSevernTrentWater.Acomparisonwith2017-18performanceisnotprovidedforthesecompanies.2.ThelegacycompanyDeeValleyWaterprovidedwaterservicesonlyandthereforethefigurespresentedarerepresentativeofthelegacycompanySevernTrentWater.

Top25%

Middle50%

Bottom25%

pImproved performance

qDeteriorated performance


6

Water and wastewater Abbreviationcompanies

AnglianWater ANHDŵrCymru WSHHafrenDyfrdwy HDDNorthumbrianWater NESSevernTrentWater SVESouthWestWater SWBSouthernWater SRNThamesWater TMSUnitedUtilitiesWater UUWWessexWater WSXYorkshireWater YKY

Water only companies Abbreviation Wastewater provider/s

AffinityWater AFW ANH/TMS/SRNBournemouthWater SWB WSX/SRNBristolWater BRL WSXPortsmouthWater PRT NESSouthEastWater SEW TMS/SRNSouthStaffsWater SSC SVESESWater SES TMS/SRN

1.WaterservicesprovidedundertheHartlepoolWatername.2.WaterservicesprovidedundertheCambridgeWatername.3.WaterservicesprovidedundertheEssex&SuffolkWatername.4.WaterservicesprovidedundertheBournemouthWatername.5.HafrenDyfrdwyprovideswaterservicesonlyinthisarea.6.HafrenDyfrdwyprovideswaterandwastewaterservicesinthisarea.7.SevernTrentWaterprovideswaterservicesonlyinthearea.

Betterperformance

Marginalperformance–better/average

Averageperformance

Poorerperformance


7

Companiesareresponsiblefortheiractualspendandmayeitheroutperformorspendlessthantheallowedamountorunder-performandspendmorethantheallowedamount.

ThetableshowscompanyperformanceagainstPR14costallowances.Ifcompaniesunderspend(negativefigures)theirexpenditureislessthantheallowancewedeterminedatPR14andwhentheyoverspend(positivefigures)itisgreater.

Wehavecalculatedcumulativeout-orunder-performanceforthewholesalewaterandwastewatercontrolscombinedfor2015-16to2018-19.Thiscomparescompanies’expenditureinthesecontrolsagainsttheirtotalallowanceinthepricecontroltodate.

Mostcompaniesareunderspendingagainsttheirallowances.Fourcompanies–South Staffs Water, Dŵr Cymru, United Utilities and Thames Water–areoverspending.Accordingtocompanyannualperformancereports,thisisdrivenbyadditionaloracceleratedinvestmentsonimprovementstoresilience,waterqualityandleakage.Thesectorhasoverspentagainstcumulativeallowancesin 2018-19by6.2%butunderspentinpreviousyearssooverallthesectorhasunderspentitsallowancesby1.6%over2015-19.Thesector’sexpenditurehasincreasedineachyearofthepricecontrol.

Whilethistableshowsout-andunder-performanceagainstallowances,itdoesnotshowwhichcompanieshavethemostorleastefficientwholesalecostsasunderspendcouldresultfromreprofilingofexpenditureratherthanefficiencygains.Althoughtheimpactofreprofilinginvestmentoncumulativeperformanceagainstallowanceislimitedinthelatteryearsofapricecontrol.BasedonassessmentofefficiencyofhistoricalbasecostsforPR19,Portsmouth Water, Wessex Water and South East Water havethemostefficientwholesalecosts,whileDŵr Cymru, Bristol Water and United Utilities have the leastefficient.

Underspend and overspend: cumulative wholesale expenditure performance

1.Acomparisonwith2017-18performanceisnotprovidedforSevernTrentWaterandHafrenDyfrdwy.Thesecompanieswereformedon1July2018followingtherealignmentoftheboundariesbetweenthelegacycompaniesSevernTrentWaterandDeeValleyWater.

2018-19performancecomparedto2017-18

Relative performance

Improved p Top25%

Stable tu Middle50%

Deteriorated q Bottom25%

Cumulative actual

wholesale totex (£m)

Cumulative wholesale

totexallowance

(£m)

Cumulative performance

2015-19

AnglianWater 3,044 3,368 q -9.6%

DŵrCymru 2,148 2,060 q 4.3%

HafrenDyfrdwy1 86 88 -3.0%

NorthumbrianWater 1,717 1,888 q -9.0%

SevernTrentWater1 4,225 4,439 -4.8%

SouthWestWater 1,157 1,383 q -16.4%

SouthernWater 1,999 2,165 q -7.7%

ThamesWater 6,507 6,119 q 6.3%

United Utilities 4,593 4,280 p 7.3%

WessexWater 1,283 1,426 q -10.0%

YorkshireWater 2,749 2,750 q -0.0%

AffinityWater 886 888 q -0.3%

BristolWater 323 338 q -4.2%

PortsmouthWater 107 112 q -3.8%

SouthEastWater 589 628 q -6.3%

SouthStaffsWater 311 310 q 0.4%

SESWater 171 178 q -3.9%

https://www.ofwat.gov.uk/wp-content/uploads/2019/07/PR19-draft-determinations-historical-expenditure-companies’-forecasts-and-Ofwats-challenge.xlsx



8

AtPR14weseteachcompanyanallowanceforeachyearofthefive-yearpricecontrolperiod.Attheendofthepricecontrolperiodweassesseachcompany’stotalover-orunderspendagainstthetotalallowance. Aproportionofanyunderspendisreturnedtocustomerswhileaproportionofanyoverspendisrecoveredfromcustomers.

The sector as a whole has underspent early in the price control and expenditurehasincreasedovertime.Allbuttwocompanies–United Utilities and Thames Water–underspentconsiderablyinthefirstyear ofthepricecontrol.Theprofileofcompanies’expenditureintheremainderofthepricecontrolisvariable.

The companies that are achieving the greatest cumulative underspends typicallyreducetheirunderspendingasthepricecontrolproceeds.

Mostcompanieshaveunderspentduringthefirsttwoyearsofthepricecontrolandoverspentinsubsequentyears.However,inpreviouspricecontrolscompaniesexpenditurehastypicallyfallentoalignwithcumulativeallowancesinthefinalyear.Wemayseeasimilardecrease inexpenditurein2019-20.

Long-term trends in wholesale expenditure performance

Annual outperformance as % of annual allowed wholesale totex

Cumulative outperformance as % of cumulative allowed wholesale totex

-25%

-20%

-15%

-10%

-5%

0%

5%

10%

15%

20%

25%

2015-16 2016-17 2017-18 2018-19

-25%

-20%

-15%

-10%

-5%

0%

5%

10%

15%

20%

25%

2015-16 2016-17 2017-18 2018-19


9

Toimprovevisibilityofperformanceintheresidentialretailcontrol,wehavecalculatedanapproximatecumulativeretailexpenditureout-orunder-performance2.Thiscomparescompanies’residentialretailoperatingcostswithanestimateofallowedretailcosts.

Thesectorhasoverspentagainstestimatedcumulativeallowancesfor2014-15to2018-19byaround4%,althoughthereisalargespreadinperformanceacrossthesector.Somecompanies–South East Water, Severn Trent Water and South Staffs Water–haveunderspentbymorethan10%.SES Water and Southern Waterhaveoverspentbymorethan20%.

Companyannualperformancereportsexplainthatoverspendsaretypicallytheresultofmanagingthecostofbaddebtandprioritisingattemptstoimprovecustomersatisfaction;thelatterisachievedby Dŵr Cymru, Affinity Water, SES Water and Southern Water(seepage10).Underspendsaretypicallytheresultofmanagingbaddebteffectively,efficiencygainsduetoincreasedmeteringandbetteronlineserviceswhichservecustomersatalowercost.

Based on an assessmentofefficiencyofhistoricalbasecostsforPR19,Yorkshire Water, Anglian Water and Bristol Waterhavethemostefficientresidentialretailcosts,whileSouthern Water, South West Water and Dŵr Cymruhavetheleastefficient.IntheirPR19businessplansbothSouthern Water and South West Waterareproposingtoreducetheircostsbyover40%during2020-25comparedtohistoricallevels.

Underspend and overspend: cumulative residential retail expenditure performance

1.Acomparisonwith2017-18performanceisnotprovidedforSevernTrentWaterandHafrenDyfrdwy.Thesecompanieswereformedon1July2018followingtherealignmentoftheboundariesbetweenthelegacycompaniesSevernTrentWaterandDeeValleyWater.2.Thenumberspresentedinthistableareindicativeofcompanyperformance.Forexample,theexpenditurereportedinannualperformancereportsincludesdepreciationonpre-2015assetsandwehaveincludedanallowanceforthisinouranalysis.Therearefurtherdifferencesbetweenthebuild-upofallowedcostsandactualcostsasreportedinannualperformancereports.Wehaveassessedthematerialityofthesedifferencesandaccountingforthemdoesnotimpacttheassignmentofcompaniestocategoriesinourrelativeassessment.



Improved p Top25%

Stable tu Middle50%


Cumulative actual

residential retail totex

(£m)

Cumulative residential retail totex allowance

(£m)

Cumulative performance

2015-19

AnglianWater 296 296 q -0%

DŵrCymru 235 209 q 12%

HafrenDyfrdwy1 10 11 -3%

NorthumbrianWater 195 211 q -8%

SevernTrentWater1 365 446 -18%

SouthWestWater 126 136 p -7%

SouthernWater 306 233 p 31%

ThamesWater 676 612 q 11%

United Utilities 459 467 q -2%

WessexWater 118 127 q -7%

YorkshireWater 229 228 q 0%

AffinityWater 122 108 p 13%

BristolWater 37 41 q -10%

PortsmouthWater 18 18 p 3%

SouthEastWater 64 80 p -20%

SouthStaffsWater 52 62 p -16%

SESWater 28 22 q 28%



10

Customersatisfaction,asmeasuredbytheserviceincentivemechanism(SIM),isanimportantmeasureofhowcustomersfeelabouttheservicescompaniesprovide.

OuranalysisshowswhethereachcompanyhasachievedahigherorlowerSIMscorein2018-19incomparisonto2017-18andarelativeassessmentofthescoresachievedin2018-19.

Between2017-18and2018-19thebestperformingcompanies–Anglian Water, South West Water, United Utilities, and Portsmouth Water–eitherimproveormaintaintheirperformance.

TheSIMscoresofSES Water, Affinity Water, Thames Water, Southern Water and Hafren Dyfrdwy rankinthebottom25%.Ofthesecompanies,onlySES Waterhasimproveditsscorein2018-19incomparisonto2017-18.Thames Water’sscoredeterioratedandisthelowestinthesector.

Customer satisfaction – service incentive mechanism performance in 2018-19

1.Acomparisonwith2017-18performanceisnotprovidedforSevernTrentWaterandHafrenDyfrdwy.Thesecompanieswereformedon1July2018followingrealignmentofthegeographicalboundariesofthelegacycompaniesDeeValleyWaterandSevernTrentWater.TheperformancefiguresforSevernTrentWaterandHafrenDyfrdwyrespectivelyarecomposedofthreeyearsofthelegacycompanyandoneyearofthenewcompany.2.SouthWestWaterreportsaseparateSIMscoresforitsBournemouthandSouthWestregions.In2018-19theseSIMscoresarethesamewhenroundedtotwodecimalplaces.

Performance

In 2018-19 compared to 2017-18

2018-19 (score out of 100)

AnglianWater p 90.0

DŵrCymru p 86.9

HafrenDyfrdwy1 - 78.4

NorthumbrianWater tu 85.9

SevernTrentWater1 - 81.4

SouthWestWater2 p 87.6

SouthernWater p 80.1

ThamesWater q 75.0

United Utilities tu 87.6

WessexWater tu 87.2

YorkshireWater tu 84.0

AffinityWater tu 81.2

BristolWater p 84.7

PortsmouthWater p 89.1

SouthEastWater tu 85.4

SouthStaffsWater tu 86.4

SESWater p 80.5



Improved p Top25%

Stable tu Middle50%



11

Thesectorhasdeliveredanincreaseincustomersatisfactionsince2015.Satisfactionincreasedinconsecutiveyearsfrom82.7in2015-16to84.5in 2017-18.Howeverperformancedeterioratedto84.0in2018-19.

Mostcompanieshaveachievedimprovementsintheirscoressince2015-16and the sector’s average score increased continuously up to and including 2017-18.Howeverthesector’saveragedeterioratedmarginallyin 2018-19,astheimprovementsmadebymanycompanieswereoffsetby severedeteriorationsinthescoresofasmallnumberofcompanies.

Thecompanieswholeadthesectoroncustomersatisfactionperformance–Anglian Water, Portsmouth Water, United Utilities and South West Water –haveachievedpredominantlycontinuousimprovementsineachyearofthepricecontroltodate.

Thames Water, Hafren Dyfrdwy and Severn Trent Water demonstrate considerabledeteriorationsincustomersatisfactionsince2015-16,withseveredeteriorationin2018-19.

Severn Trent Water and Hafren Dyfrdwy (who are owned by the same parent company)statethattheyexperiencedincreasesintheescalationofcustomercomplaintsin2018-19asbothcompaniesdivertedresourcesawayfromday-to-dayoperationstofocusonsecuringsupplytocustomerswhowereexperiencing,oratriskof,supplyinterruptionsduringthedrysummerspell.

Thames Wateradvisesthatitprioritisedclearingabacklogofworkafterthe2017-18freeze-thawevent.Subsequently,ittooklongertorespondtootherenquiries,thiswasfurthercompoundedbyprolongedwarmweatherinsummer2018.

Customer satisfaction – long-term trend

SIM scores 2015-16 to 2018-19

Absolute change in SIM score by company between 2015-16 and 2018-19

65

70

75

80

85

90

2015-16 2016-17 2017-18 2018-19

-6

-4

-2

0

2

4

6

8

10

ChangeinSIM


12

Performancecommitmentsmeasurethespecificlevelsofservicecompaniespromisedcustomerswouldbeachieved.Eachperformancecommitmenthasaperformancecommitmentlevel.Theserviceeachcompanyprovidestoitscustomersmustmeetorexceedthislevelinorderfortheperformancecommitmenttobeachieved.

Thetableshowswhethereachcompanyhasachievedahigherorlowerpercentageofitsperformancecommitmentsin2018-19incomparisonto2017-18andthepercentageeachachievedin2018-19.

Since2014-15,thesectorhasachieved67%ofperformancecommitments.However,thepercentageachievedineachyearhasdeterioratedconsecutivelyfrom69%in2014-15to63%in2018-192.

Performancecommitmentlevelshavebecomemorestretchingasthepricecontrolproceeds.Consequently,companiesmustimproveanddelivermoretoensuretheymeettheirperformancecommitmentlevels.

Mostcompaniesachievethesameorahigherpercentageofperformancecommitmentsin2018-19comparedto2017-18.Anglian Water, Wessex Water, Affinity Water and Portsmouth Water all improveormaintaintheirperformance,andtheirperformanceisinthetop25%onthepercentageofcommitmentsmetin2018-19.

Northumbrian Water, Thames Water, Dŵr Cymru, South East Water and SES Water’s performancedeterioratedin2018-19incomparisonto2017-18.South East Water’s performanceonthepercentageofperformancecommitmentsithasachievedinthepricecontroltodateisinthebottom25%.Thecompanyhasmultiplecustomersatisfactionperformancecommitmentswithstretchingtargets;iftheseareexcludedfromourrelativeassessmentitachieves38%ofitscommitments.BristolWatermakesnoimprovementonitsachievementofperformancecommitmentsbetween2017-18and2018-19andalsoremainsinthebottom25%.

Meeting performance commitment levels in 2018-19

1.Acomparisonwith2017-18performanceisnotprovidedforSevernTrentWaterandHafrenDyfrdwy.Thesecompanieswereformedon1July2018followingrealignmentofthegeographicalboundariesofthelegacycompaniesDeeValleyWaterandSevernTrentWater.TheperformancefiguresforSevernTrentWaterandHafrenDyfrdwyrespectivelyarecomposedofthreeyearsofthelegacycompanyandoneyearofthenewcompany.2.Somecompanieshaverestatedtheirperformancesincewepublishedourpreviousreportsandsothesefiguresarenotnecessarilyconsistentwithouranalysesinpreviouspublications.

Performance


2018-19(% achieved)

AnglianWater tu 93

DŵrCymru q 63

HafrenDyfrdwy1 - 51

NorthumbrianWater q 59

SevernTrentWater1 - 62

SouthWestWater tu 71

SouthernWater p 64

ThamesWater q 55

United Utilities p 74

WessexWater tu 77

YorkshireWater p 77

AffinityWater p 90

BristolWater tu 43

PortsmouthWater p 80

SouthEastWater q 32

SouthStaffsWater p 67

SESWater q 71



Improved p Top25%

Stable tu Middle50%



13

Someperformancecommitments,typicallythoseofhighvaluetocustomers,haveassociatedfinancialoutcomedeliveryincentives(ODIs).Companiesthatdeliveraboveandbeyondforcustomerscanearnoutperformancepayments,whicharerecoveredfromcustomers.Companiesthatdonotmeettheircommitmentlevelscanincurunderperformancepaymentswhicharereturnedtocustomers.Thesize ofthepaymentdependsonthesizeofthecompanyaswellasthelevelofperformance.

Wehavenormalisedeachcompany’sODIoutperformancebyitsregulatedequitytoallowcomparisonbetweencompanies.Ouranalysisshowswhethereachcompanyhasachievedahigherorlowerreturnin2018-19incomparisonto2017-18andthereturneachachievedin2018-19.

Anglian Water, South West Water, United Utilities, Wessex Water, Yorkshire Water and South Staffs Water achievednetoutperformancepaymentsin2018-19.South West Water earned net outperformancein2017-18andhasincreaseditsreturnin2018-19.

Proportionatetotheirsize,Hafren Dyfrdwy, Northumbrian Water, Thames Water, Affinity Water and Bristol Waterhavethelargestfinancialpenaltiesin2018-19.FinancialpenaltieshaveincreasedforNorthumbrian Water, Thames Water, Affinity Water, Bristol Water and Portsmouth Water in 2018-19duetoalackofimprovementordeteriorationintheservicesdeliveredforcustomers.

In2017-18Severn Trent Waterachievedlargeoutperformancepayments(£86million)fromstrongoutperformanceonsewerflooding.ThecompanywasclosetoexceedingitscaponwastewaterODIsandrequestedthatthecapbelifted.Weliftedthecompany’soutperformancecapand,toencouragecontinuousimprovement,alsoamendeditsperformancetargetsandfinancialincentives3.In2018-19thecompanyachievedoutperformancepaymentsonexternalsewerfloodingbutincurredlargerunderperformancepaymentsforinternalsewerflooding2,supplyinterruptionsandpollutionincidents.Thisresultsinanetunderperformancepaymentof£3.3million.

Earning financial incentives – ODI returns in 2018-19

1.Acomparisonwith2017-18performanceisnotprovidedforSevernTrentWaterandHafrenDyfrdwy.Thesecompanieswereformedon1July2018followingrealignmentofthegeographicalboundariesofthelegacycompaniesDeeValleyWaterandSevernTrentWater.2.AlthoughSevernTrentWaterachievesitsperformancecommitmentlevelfor2018-19itaccruesanunderperformancepaymentasaresultofperformanceagainstsomecommitmentsforthefirstquarterofthisfinancialyear,duringwhichthegeographicalrealignmentoftheboundarywithHafrenDyfrdwywasnotineffect.3.Finaldeterminationforin-periodODIsfor2018.

Performance


Actual return as % of notional

regulated equity

AnglianWater q 0.48

DŵrCymru p -0.02

HafrenDyfrdwy1 - -1.82

NorthumbrianWater q -0.23

SevernTrentWater1 - -0.11

SouthWestWater p 0.37

SouthernWater q -0.02

ThamesWater q -1.13

United Utilities p 0.53

WessexWater q 0.24

YorkshireWater q 0.41

AffinityWater q -1.76

BristolWater q -2.01

PortsmouthWater q -0.77

SouthEastWater p -0.01

SouthStaffsWater p 0.19

SESWater q -0.18



Improved p Top25%

Stable tu Middle50%


https://www.ofwat.gov.uk/publication/final-determination-of-in-period-odis-for-2018/


14

During2018-19thesectorincurred£108millionofunderperformancepayments,ofwhich£69millionwasincurredforunderperformanceonleakage;supplyinterruptions;internalsewerflooding;andpollutionincidents.Thismoneywillbereturnedtocustomersastheyhavenotreceivedtheservicespromised.Thesectorearned£85millioninoutperformancepaymentsfordeliveringaboveandbeyondonperformancecommitments.

2018-19wasthefirstyearofthecurrentpricecontrolinwhichthesectoroverallincurrednetunderperformancepayments.Thegreatestunderperformancepaymentswere accrued by Thames Waterforitsperformanceonleakage.Followingourenforcementactionin2017-18,unlikeothercompanies,whenThames Water underperformsonleakageitsunderperformancepaymentswillnotbelimitedtowithin adeterminedrange.

Earning financial incentives – long-term trends in ODI returns

2018-19 incentive payments (£ million)

2018-19 RoRE performance on outcomes

-60

-40

-20

0

20

40

60

£million

Leakage Supplyinterruptions Internalsewerflooding

Pollution incidents Others Net payment

-2.2%-2.0%-1.8%-1.6%-1.4%-1.2%-1.0%-0.8%-0.6%-0.4%-0.2%0.0%0.2%0.4%0.6%

https://www.ofwat.gov.uk/investigation-thames-waters-failure-meet-leakage-performance-commitments/


15

Everycompanyhasaleakageperformancecommitmentacross2015-20althoughnotallhaveatargetineachyear.Ouranalysisdemonstrateswhethereachcompanyhasachieveditstargetin2017-18and2018-19,anditsperformanceandassociatedtargetin2018-19.Toallowbettercomparisonofperformancebetweencompanieswehaveconductedourrelativeassessment ofperformanceusingleakagenormalisedbylengthofwatermain.

Mostcompaniesachievetheirleakageperformancecommitmentlevelsin2018-19andthreemorecompanies–Northumbrian Water, Yorkshire Water and South Staffs Water–achievetheirtargetsincomparisonto2017-18.Anglian Water, South West Water and South East Water eachachievetheirleakageperformancecommitmenttargetsin2017-18and2018-19whileachievingperformanceinthetop25%ofcompanies.

Thames Water and Affinity Waterfailtoachievetheirleakagetargetforasecondconsecutiveyear.Bothcompanies’performanceisrankedinthebottom25%.

TheperformancecommitmentlevelsofBristol Water and Portsmouth Water consider each company’saverageperformanceduringthepricecontrolandareassessedattheendoftheperiod,in2019-20.Southern Water’sperformanceisonlyassessedin2019-20.Southern Water and Bristol Waterdonotachieveannualisedmilestonesin2018-19.

Leakage performance in 2018-19

1.Acomparisonwith2017-18performanceisnotprovidedforSevernTrentWaterandHafrenDyfrdwy.Thesecompanieswereformedon1July2018followingrealignmentofthegeographicalboundariesofthelegacycompaniesDeeValleyWaterandSevernTrentWater.2.NorthumbrianWater,SouthStaffsWater,SevernTrentWaterandHafrenDyfrdwyeachhavetwoleakageperformancecommitments,oneforeachoftheiroperatingregions.Thefigurespresentedandusedinourassessmentofperformanceforeachcompanyarefortheirrespectiveregionscombined.3.SouthWestWater’sperformanceisassessedagainstitstargetfortheSouthWestoperatingareaonly.ThecompanyhasatargetforleakageintheBournemouthareaagainstwhichperformanceisassessedin2019-20only.4.UnitedUtilities’leakageperformancecommitmentisassessedasthevariancefromthistarget.

Performance against targets Relative performance

(2018-19)

In 2018-19 & compared to 2017-18

2018-19 performance

(ml/d)

2018-19 target (ml/d)

Total litres per km of

main

AnglianWater tu 186.00 192.00 4.96

DŵrCymru tu 170.00 171.00 6.13

HafrenDyfrdwy1 15.27 11.72 5.86

NorthumbrianWater2 p 200.44 203.00 7.70

SevernTrentWater1 424.37 428.02 9.06

SouthWestWater3 tu 84.00 84.00 5.66

SouthernWater - 101.80 - 7.31

ThamesWater tu 690.00 612.00 21.88

United Utilities4 tu 455.95 462.65 10.81

WessexWater tu 66.40 67.20 5.54

YorkshireWater p 289.80 292.10 9.12

AffinityWater tu 196.10 167.70 11.72

BristolWater - 45.83 44.00 6.09

PortsmouthWater - 28.12 29.85 8.40

SouthEastWater tu 86.88 89.10 5.93

SouthStaffsWater2 p 83.70 84.00 9.82

SESWater tu 24.10 24.10 6.90

Performanceagainsttargets Relative performance

Target met Improved p Top25%

Targetfailed Stable tu Middle50%

Notargetin2018-19 - Deteriorated q Bottom25%


16

Wehaveexaminedthesector’sleakageperformanceineachyearofthecurrentpricecontrolandeachcompany’scontributiontolong-termtrends1.

Nettotalleakagehasstayedaboutthesamesince2012-13.Thesectorlost3,097Ml/dofwaterin2012-13and3,170Ml/din2018-19.

Eightcompanieshavemademodestreductionsinleakagesince2012-13.Howeverthesearemorethanoffsetbytheperformanceoftheremainingcompanies,particularlyThames Water, Yorkshire Water and Southern Water. Relativetotheirperformancein2012-13,Portsmouth Water has reducedleakageby17.5%,equivalentto6Ml/dwhileDŵr Cymru and South East Waterhavereducedleakageby9%and7%,equivalentto 6Ml/dand7Ml/d,respectively.Southern Waterhasincreasedleakageby25%,equivalentto21Ml/d;Hafren Dyfrdwyhasincreasedleakage by18%,equivalentto2.3Ml/d,andThames Water has increased leakageby7%,equivalentto45Ml/d.

Companieswillhavenewleakageperformancecommitmentsaspartofour2019pricereview.Ourdraftdeterminationsrequirecompaniestoreduceleakageby15%to25%by2025.

Long-term trends in leakage performance

Total industry leakage (megalitres per day (thousands))

Net change in company leakage as % of total industry performance in 2012-13

0.0

0.5

1.0

1.5

2.0

2.5

3.0

3.5

2012-13 2013-14 2014-15 2015-16 2016-17 2017-18 2018-19

Ml/day(thousands)

ANH WSH HDD NES SVE SWB SRN TMS UU

WSX YKY AFW BRL PRT SEW SSC SES

-0.6%

-0.4%

-0.2%

0.0%

0.2%

0.4%

0.6%

0.8%

1.0%

1.2%

1.4%

1.6%

WSH SVE SEW PRT WSXSWB UU BRL SES HDD ANH SSC AFW NES SRN YKY TMS

1.SevernTrentWaterandHafrenDyfrdwywereformedon1July2018followingrealignmentofthegeographicalboundariesofthelegacycompaniesDeeValleyWaterandSevernTrentWater.Forouranalysisin2015-16to2017-18inclusiveweusecounterfactualfiguresequivalenttothoseinAPRtable4Pinthesecompany’srespectiveSeptember2018businessplans.Priorto2015-16weapportionthecompaniescombinedleakagebasedonproportionsinsubsequentyears.


17

Allcompanieshaveaperformancecommitmentonsupplyinterruptionsfor2015-20.Thecommitmentsofallcompanies,exceptAffinity Water, Bristol Water and Thames Water are forinterruptionsthatexceedthreehours3.Ouranalysisshowswhethereachcompanyhasachieveditstargetin2017-18and2018-19anditsperformanceandassociatedtargetin2018-19.Wehavealsoconductedarelativeassessmentofcompanyperformance,thisanalysisusesdataforallcompaniesthatisrepresentativeofsupplyinterruptionsgreaterthan3hours.

Mostcompaniesachievetheirsupplyinterruptionsperformancecommitmentin2018-19.Portsmouth Water and South Staffs Waterachievedtheirsupplyinterruptionsperformancecommitmenttargetsinboth2017-18and2018-19andareinthetop25%ofcompaniesinourassessmentofrelativeperformance.Anglian Water and Yorkshire Water also achieved theirtargetsinconsecutiveyears.Southern Water, South West Water, United Utilities and Wessex Waterallmettheirtargetsin2018-19,havingfailedtoachievetheirtargetsin2017-18.Thesecompaniescontributetothesectorachievingagreaternumberofsupplyinterruptionsperformancecommitmenttargetsin2018-19.

Thames Water, Dŵr Cymru, Bristol Water and South East Waterfailtoachievetheirsupplyinterruptionstargetforasecondconsecutiveyear.TheperformanceofThames Water and Bristol Waterisalsorelativelypoorcomparedtoothercompanies.

Supply interruptions performance

1.Acomparisonwith2017-18performanceisnotprovidedforSevernTrentWaterandHafrenDyfrdwy.Thesecompanieswereformedon1July2018followingrealignmentofthegeographicalboundariesofthelegacycompaniesDeeValleyWaterandSevernTrentWater.Figuresfor,andperformanceagainst,multipletargetsarepresentedbecausefollowingtheboundaryrealignmenteachcompanyadoptedtheperformancecommitmentsofthelegacycompanies.2.SouthWestWaterhassupplyinterruptionstargetsforeachofitsoperatingregions–theSouthWestareaandtheBournemoutharea.TheperformanceandtargetfiguresforeachareaarepresentedandtheBournemouthfiguresareinbrackets.In2017-18targetswereachievedintheBournemouthregiononlywhereastargetsweremetinbothregionsin2018-19.3.AffinityWater’ssupplyinterruptionsperformancecommitmentdefinitionisforinterruptionsgreaterthan12hours;BristolWater’sdefinitionincludesallsupplyinterruptions;andThamesWater’sdefinitionincludesinterruptionsgreaterthanfourhours.ForthesecompanieswehaveobtainedfiguresforinterruptionsgreaterthanthreehoursfromDiscoverWater.



Targetsmetandfailed Stable tu Middle50%

Targetfailed Deteriorated q Bottom25%


(2018-19)

In 2018-19 & compared to 2017-18

2018-19 performance

(mins/ property)

2018-19 target (mins/

property)

Minutes per property


DŵrCymru tu 16.00 12.00 16.00

HafrenDyfrdwy1 7.20(93.74) 12.00(7.10) 29.17

NorthumbrianWater q 9.20 5.48 9.20

SevernTrentWater1 19.06(1.80) 9.40(12.00) 18.88

SouthWestWater2 p 9.66(0.66) 12.84(4.40) 7.88

SouthernWater p 7.38 9.00 7.38

ThamesWater tu 15.60 7.80 22.05

United Utilities p 9.17 12.00 9.17

WessexWater p 5.85 12.00 5.85

YorkshireWater tu 10.46 12.00 10.46

AffinityWater3 - - - 12.70

BristolWater tu 14.67 12.50 15.02

PortsmouthWater tu 3.90 5.00 3.90


SouthStaffsWater tu 7.15 10.00 7.15

SESWater q 16.20 12.00 16.20

https://discoverwater.co.uk/


18

Long-term trends in supply interruptions performance

Total industry supply interruption minutes (millions)

% change in supply interruption minutes per property since 2012-13

0

100

200

300

400

500

600

2012-13 2013-14 2014-15 2015-16 2016-17 2017-18 2018-19

Prop

erty

min

utes

(milli

ons)



-80%

-60%

-40%

-20%

0%

20%

40%

60%

80%

100%

Wehaveexaminedthesector’ssupplyinterruptionsperformancesince2014-15,andeachcompany’snetimprovementordeteriorationduringthisperiod.Weusesupplyinterruptionsminutesperpropertyreportedineachcompany’sannualperformancereportorDiscoverWater1 (Affinity Water, Thames Water and Bristol Water) which wehaveconvertedtominutesusingassociatedcustomernumbers.

Since2012-13thesectorhasreducedthetotalsupplyinterruptionminutesexperiencedbycustomersby114millionminutes,or5.2minutesperpropertyinEnglandandWales.Howeverthesectorachieveditslowestminutesofinterruptionsin2016-17.Thisisequivalenttoareductionof183millionminutesincomparisonto2012-13anddemonstratesthatmorecanbedonetodeliverthisserviceforcustomers.

Despitethesector’sperformance,anumberofcompanieshavedeliveredsubstantialreductionssince2012-13.Wessex Water and Dŵr Cymru have reduced supply interruptionminutesperpropertyby76%and70%respectivelyandSouthern Water, United Utilities and South West Waterbymorethan40%.

CustomersofHafren Dyfrdwy and Thames Waterhaveexperiencedaconsiderableincreaseinsupplyinterruptionsminutesperproperty,87%and64%respectivelyincomparisonto2012-13.Northumbrian Water’scustomersalsoexperiencedanincreaseinsupplyinterruptionsminutesperproperty,equivalentto32%incomparisonto2012-13.TheconsiderableincreasesinThames Water’s deterioration isequivalentto36millionminutesor1.4minutesperpropertyinEnglandandWales.

OurPR19draftdeterminationschallengethesectortoreducesupplyinterruptionsby64%inthenextpricecontrolperiod.

1.FiguresforAffinityWater,ThamesWaterandBristolWaterhavebeenobtainedfromDiscoverWater.

https://discoverwater.co.uk/


19


(2018-19)

In 2018-19 & compared to 2017-18

2018-19 performance (per 1,000 population)

2018-19 target

(per 1,000 population)

Rate per 1,000

population


DŵrCymru tu 3.28 1.23 3.42

HafrenDyfrdwy 1.02(1.22) 1.01(0.69) 2.87

NorthumbrianWater 0.23(0.59) 0.22(0.69) 1.34

SevernTrentWater - 1.54(0.45) 1.30(1.01) 1.64

SouthWestWater tu 2.13(0.71) 3.30(1.23) 2.42

SouthernWater tu 0.68 0.82 1.26

ThamesWater - - - 0.61

United Utilities tu 1.51 0.96 2.06

WessexWater tu 1.54 1.23 1.54

YorkshireWater tu 1.57 1.21 1.64

AffinityWater tu 0.23 0.66 0.82

BristolWater tu 1.62 1.90 1.69

PortsmouthWater tu 0.44 0.42 0.44


SouthStaffsWater tu 1.51 1.23 1.51

SESWater tu 0.54 0.49 0.59

Waterqualityisatopcustomerpriority.Mostcompanieshaveaperformancecommitmentonthenumberoftimescustomers have contacted them (complained) about water quality.Complaintsarecategorisedasbeingabouteitherdiscolouration(appearance),ortasteandodour1.Ouranalysis shows whether each company has achieved its waterqualitycontactsperformancecommitmenttargetin2017-18and2018-19,itsperformanceandassociated targetin2018-19and–usingthenumberofcustomercontactsreportedbytheDrinkingWaterInspectorateinitsannualreport–itsperformancerelativetoothercompanies.

Anglian Water, Southern Water, South West Water, Affinity Water and Bristol Water achievetheirperformancecommitmentsin2018-19forasecondconsecutiveyear.Anglian Water and Affinity Wateralsoachieveperformanceinthetop25%ofcompaniesinourrelativeassessment.However,mostcompaniesfailtheirperformancecommitmentlevelsin2018-19anddosoforasecondconsecutiveyear.United Utilities, Dŵr Cymru and Hafren Dyfrdwy failandhaverelativelypoorperformancecomparedtoothercompanies.Asweconcludedinthe2017-18servicedeliveryreport,thereisstillworkforcompaniestodotoreducecustomercontacts.

Water quality contacts performance

1.AffinityWaterandSouthEastWater,SouthernWaterhaveperformancecommitmentsonappearanceonly.NorthumbrianWaterhasseparateperformancecommitmentsfordiscolourationandtasteandodour.HafrenDyfrdwyandSevernTrentWaterhaveperformancecommitmentsonappearanceforcomplaintsfromcustomersintheareasoftheirregionspreviouslyservedbyDeeValleyWaterandlegacySevernTrentWater,respectively.ThamesWaterdoesnothaveaperformancecommitmentonwaterquality,itreportscomplaintsaboutdiscolouration,chlorineandhardness.ComplaintsfromallremainingHafrenDyfrdwyandSevenTrentWaterareassessedagainstsingleperformancecommitmentsforappearance,tasteandodour.UnitedUtilitiesincludecomplaintsaboutappearance,taste,odourandcolourasoneofsixsub-measureswithinabespokewaterqualityindexperformancecommitment.Theremainingcompanieseachhaveoneperformancecommitmentforappearance,tasteandodour.2. SummaryoftheChiefInspector’sreportfordrinkingwaterinEngland and SummaryoftheChiefInspector’sreportfordrinkingwaterinWales.

Customer contacts measure the acceptability of water to customers. Compliance with legal requirements (the EU Drinking Water Directive) is measured separately. Compliance was greater than 99.95% in 2018, and has been at this high level since 20042.

q





http://www.dwi.gov.uk/about/annual-report/2018/CIR-2018-England.pdf

http://www.dwi.gov.uk/about/annual-report/2018/CIR-2018-Wales.pdf

http://www.dwi.gov.uk/about/annual-report/2018/CIR-2018-Wales.pdf


20

ThenumberofwaterqualitycontactsmadetowatercompaniesarereportedbytheDrinkingWaterInspectorateinitsannualreportonacalendaryearbasisbackto2012.

Wehaveexaminedthesector’swaterqualitycontactsperformancesince 2014-15,andeachcompany’snetimprovementordeteriorationduringthisperiod.

Since2012thesectorhasmadesomeprogressinreducingwaterqualitycontacts,byaround18,000contactsperyear,a17%reduction.However,progresshasoftenstalled,andthishasbeenthecasebetween2017and2018.

Hafren Dyfrdwy1 and South West Water have made the greatest progress in reducingthenumberofcontactstheyreceive,by54%and47%respectively.Wessex Water, South East Water, Northumbrian Water, Yorkshire Water, Anglian Water and Bristol Waterhavereducedcontactsbybetweenmorethan20%.

TheperformanceofSES Water, Dŵr Cymru and Thames Waterhasdeteriorated.Dŵr Cymru’sdeteriorationisgreatestat8.5%andisequivalentto829extracontacts.

Long-term trends in water quality contacts performance

Total industry water quality contacts (thousands) (DatafromDWI)

% change in water quality contacts since 2012

0

20

40

60

80

100

120

2012-13 2013-14 2014-15 2015-16 2016-17 2017-18 2018-19

Waterqualitycontacts(thousands)



-60%

-50%

-40%

-30%

-20%

-10%

0%

10%

1.SevernTrentWaterandHafrenDyfdrwywereformedon1July2018followingrealignmentofthegeographicalboundariesofthelegacycompaniesDeeValleyWaterandSevernTrentWater.ThefigurespresentedforthesecompaniesarerepresentativeofthelegacycompaniesDeeValleyWaterandSevernTrentWater.


21


(2018-19)

In 2018-19 & compared to 2017-18

2018-19 performance (incidents)

2018-19 target

(incidents)

Incidents per 10,000 properties

AnglianWater1 - - - 1.23

DŵrCymru tu 221 282 1.52

HafrenDyfrdwy2 4 5 1.90

NorthumbrianWater3 124 (246) 186(228) 2.91

SevernTrentWater2 7254 868 1.75

SouthWestWater tu 93 139 1.23

SouthernWater tu 389 392 1.96

ThamesWater tu 1,032 1,085 1.75

United Utilities5 551 (15) 375(55) 1.69

WessexWater tu 179 210 1.43

YorkshireWater tu 1,692 1,919 7.36

Sewerfloodingisoneofthemostunpleasantanddistressingservicefailuresforcustomersandreducingitisahighpriority.Customersarenoweighttimeslesslikelytosuffersewerfloodingthantheywereinthe1990s.Eachcompanyprovidingwastewaterserviceshasaninternalsewerfloodingperformancecommitmentduringthe2015-20pricecontrol.

Ouranalysisshowswhethereachcompanyhasachieveditstargetin2017-18and2018-19,itsperformanceandassociatedtargetin2018-19andrelativeperformanceper10,000propertiesserved.

Mostcompaniesmeettheirinternalsewerfloodingperformancecommitmenttargetin2018-19anddosoforasecondconsecutiveyear.However,thereisconsiderablespreadinperformance.TheperformanceofSouthern Water, Thames Water and Yorkshire Waterisinthebottom25%ofcompaniesinourrelativeassessment.Thereareconsiderabledifferencesinthewaysthatcompanieshavedefinedsewerfloodingforinclusionintheircurrentperformancecommitments.Forexample,Yorkshire Watercountsthenumberoftimesapropertyisflooded,asopposedtothenumberofpropertiesflooded,anditdoesnotexcludeincidentscausedbysewersoverloadedwithrainfall.From2020-21weareintroducingaperformancecommitmentoninternalsewerfloodingthathasacommondefinitionforallcompanies.Acomparisonofourrelativeassessmentwithperformancereportedusingthecommondefinitionresultsinminorrevisionstothecategorisationofcompanies’relativeperformance–Southern Water’sperformancemovestothemiddle50%andUnited Utilities’performancemovestothebottom25%.

Internal sewer flooding performance

1.AnglianWater’sperformanceagainstitstargetisassessedin2019-20only.2.Acomparisonwith2017-18performanceisnotprovidedforSevernTrentWaterandHafrenDyfrdwy.Thesecompanieswereformedon1July2018followingrealignmentofthegeographicalboundariesofthelegacycompaniesDeeValleyWaterandSevernTrentWater.3.Northumbrianwaterhastwointernalsewerfloodingperformancecommitments.Thecompanyreportsincidentscausedbytransferred(adopted)sewersseparately,thisfigureispresentedinbrackets.4.AlthoughSevernTrentWaterachievesitsperformancecommitmentlevelfor2018-19itaccruesanunderperformancepaymentsasaresultofperformanceagainstitscommitmentagreedforthefirstquarterofthisfinancialyear,duringwhichthegeographicalrealignmentoftheboundarywithHafrenDyfrdwywasnotineffect.5.UnitedUtilities’sewerfloodingcommitmentsaresub-measuresofitsassethealthperformance.Incidentsduetohydraulicoverloadarereportedseparatelytoothercauses,theformerispresentedinbrackets.

q

p






22

Long-term trends in internal sewer flooding performance

Total number of sewer flooding incidents (thousands)

% change in sewer flooding incidents since 2014-15

0

1

2

3

4

5

6

7

8

2014-15 2015-16 2016-17 2017-18 2018-19

Inci

dent

s (th

ousa

nds)

ANH WSH NES SVE+HDD SWB SRN TMS UU WSX YKY

-50%

-40%

-30%

-20%

-10%

0%

10%

20%

30%

Wehaveexaminedthesector’ssewerfloodingincidentsperformancesince2014-15,and each company’s net improvement or deterioration during this period1.Thereareconsiderabledifferencesinthewaysthatcompanieshavedefinedsewerfloodingforinclusionintheircurrentperformancecommitments(seepage21)andsothetotalnumbersofincidentsreportedbyeachcompanyshouldnotbecompareddirectly.

Thesectorhasachieveda26%reductioninsewerfloodingincidentsincomparisonto2014-15,equivalentto1,930fewerincidents.Althoughsomereductionshavebeenmadeineachyeartodate,therehasbeenlittleimprovementbetween2017-18and2018-19.

Since2014-15somecompanieshavemadesignificantreductionsininternalsewerflooding.South West Water, Severn Trent Water and Thames Water have reduced sewerfloodingincidentsby49%and38%respectively.United Utilities, Anglian Water, Southern Water, Dŵr Cymru, Yorkshire Water and Northumbrian Water all madereductionsofmorethan10%.

Wessex Watercustomersexperienceda28%increaseinsewerfloodingincidentsin2018-19incomparisonto2014-15,equivalentto39moreincidents,butitremainsinthetop25%ofperformers.

OurPR19draftdeterminationsincludestretchingperformancecommitmentsonsewerflooding.Theychallengetheindustrytodelivera40%reductionby2024-25.

1.SevernTrentWaterandHafrenDyfdrwywereformedon1July2018followingrealignmentofthegeographicalboundariesofthelegacycompaniesDeeValleyWaterandSevernTrentWater.ThelegacycompanyDeeValleyWateronlyprovidedwaterservices.Toallowforconsistentcomparisonthroughoutthetimeseriesofdata,figurespresentedarerepresentativeofthelegacycompanySevernTrentWater.


23

Customersandotherstakeholdersexpectcompaniestopreventseriouspollutionincidents.Incidentsleadtothereleaseofharmfulsubstancesintoair,landorwater,andsomecancausesignificantharmtotheenvironment.TheEnvironmentAgencycategorisesincidentsbasedontheirimpact.Acategory1incidenthasaserious,extensiveorpersistentimpact.Category2incidentshavealesser,yetsignificantimpact.Category3incidentshaveaminororminimalimpact.

Ouranalysisshowswhethereachcompanyhasachieveditspollutionincidentperformancecommitmenttargetin2017-18and2018-19,itsperformanceandassociatedtargetin2018-19and–usingthenumberofcategory1-3pollutionincidentsper10,000kmofsewerasreportedbytheEnvironmentAgencyinitsannualEnvironmentalPerformanceReport–itsnormalisedperformancerelativetoothercompanies.

Mostcompaniesachievetheirpollutionincidenttargetsin2018-19anddosoforasecondconsecutiveyear.Northumbrian Water and United Utilitiesachievethisand,alongwithWessex Water,performanceinthetop25%ofcompaniesinourrelativeassessment.

South West Water failedtoachieveitspollutionincidentsperformancecommitmenttargetforasecondconsecutiveyearanddemonstratespoorperformancerelativetoothercompanies.Southern Water and Yorkshire Wateralsofailedperformancecommitmenttargetsin2018-19.

2018-19 pollution incidents performance against targets

1.SouthernWater,SevernTrentWater,UnitedUtilitiesandYorkshireWatereachhavetwoperformancecommitmentsonpollutionincidents,onforcategory3incidentsandanotherforcategory1and2incidents.Thefiguresrelatingtocategory1and2incidentsarepresentedinbrackets.2.SevernTrentWaterandHafrenDyfdrwywereformedon1July2018followingrealignmentofthegeographicalboundariesofthelegacycompaniesDeeValleyWaterandSevernTrentWater.ThelegacycompanyDeeValleyWateronlyprovidedwaterservicesandthereforethefigurespresentedarerepresentativeofthelegacycompanySevernTrentWater.3.WessexWaterdoesnothaveaperformancecommitmentbasedsolelyonpollutionincidents.ItscommitmentistoachieveindustryleadingstatusintheEnvironmentAgency’senvironmentalperformanceassessment,acomponentofwhichisbasedonpollutionincidents.4.SouthWestWaterhastwoperformancecommitmentsonpollutionincidents,oneforcategory3and4incidentsandanotherforcategory1and2incidents.Thefiguresrelatingtocategory1and2incidentsarepresentedinbrackets.


(2018-19)

In 2018-19 & compared to 2017-18

2018-19 performance (incidents)

2018-19 target

(incidents)

Category 1-3 pollution

incidents per 10,000 km of sewer

AnglianWater tu 185 298 25

DŵrCymru tu 118 131 28

NorthumbrianWater tu 73 115 12

SevernTrentWater2,1 328(7) 369(2) 31

SouthWestWater4 tu 248(2) 208(0) 98

SouthernWater1 144 (7) 158(2) 39

ThamesWater tu 295 340 27

United Utilities1 tu 143(1) 195(3) 24

WessexWater3 - - - 24

YorkshireWater4 188(11) 211 (2) 44q

q






24

TheEnvironmentAgencysettheexpectationthattheninewastewatercompaniesoperatinginEnglandwouldreducetotalpollutionincidents(includingcleanwaterincidents) caused by water and wastewater assets by at least a third in comparison to 2012.Theydidnotquiteachievethisexpectation(32.9%)andtheEnvironmentAgencyadvisesthatsignificantimprovementsarerequired1.

Ouranalysisconsidersthenumberofcategory1-3pollutionincidentscausedbywastewaterassetsper10,000kmofsewer(incidentscausedbywaterassetsandadoptedsewersareexcluded)inEnglandandWales.TheEnvironmentAgency1 and NaturalResourcesWales2providethesedataforcompaniesoperatinginEnglandandWalesrespectively.Dataareavailableonacalendaryearbasisbackto2013.

Companiesprovidingwastewaterserviceshavedelivereda41%reductioninpollutionincidentssince2012(unliketheEnvironmentAgency’sassessment,weonlyincludeincidentscausedbywastewaterassets).Therewere2,924pollutionincidentsin2012comparedto1,720in2018.Thegreatestreductionsweredeliveredin2013and2014,andtherehasbeennomaterialoverallimprovementsince2015.Since2012Northumbrian Water, Southern Water and Anglian Water have each reduced pollution incidentsby81%,63%and57%respectively.

Wessex Watercaused38%morepollutionincidentsin2018incomparisonto2012,equivalentto23moreincidents,butitremainsinthetop25%ofperformers.

OurPR19draftdeterminationsincludea34%reductioninpollutionincidentsby2020-25.

Long-term pollution incidents trend

Total number of category 1-3 pollution incidents (000s)(DatafromEA)

% change in total pollution incidents since 2012

0.0

0.5

1.0

1.5

2.0

2.5

3.0

2012-13 2013-14 2014-15 2015-16 2016-17 2017-18 2018-19

Inci

dent

s (th

ousa

nds)

ANH WSH NES SVE+HDD SWB SRN TMS UU WSX YKY

-100%

-80%

-60%

-40%

-20%

0%

20%

40%

NES SRN ANH WSH UU TMS SVE SWB YKY WSX Industry

1.WaterandseweragecompaniesinEngland:environmentalperformancereport.2.AnnualperformancereportforWelshWater(DŵrCymru) and AnnualperformancereportforHafrenDyfrdwy.WecombineHafrenDyfrdwyandSevernTrentWaterinouranalysisoflong-termtrends.Thesecompanieswereformedon1July2018afterthegeographicalrealignmentoftheboundarybetweenthelegacycompaniesDeeValleyWaterandSevernTrentWater.DeeValleyWaterprovidedwaterservicesonly.ThefigurespresentedforSevernTrentWaterin2018includeincidentscausedbyHafrenDyfrdwyassetsinthefinalsixmonthsofthe2018calendaryear.Therewerenine,eight,sixandfourcategory1-3pollutionincidentsin2018,2017,2016and2015respectivelyintheareainwhichwastewaterservicesarenowprovidedbyHafrenDyfrdwy.

https://www.gov.uk/government/publications/water-and-sewerage-companies-in-england-environmental-performance-report

https://naturalresources.wales/evidence-and-data/research-and-reports/water-reports/annual-performance-report-for-dwr-cymru-welsh-water/?lang=en

https://naturalresources.wales/evidence-and-data/research-and-reports/water-reports/annual-performance-reports-for-hafren-dyfrdwy/?lang=en

Ofwat(TheWaterServicesRegulationAuthority)isanon-ministerialgovernmentdepartment.WeregulatethewatersectorinEnglandandWales.Ourvisionistobeatrustedandrespectedregulator,workingattheleadingedge,challengingourselvesandothersto buildtrustandconfidenceinwater.

OfwatCentreCityTower7HillStreetBirmingham B5 4UA

Phone: 0121 644 7500Fax:01216447533Website:www.ofwat.gov.ukEmail:[email protected]

October 2019

©Crowncopyright2019

ThispublicationislicensedunderthetermsoftheOpenGovernmentLicencev3.0exceptwhereotherwisestated.Toviewthislicence,visitnationalarchives.gov.uk/doc/open-government-licence/version/3.

Wherewehaveidentifiedanythirdpartycopyrightinformation,youwillneedtoobtainpermissionfromthecopyrightholdersconcerned.

Thisdocumentisalsoavailablefromourwebsiteatwww.ofwat.gov.uk.

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