Wessex Water’s Information risks, strengths and weaknesses statement and Final assurance planMarch 2020

wessexwater.co.uk

Introduction 2

Background and context 3

Our assurance framework 5

Process for identifying risks, strengths and weaknesses 6

Target areas 8

Final assurance plans for target areas 13

Assurance statement 18

Next steps 18

Contents

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Introduction

Who we areWe provide water and sewerage services to more than 2.8 million customers in the south west of England. Ouroverall mission is to provide outstanding sustainable water and environmental services.Our customers’ priorities are always our starting point. Their service expectations continue to grow and theinformation we provide is a key part of ensuring we do the right thing for them and our stakeholders.

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About this documentProviding information to our customers and stakeholders that is transparent, easy to understand, complete andaccurate is one of our core values and is essential to building trust and confidence in the services we provide.Equally important is that we meet our performance commitments and deliver real improvements, keeping upwith customers’ changing needs.This document sets out our assessment of the potential risks, strengths and weaknesses that could affect theinformation we publish and the governance and assurance processes we have put in place to support ourreporting. We published our draft assurance plan for consultation in November 2019 and feedback fromstakeholders is reflected in this final plan.

Wessex Water MarketplaceWe thrive on doing things differently and our vision and future plans depend on embracing change. So, we haveintroduced the Wessex Water Marketplace to share our outcomes and data, championing new ideas from withinWessex Water and from outside. This will inspire innovation and encourage collaboration to deliver the bestvalue for our customers and the environment.We’ve introduced an online platform to interact with wider markets, and we will operate and procure solutionstransparently, working with other providers where we can to develop sustainable answers to our challenges. Asa private company delivering essential public services, we want the way that we deliver to add much wider valueto society.The Wessex Water Marketplace is our next step on this journey, and we hope you will join us by bringing ideasand solutions that continue to improve services for current and future generations. Take a look at what’s goingon in the Wessex Water Marketplace at marketplace.wessexwater.co.uk

Where we work

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Background and contextOfwat introduced the company monitoring framework (CMF) in 2015 to encourage companies to carry out high-quality assurance of the information they provide to customers and other stakeholders. The framework looks attwo aspects of company assurance:• data assurance activities that companies use in relation to the information they produce • how companies are communicating information to ensure that this is clear, accessible and transparent, and

gives a fair view of how they are performing.

Historically, Ofwat has carried out an annual review to categorise companies in one of three assurancecategories: self-assurance, targeted or prescribed. Along with most other water companies, we were assessedas targeted in Ofwat’s most recent assessment here.

Ofwat is evolving its approach to performance monitoring and, in the meantime, will not publish furtherassessments under the CMF. All companies must meet the following requirements as a minimum.

Element Requirement

Assurance statement • Board sign-off of compliance with all relevant statutory, licence andregulatory obligations, and the steps being taken to manage and/ormitigate risks

Risks, strengths andweaknesses

• Carry out an exercise with stakeholders to target issues to be addressed• Publish a risks, strengths and weaknesses statement

Assurance plans • Publish and consult on draft assurance plans to resolve the issues identified• Publish a final assurance plan

Other requirements • Provide transparency on audit procedures regarding data assurance• Provide a summary of the outcome of data assurance carried out

This document covers the assurance statement, the risks, strengths and weaknesses statement and our finalassurance plan.

Southern Water investigationAn investigation launched by Ofwat and the Environment Agency into Southern Water, identified seriousproblems of deliberate misreporting of waste water compliance data. This appears to have gone on for severalyears and resulted in Southern Water reporting better compliance than was actually the case. It has agreed topay a penalty totalling £126 million and criminal prosecutions may follow.

As a result of these findings, all water companies were asked to review their own processes and systems.We have carried out an extensive internal review and also have results from recent Environment Agency audits.We have found no evidence whatsoever of any similar problems within Wessex Water.

However, that does not mean we can be complacent. The board has considered the reports and agreed someminor changes, including the extension of the company’s annual certification process. They also agreed that weshould give greater internal publicity to our whistleblowing policy.

Our chief executive officer has written to all employees to make it clear that we need to maintain openness,transparency and complete honesty in all our reporting,both externally and internally.

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Document structureThe remainder of the document is structured as follows.

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Our assuranceframework

Describes ourbusiness riskassuranceprocesses and ourRegulatoryAssurance Manual.

Explains how weidentify the issues tobe addressed.

Details progress wehave made inrelation to theissues weidentified last yearand the new targetareas we haveidentified.

Sets out theactions to manageor mitigate therisks in the targetareas.

Confirms that thecompany hascomplied with all itsrelevant statutory,licence and regulatoryobligations and istaking appropriatesteps to manageand/or mitigate therisks it faces.

Highlights how youcan get in touch tolet us know yourthoughts on thisdocument and ourapproach toreporting on ourperformance moregenerally.

Process foridentifying risks,strengths andweaknesses

Target areas Final assuranceplans

Assurancestatement

Next steps

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Business risk assurance mapOur overall approach to assessing and managing business risk is governed by our business risk assurance map.This is based on a first, second and third level of defence framework and is published on our website here.

Regulatory Assurance ManualWe maintain a Regulatory Assurance Manual (RAM) to help ensure we provide the appropriate level ofgovernance and assurance to all the information we provide. The manual provides a system for thecompilation of information or data based on the principles of ISO9001 and includes the data flows and theprocess for internal certification of data.The responsibilities detailed in the RAM include both assurance and information provider roles. The assuranceroles are the Wessex Water Services Limited (WWSL) board, the Audit and Risk Committee, external technicaland financial auditors and our internal audit team. The information provider roles are originators, compilers,owners and reviewers. Each of these roles has responsibilities for certain elements of our data andinformation provision. Our RAM is reviewed and updated on an annual basis and is published on our website here.

Board governanceBoard ownership is key to providing a strong assurance process. The board owns and assures all regulatorysubmissions, supported by the Audit and Risk Committee and our executive leadership team (ELT).

External technical and financial auditorsOur external technical auditors independently check and assure all our regulatory submissions including ourAnnual Performance Report (APR) and charges schemes. Our financial auditors perform a separate and well-established audit of the financial and regulatory accounts. We also gain additional specialist advice whereneeded.

ResponsibilitiesOur executive leadership team (ELT) monitor performance and risk and report to the board. Individuals compiling data are responsible for their calculations and processes. Regulatory submissions havedefined originators, compilers, owners and reviewers. Method statements and process diagrams are used tosupport the reporting and assurance process.

Our assurance framework2

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The main aim of this risk assessmentprocess is to identify both risks to thereliability and accuracy of the data weprovide to customers, and areas where wecan improve. Our process is based on threemain elements:• internal risk review• feedback from independent external

assurance • direct and indirect engagement with our

customers and other stakeholders.

Internal risk reviewWe use an information risk register to assessand monitor the risks associated with theprovision of reliable and accurateinformation to our customers and otherstakeholders. We consider the five types ofinformation identified in our RegulatoryAssurance Manual – see diagram.

Direct tocustomers

Informationto promote

competitionand markets

Regulatorysubmissions

andpublications

Financial reporting

Otherregulatoryreporting

Information we provide

The information risk register currently includes our AMP6 performance commitments and the AMP7performance commitments that we will report in our 2019-20 Annual Performance Report. Each year, weconsider whether any new items should be included, if any are no longer relevant and whether the impact orlikelihood have changed. For example, in 2019, we launched the Wessex Water Marketplace, the hub for the‘open system’ approach that we set out in our business plan for 2020-25. Our Marketplace approach will enableus to share the challenges we face with the market in an open question rather than asking for a price for a pre-determined solution. We have added this to our information risk register. We assess the likelihood of databeing misreported using the definitions below.

Category Score Description

Very high 5 It is almost certain that the event will occur if the situation continues as it is

High 4 It is very likely that the event will occur if the situation continues as it is

Medium 3 It is foreseeable that circumstances may exist which result in the event occurring

Low 2 It is unlikely that circumstances will combine to result in the event occurring

Very low 1 It is most unlikely that the event will occur/it would require exceptional conditions

Process for identifying risks, strengthsand weaknesses

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We assess risk impact in relation to the following categories.1 Financial, investor and commercial.2 Customer/service.3 Environmental/sustainability.4 Public health, safety and security.5 Legal and regulatoryWe score risk impact on a scale of 1 (low) to 5 (high) and combine the impact and likelihood scores to give anoverall risk score. We categorise the overall risk as low, medium or high using the following definitions.

Target areas include those where the overall risk is assessed as medium or high. For our target areas, weidentify actions to mitigate the likelihood and reduce the overall risk. We record any mitigating actions on anaction log with an assigned owner and target completion date.

Independent external assuranceFor this plan, we have considered feedback from the external technical assurance on the followingsubmissions:• 2018-19 Annual Performance Report• PR19 draft determination representations • draft and final 2019-20 charges.

Engagement with customers and stakeholdersOur engagement with customers takes a variety of forms. From taking feedback on calls, conducting surveys,live chat via our website and have your say panels, to the Wessex Water Partnership (WWP), we are activelylistening to what our customers say about our performance. We invite customers to respond to ourconsultations and have their say on this document to ensure their views are being considered.In addition to engaging the WWP on the process for fulfilling our obligations under the company monitoringframework, we provide copies of our Information, risks, strengths and weaknesses statement and assuranceplans. We also hold a separate meeting with the WWP on delivery of our performance commitments. We have engaged with the following stakeholders throughout the year: • Wessex Water Partnership (WWP)• Consumer Council for Water (CCWater)• Drinking Water Inspectorate (DWI)• Environment Agency (EA)• Market operator (MOSL) and retailers• Ofwat• developers.

Risk rating Risk score

Low Between 1 and 8

Medium Between 9 and 14

High Greater than or equal to 15

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Issues we identified last yearIn our 2018 assurance plan we identified 16 areas with specific actions to improve the quality of information weprovide to customers and other stakeholders. We grouped these as follows:• PR19 Business Plan• Annual Performance Report• performance commitments• other stakeholder information• assurance frameworkWe identified actions associated with each target area. Our progress is summarised below. We have retained sixof the areas as target areas because actions are ongoing or further actions are required.

Progress against previous actionsTarget area Action Progress

PR19 Business Plan

Initial assessment of plans Resubmit parts of our business plan and provideadditional information to Ofwat, following our fullexternal assurance and board governance processes.

Complete

Provide a restated and compliant board assurancestatement (some areas).

Complete

Provide an updated financial model with appropriateassurance to ensure data is consistent and accurate.

Complete

Draft determinationrepresentations

Submit representations on draft determination,following our full external assurance and boardgovernance processes.

Complete

Annual Performance Report

Section 1 – Regulatoryfinancial reporting

Allow additional time to prepare the data.Introduce additional checks and oversight, particularlyfocusing on previous errors.

Complete

Section 2 – Price controland additional segmentalreporting

Review and update reporting documentation.Introduce additional checks, particularly focusing on datawhere estimates are required.

In progress. Retained asa target area

Section 4 - Additionalregulatory information

Introduce additional checks, particularly focusing onprevious errors and areas where estimates are required.Ensure reporting documentation remains current in thelight of any changes to reporting rules.

In progress. Retained asa target area

Target areas4

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Target area Action Progress

Annual Performance Report (continued)

Wholesale costassessment submission

Further improve the reporting documentation. Work to increase the completeness of the data andintroduce additional checks focusing on previous errorsand areas where estimates are required.Provide more detailed commentary, highlightingvariances from the prior year’s data and changes toreporting methodology in accordance with best practice.

Complete

Long-term viabilitystatement

Consider the feedback from Ofwat in developing thestatement for the 2019-20 financial year.

Complete

Performance commitments

B4 Compliance withabstraction licences

Review our approach in collaboration with theEnvironment Agency and their processes for assessingcompliance in order to corroborate any judgementsmade.

Complete. Removed as atarget area.

B6 BAP landholdingassessed and managed forbiodiversity

Audit as part of our 2019-20 internal audit programme.Introduce additional checks prior to reporting.

Complete. Auditfindings supportremoval as a targetarea.

Water supply interruptions– minutes lost (shadowreporting)

Audit as part of our 2019-20 internal audit programme. Complete

Volume of water leaked(shadow reporting)

Implement a number of technical actions to finalise themeasure.

In progress. Retained asa target area.

Other stakeholder information

Drinking Water Safety Plan(DWSP) assessments

Work with the DWI and LRQA for formal accreditation ofour DWSP assessment process.

In progress. We hope toapply for accreditationin 2020. Removed as atarget area.

Developer Services –charging arrangements

Continue to improve our explanation of how charges arederived.

In progress. Retained asa target area.

Developer Services –routine enquiries

Extend online system for household development todevelopment companies during 2019-20. Implement post-project reviews to confirm costs at amore detailed level.

In progress. Onlinesystem extended todevelopmentcompanies. Work iscontinuing to furtherimprove recording ofcosts at a more detailedlevel. Overall riskreduced to low.Removed as a targetarea.

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Target area Action Progress

Assurance framework

Regulatory AssuranceManual

Review Regulatory Assurance Manual and update asrequired.

Complete for 2019.Retained as a target area.

Method statements Improve reporting documentation for AnnualPerformance Report – Section 2 – Price control andsegmental reporting and Wholesale cost assessmentsubmissionReview method statements as part of auditprogramme.

In progress. Retained as atarget area.

Source data Continue our ongoing focus on all core dataDelve deeper into source data as part of 2019 AnnualPerformance Report external assurance.

In progress. Retained as atarget area.

Internal risk reviewThrough the internal risk review process described in Section 3, we identified six new areas to target. Theseinclude areas where the overall risk is assessed as medium or high as well as where there is evidence of historicalerrors. The new target areas identified are listed below.• Collapses and bursts on the sewer network.• Interruptions to supply (outcome delivery incentive).• Outcome delivery incentives.• Waste water pollution incidents.• Flow compliance.• Water recycling centre compliance.

As detailed in the table above, we also retained the following as target areas:• Section 2 and Section 4 of the Annual Performance Report• Regulatory Assurance Manual.Further detail is given in Section 5.

External technical assuranceOur external technical assurers made a number of recommendationsfollowing their assurance of the 2018-19 Annual Performance Report. Wehave identified the following as new target areas through this process:• implementation of new billing system (Falcon)• waste water pollution incidents.We have also retained method statements, source data and volume of waterleaked as target areas as a result of the external technical assuranceprocess.

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Engagement with stakeholders and customers Wessex Water Partnership (WWP): the WWP was established in January 2016 with an independentchair and diverse membership representing various customer and stakeholder groups. One of its key roles is toreview and challenge our 2020-2025 Business Plan, specifically that it has been developed using soundcustomer engagement and that it reflects customers’ needs and priorities, and their willingness to pay for them.Some specific comments in the WWP report on our PR19 Business Plan include:“Engagement has been two-way and transparent and there has been good use of innovative customer researchtechniques, mainly associated with digital media, web-based tools involving gaming and virtual reality and theengagement of future customers including the use of a Young People’s Panel. Participants were provided withaccurate and sufficient information on the company’s current performance relative to its peers.”“As a result of its work, the Partnership considers overall that the company’s Business Plan is grounded in goodcustomer engagement. There is strong evidence that customers have been involved in the shaping of thecompany’s strategic objectives. The company has developed a good understanding of its customers’ priorities,needs and valuations. Its Business Plan includes service outcomes that customers have said they value andprioritise and at a price they find affordable. It also includes a commitment to meet all its statutory andregulatory obligations.”The WWP has since responded to both the initial assessment of plans and the draft determination, in both casesreferencing our customer engagement.

Consumer Council for Water (CCWater): CCWater has confirmed they remain very satisfied with ourengagement with them and have no concerns with the quality and timeliness of information we have providedduring the year. CCWater recently published their year-end report on complaints and enquiries. This confirmed that we have,again, the lowest number of complaints and enquiries of any water and sewerage company in the country.

Drinking Water Inspectorate (DWI): we have maintained a positive relationship with the DWI over thepast year. We provide monthly as well as annual data submissions and continue to work with them to ensure theinformation that we submit is in line with regulatory requirements. We have met regularly with our liaison inspector where discussions included progress with our programme oflegal instrument notices, audit outcomes and actions following events and compliance failures. We proactivelyengage the DWI in discussions on event notification criteria where guidance is not clear, to ensure our policiesand procedures are in line with their expectations. We remain in the top third of companies on the Event RiskIndex (ERI) and are the leading water and sewerage company for the Compliance Risk Index (CRI).

Environment Agency (EA): the EA has not raised any significant issues about general data reporting andwe continue to have an excellent relationship with them. We have had regular constructive dialogue with the EAon the provision of water and waste water quality data. We achieved a ranking of ‘good’ in the EA’s Environmental Performance Assessment for 2018. However, ournumber of pollutions and our self-reporting of pollutions were highlighted as areas for improvement. To addressthis, we have set up a team dedicated to training the wider business and responding to pollution incidents asquickly as possible.

Market operator (MOSL) and retailers: the success of the retail market relies in part on the quality ofdata so participants can make accurate and timely decisions. Since market opening our data has consistentlybeen among the top of the industry in transactions completed first time (upper quartile performance for marketperformance standards in 2017-18 and 2018-19) and we have never been subject to an initial performancerectification plan. MOSL’s annual market performance operating plan retains data quality as a key area of focusfor trading parties. MOSL has no concerns about our response to requests for information. We continue tomanage minor data corrections through business as usual processes, alongside proactive and collaborativeworking with retailers to ensure our data is accurate and fit for purpose.

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Ofwat: Ofwat is evolving its approach to performance monitoring and, in the meantime, will not publishfurther assessments under the company monitoring framework (CMF). In the 2018 CMF assessment, ourassurance plan ‘met expectations’. Ofwat assessed the assurance plans of six companies as ‘exceedsexpectations’. The key positive areas were:• high level of detail on planned assurance activities • use of non-technical/accessible language• the context/purpose of the plan is explained • inclusion of detail on the assurance framework and assurance mechanisms • changes between years are highlighted • proactive engagement with stakeholders.We have adopted these elements of best practice in our assurance plan. We have also considered feedback fromOfwat through the query process on our 2018-19 Annual Performance Report.

Developers: we have run several sessions with developers, both in relation to our new chargingarrangements and to encourage dialogue about our services overall. These sessions have been veryconstructive. Developers are broadly very positive about our information provision and we ranked near the topof the developers’ measure of experience pilot survey.As a result of our engagement with stakeholders and customers, we have retained developers’ chargingarrangements as an area to target. In addition, we identified waste water pollution incidents as a new targetarea. This was also identified from the internal risk review and external technical assurance feedback.

Current target areasOverall, we have identified 14 target areas through the information risks, strengths and weaknesses process.These are detailed in the table below.

Further details on the specific actions to manage or mitigate the risk(s) in each target area are given in Section 5.

Target area Status

New billing system New

Volume of water leaked Existing

Collapses and bursts on the sewer network New

Developers charging arrangements Existing

Regulatory Assurance Manual Existing

Outcome delivery incentives

Outcome delivery incentives (ODIs) New

Interruptions to supply ODI New

Compliance

Water recycling centre compliance New

Flow compliance New

Waste water pollution incidents New

AMP7 Performance commitments

Source data Existing

Method statements Existing

Annual Performance Report

APR Section 2 – Price control and segmental reporting Existing

APR Section 4 – Additional regulatory information Existing

New billing systemReason for targeted statusIn 2020-21 we intend to introduce a new billing system to the business. Thisbrings with it all the risks inherent in delivering a major IT programme,particularly one with large amounts of customer data. The new billing system will not alter the way customers communicate with usor the way we communicate with our customers. It will, however, make thosecommunications more effective and efficient.The information risks associated with introducing this new system includeareas such as data migration, reporting and systems integration.

Ongoing or planned assurance activityA full programme team is in place, with clear plans, regular reporting and itsown risk and mitigation procedures. The programme is run with a stronggovernance process and split into a number of workstreams, each of which also reports using the samegovernance procedures.Each workstream considers its key deliverables, which have been clearly set out, and is reviewed fortnightlywith a RAG (red, amber, green) status, commentary on trends and reasons for changes in status as well as plansfor getting back to green if any milestones slip.

Volume of water leakedReason for targeted statusWe recognise that leakage is a very important area to our customers and other stakeholders. We have a currentperformance commitment on leakage, and it is also one of the performance commitments for 2020-2025 thatwe are currently reporting against a common industry definition (shadow reporting). In the internal review we carried out for the 2018 risks, strengths and weaknesses exercise, we identifiedreporting of the leakage shadow measure as high risk linked to the new reporting method. We considered thatthe risk would reduce to medium once the new method was fully implemented as the likelihood of inaccuratereporting would decrease. We adopted the recommendation made by our technical auditors following the 2018-19 APR to implement theremaining technical actions to finalise the measure. These actions include a review of unmeasured non-household consumption and other water used in the top-down calculation, and improvements to estimatinghousehold night use, non-household night use and trunk main leakage. These technical actions feed intoachieving ‘Green’ in the 76 assessment components for shadow reporting, which indicates full implementationwith robust data. Several actions are underway to achieve green status for the remaining amber components. One of therecommendations from the external technical assurance from 2018-19 APR was that we: “Continue to prioritiseshadow leakage reporting in time for implementation in April 2020”. We have, therefore, revised our assessmentto medium risk. Ongoing or planned assurance activity• During 2019-20 we carried out an external technical audit of the methodology for the industry-wide

measure. We will adopt the recommendations made.• The data for both the AMP6 and AMP7 performance commitment will be signed off by the originator, compiler,

owner and reviewer as part of the certification process for the 2019-20 Annual Performance Report.• Reporting of our performance in this area will be reviewed by the Wessex Water Partnership.• The data will be subject to external assurance for the 2019-20

Annual Performance Report by our external technical auditors. • The 2019-20 Annual Performance Report will be signed off by

the board in accordance with our business risk assuranceframework.

Final assurance plans for target areas5

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Collapses and bursts on the sewer network Reason for targeted statusDuring compilation of the 2018-19 Annual Performance Report, we identified an error in reporting of thecollapses and bursts on the sewer network performance commitment. In our 2014 final determination, themeasure is defined as a rolling five-year average. In 2015-16, 2016-17 and 2017-18, we reported in-yearperformance rather than the five-year rolling average. As a result, we had to restate prior year numbers for2015-16, 2016-17 and 2017-18 in our 2018-19 Annual Performance Report (APR). We included the following in our APR commentary:

We explained the change to the Wessex Water Partnership (WWP) at the time. The updated values were subjectto external technical assurance by Mott MacDonald prior to submission of the 2018-19 APR.

Ongoing or planned assurance activity• Our internal audit team carried out a review to understand the root cause of the reporting issue and actions

we can take to reduce the risk in future. We have adopted the recommendations made, which relate tomethod statements, resources and how we work with our external technical auditor to share information onrisks.

• The data will be signed off by the originator, compiler, owner and reviewer as part of the certification processfor the 2019-20 Annual Performance Report.

• Reporting of our performance in this area will be reviewed by the Wessex Water Partnership.• The data will be subject to external assurance for the 2019-20 Annual Performance Report by our external

technical auditors.• The 2019-20 Annual Performance Report will be signed off by the board in accordance with our business risk

assurance framework.

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Sewer collapses – Previous reporting in AMP6 has been against our annual performance. However, theperformance commitment definition in our final determination requires reporting against a rollingfive-year average. We are therefore restating previous years’ figures on this basis, as shown below. Theupdated figures do not change our reward/penalty position in any year as all remain better than ourperformance commitment level. Our annual figures have been reported accurately for all years and are notbeing changed.

The reported figure for 2018-19 is 257. The target is set at 300 throughout 2015-20. This represents thelevel above which we could have incurred an underperformance penalty payment during the period 2010-15 from Ofwat. For every collapse/burst over 300 in a given year we will refund customers £8.4k.In 2018-19 we had 248 collapses and bursts, and while weather conditions were favourable in the yearwe do anticipate achieving the target for 2019-20.

2015-16 2016-17 2017-18

Restated figures (five-year average) 271 276 264

Previously reported figures (in-year) 282 264 223

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Outcome delivery incentives (ODIs)Reason for targeted statusWe have combined water supply interruptions – outcome delivery incentive – and outcome delivery incentivesinto a single target area. Performance against our regulatory targets (performance commitments) and outcome delivery incentives is ahigh priority for customers. Where performance commitments have ODIs, this means we can earn financialrewards or penalties depending on our performance. This directly affects customer bills. Our customer andwider stakeholder research help to shape the level at which ODIs are set. Following an Ofwat query on our 2018-19 APR, we were required to submit updated ODI values for performancecommitment D3: Water supply interruptions. We incorrectly applied the underperformance incentive rate(£41,900) to calculate the 2018-19 actual and 2019-20 forecast outperformance payment values. Thepayments were restated using the appropriate incentive rate (£6,400). The reported and restated figures aredetailed in the table below.

*£m, 2012-13 prices

Ongoing or planned assurance activity• The data will be signed off by the originator, compiler, owner and reviewer as part of the certification process

for the 2019-20 Annual Performance Report.• Reporting of our performance in this area will be reviewed by the Wessex Water Partnership.• The data will be subject to external assurance for the 2019-20 Annual Performance Report by our external

technical auditor• Our Internal audit team carried out a review to understand the root cause of the reporting issue and actions

we can take to reduce the risk in future. We have adopted the recommendations made, which relate tomethod statements, resources and how we work with our external technical auditor to share information onrisks.

• The 2019-20 Annual Performance Report, including the ODIs, will be signedoff by the board in accordance with our business risk assurance framework.

2018-19 2019-20

Performance level 5.9 8.0

PCL met? Yes Yes

ODI value (reported)* 0.2259Outperformance

0.1676Outperformance

ODI value (restated)* 0.0390Outperformance

0.0256Outperformance

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ComplianceReason for targeted statusThis area includes water recycling centre (WRC) compliance, flow compliance and waste water pollutionincidents. We have been reporting data against these measures for a number of years. WRC compliance andwaste water pollution incidents are also measures within the EA’s Environmental Performance Assessment(EPA). The EPA is one of our current performance commitments (PCs). The individual measures and the EPA areincluded on our information risk register. They have not previously been identified as a target area. Following the Southern Water investigation detailed in Section 1, we carried out an internal audit to investigatewhether or not similar circumstances existed or could exist within Wessex Water. This concluded that there wasno evidence whatsoever of collusion between operational staff and samplers at Wessex Water and that thereare satisfactory processes and procedures in place. We have carried out briefings for operational and samplingstaff and will continue to focus on this high priority area.We assessed the risk for each measure in relation to both a systemic issue and the behaviour of a lone individual.We consider the potential risk for waste water pollution incidents to be medium where the potential impact ishigh, but the likelihood is low. We achieved a ranking of ‘good’ in the EPA for 2018. However, our number of andself-reporting of pollutions were highlighted as areas for improvement. We have set up a team dedicated totraining the wider business and responding to pollution incidents as quickly as possible including through moreproactive identification of events.Overall, we consider the risk of misreporting against WRC compliance and flow compliance to be low. Weassessed the potential impact of misreporting as high but the likelihood of a systemic issue as very low. Weconsider the likelihood of an individual causing data to be misreported to be higher than for a systemic issue butthe impact to be lower.

Ongoing or planned assurance activity• Water recycling centre and flow compliance are both subject to annual audit by the EA as part of the operator

monitoring assessment. We are awaiting the final report from the Environment Agency following their auditin October 2019.

• Flow compliance is certified on an annual basis as part of the external audit carried out by Sira. We areawaiting the results of the most recent audit carried out in January 2020.

• The EPA performance commitment will be signed off by the originator, compiler, owner and reviewer as partof the certification process for the 2019-20 Annual Performance Report.

• Reporting of our performance in this area will be reviewed by the Wessex Water Partnership.• The data will be subject to external assurance for the 2019-20 Annual Performance Report by our external

technical auditors.• The 2019-20 Annual Performance Report will be signed off by the board in accordance with our business risk

assurance framework.

AMP7 performance commitmentsReason for targeted statusIn the internal review we carried out for the 2018 risks, strengths and weaknesses exercise, we identifiedmethod statements and source data as target areas. The external technical assurance of our 2017-18 AnnualPerformance Report recommended we continue to develop our method statements, including improving versioncontrol. One of the recommendations from the external technical assurance from 2018-19 APR was that wefinalise method statements for the AMP7 performance commitments.As highlighted in our 2018 assurance plan, we have established an information management steering group tofurther improve the way in which we manage and use information across Wessex Water. A core workstream ofthis group is reporting of AMP7 performance commitments, particularly focusing on source data. We have,therefore, combined method statements and source data into a single target area.

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Ongoing or planned assurance activity• We have carried out a mid-year external technical audit of the methodology for the common AMP7

performance commitments and will adopt the recommendations made. • The data will be signed off by the originator, compiler, owner and reviewer as part of the certification process

for the 2019-20 Annual Performance Report. • Reporting of our performance in this area will be reviewed by the Wessex Water Partnership. • The data will be subject to external assurance for the 2019-20 Annual Performance Report by our external

technical auditor.• The 2019-20 Annual Performance Report will be signed off by the board in accordance with our business risk

assurance framework.

Annual Performance Report Reason for targeted statusWe have combined the target areas Section 2 - Price control and segmental reporting and Section 4 – Additionalregulatory information into this area as they are closely linked.In our internal risk review, we continue to assess the risk associated with reporting inaccurate data in section 2and section 4 of the APR as medium. The weaknesses identified in our review include:• some cost data comes from other systems aside from the general ledger• some management estimating is required• reporting documentation should be reviewed and updated• a small number of previous errors identified through the Ofwat query process. Historically, we used our Capital Programme Management (CPM) system to report data in both sections. We arenow using new functionality within our corporate financial system (Agresso), which will enhance our ability toreport this data. We are currently monitoring and reviewing the new system. We have therefore retained ourassessment of medium risk until this is fully implemented, and we have acted to mitigate the other weaknesseswhere possible. Ongoing or planned assurance activity• We will continue to review and update the reporting documentation.• We will introduce additional checks prior to reporting, particularly focusing on previous errors.• The data will be signed off by the originator, compiler, owner and reviewer as part of the certification process

for the 2019-20 Annual Performance Report. • The data will be subject to external assurance for the 2019-20 Annual Performance Report by our technical

and financial assurance providers.• The 2019-20 Annual Performance Report will be signed off by the board in accordance with our business risk

assurance framework.

Developers charging arrangementsReason for targeted statusIn 2017-18 we consulted on changes to Developer Services charging arrangements for 2018-19. We received anumber of useful comments which shaped our final charges. CCWater highlighted that they would haveappreciated advance notice of the consultation, which was published on our website. In the 2018 companymonitoring framework assessment, Ofwat identified minor concerns with our engagement on charging. Theyhighlighted that there was a lack of proactive engagement and longer-term documentation of changes to ourcharges. As a result of this feedback, we identified an action to continue to improve our explanation of howcharges are derived and have retained this as a target area to ensure we continue this focus.

Ongoing or planned assurance activityWe have committed to ensure that CCWater are fully incorporated into our stakeholder consultations and havefully engaged with them in formulating our 2020-21 charges. We met with stakeholders in the developer community through the year including a ‘Developers Day’ in October2019. We took the feedback from these sessions into account when reviewing our charging proposals. In November 2019 we consulted on key changes to our new connection charging. This was published on ourwebsite here and emailed to key stakeholders. We received a number of responses to the consultation and havetaken these on board. We will use this feedback when setting our charging strategy in future years.

Regulatory Assurance ManualReason for targeted statusWe review our Regulatory Assurance Manual (RAM) on an annual basis and have therefore retained this as atarget area. We have updated the previous version to align more closely with our business risk assurance framework asdescribed in Section 2. For the review we will carry out in 2020-21, we will consider whether any changes are required to reflect thenew AMP period, including any change to Ofwat requirements.

We welcome any comments you may have on this document or our approach to reporting on our performancemore generally. Please let us know your thoughts.

This Information risks, strengths and weaknesses statement and final assurance plan has been reviewed andassured by the Wessex Water Audit and Risk Committee, which includes all the independent non-executivedirectors of the company board. The company pays close attention to its data quality and verification proceduresand has a detailed assurance manual setting out the process for assuring all its data. The Audit and Risk Committee confirms that on the basis explained below, the company has complied with all itsrelevant statutory, licence and regulatory obligations and is taking appropriate steps to manage and/or mitigatethe risks it faces. The committee confirms it is satisfied it has the appropriate assurance processes in place and,based on these processes, endorses this assurance statement and states, to the best of its knowledge andbelief, the information produced is accurate, reliable and complete in all material respects.

Assurance statement6

Next steps7

Your feedback is important to us soplease get in touch. You can email us at:assurance@wessexwater.co.uk

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