Business Stream may need between £47m and £88m in financial support over the next two years due to the impact of Covid-19 on the businesses it serves.
That was the conclusion of the Auditor General’s 2019/20 audit of Scottish Water. Modelling low, mid and worse case scenarios on customer bad debt found the retailer could – though there is no certainty at present – need support equivalent to 9-18% of 2019/20 operating income.
The Auditor General reported that the Scottish Water board has agreed to provide support, including a contingency allowance of £30m on the estimates of financial support Business Stream may require; an additional equity injection of £10m; and a loan facility sufficient to meet the level of financial support forecast. The loan facility, which will come from Scottish Water’s group cash holdings, will only be drawn down if it is required. This will not affect Scottish Water’s delivery of its infrastructure investment programme.
Business Stream chief executive, Jo Dow, said: “There is no certainty that additional financial support will be required but as a responsible business we have taken a precautionary approach to ensure that the right measures are in place should they be needed. The ongoing Covid-19 pandemic and containment measures are presenting unprecedented challenges to businesses and the wider economy across the UK and we are not immune to these challenges.
“Our customer base includes business customers across the UK, many of whom have been directly impacted by the restrictions. We remain committed to supporting our customers, having already introduced a wide range of measures to help ease the financial burden on them. We are fortunate that our underlying business is strong, but there is no doubt that the year ahead will be challenging for us and many other businesses as we respond to the economic after effects of the pandemic – and its therefore right that we put in place measures to help protect the future resilience of our business.”
According to the audit, Business Stream reported income of £372m and operating costs of £372m in 2018/19, resulting in an operating profit of £0.3m. The figures for 2019/20 were income of £478m and operating costs of £492m, leading to an operating deficit of £14m. The increase in income and costs in 2019/20 is largely a consequence of Business Stream's expansion into the English retail market, with the costs also including a provision of £13m for doubtful debts arising from Covid-19.
Anglian a year ahead on climate adaptation reporting and makes A-list on sustainability
Anglian Water has submitted its final climate change adaptation report to Defra a year ahead of the reporting deadline, making it one of the first companies in the UK to set out how it is preparing for the impacts of climate change in the latest round of reporting under the Climate Change Act.
The report detailed the actions Anglian Water has already undertaken to prepare for climate change related challenges and set out the company’s plans for substantial further investment over the next five and 25 years. These adaptation activities will be delivered alongside Anglian Water’s commitment to become a net zero carbon business by 2030.
Anglian said this was also its first Adaptation Report to include a description of some of the climate transition risks that arise from the process of adjusting to a lower-carbon economy; in particular, the financial risk and opportunity associated with securing investment and managing its energy and carbon costs.
Separately last week, Anglian was recognised for its leadership in corporate sustainability by the Carbon Disclosure Project (CPD), securing a place on the prestigious ‘A list’ for its approach to tackling climate change. The company was recognised for its actions to cut emissions, mitigate climate risks and develop the low-carbon economy, based on the data it reported through CDP’s 2020 climate change questionnaire.
CCW: Castle Water was “largely responsible” for Summer complaints spike
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CCW has laid the blame for a rise in complaints from business customers over the summer largely at the door of Castle Water.
Publishing its latest quarterly figures, the customer watchdog said: “Complaints made by Castle Water customers to CCW tripled between July and September compared to the previous three months with the retailer largely responsible for the rise in overall disputes during the second quarter of the year.”
CCW received a total of 1,252 business customer complaints during the first six months of 2020-21 (April - September) – with more than 80% relating to billing problems. Despite the Q2 rises on Q1, the 2020-21 half year figures improved compared with Q1&2 2019-20 (see chart).
The watchdog pointed out that the reopening of some commercial premises over this summer coincided with a 42% rise in complaints to CCW between July and September after a relatively quiet first quarter. “Many of these were from customers who returned to discover estimated water bills that did not reflect their usage.” Moreover it said July and August also saw a sharp increase in disputes over the recovery of water debt – “particularly from customers of Castle Water” – at a time when retailers were being urged by CCW and regulators to support businesses on the road to recovery.
CCW praised Water2Business for retaining its position as one of the market’s best performers, and First Business Water which did not generate a single complaint to CCW this summer.
CCW has pressed for a Customer Protection Code of Practice change to better protect closed businesses from debt recovery activity, and said it had been active with Ofwat over the summer in ensuring Covid-impacted customers get support.
Ofwat continues Thames business retail investigation but under Water Industry Act
Ofwat has transferred part of its Competition Act 1998 investigation into Thames Water’s activities in the business retail market to a new investigation being undertaken under the Water Industry Act 1991. It said the Competition Act was not the most appropriate tool to address issues of data accuracy and management resourcing.
Ofwat is considering whether Thames has breached and/or is in breach of:
• Condition R2 (as was) of its licence, by failing to ensure that the data that it collected and uploaded into CMOS ahead of market opening was sufficiently accurate to enable the effective functioning of the business retail market.
• The requirements of the Market Terms of the Wholesale Retail Code, by failing to maintain accurate data and correct known data errors within CMOS.
Condition P (previously Condition F) of its licence, by failing to ensure that it has in place adequate management resources and systems of planning and internal control to enable it to carry out its regulated activities.
Under sections 18-22A of the Act, Ofwat can issue an enforcement order and may impose a financial penalty for a licence breach. Under sections 66DA(4) and 117F(4) of the Act, it may issue a direction to take action to return to compliance with the Wholesale Retail Code.
Water Resources West launches online collaboration platform
Regional water planning group Water Resources West has launched ‘IdeaStream’ – an online collaboration platform which will allow people to get involved in consultations and plans to shape the future of water resources across the North West, the Midlands and the cross-border catchments with Wales.
Richard Blackwell, director of Water Resources West, explained: “Making sure we have a sustainable and resilient future for our water resources is incredibly important. We estimate that the region will need over 200 million litres of additional water per day by 2050 – that’s over and above what we use now and it has to come from somewhere. This means that we must work together to find new opportunities to meet these needs. And this is what IdeaStream is all about.”
Take a water saving pledge with Waterwise in January
Waterwise is calling on everyone to save 2,021 litres over January 2021 in its new campaign.
Running 4-31 January, participants who take the pledge will receive a short email each day with a specific but easy-to-implement action, like timing a shower, having a meat-free day, or ordering a free water-saving gadget from their water company. Waterwise is also encouraging people to share their reasons for taking the pledge with the hashtag #ISaveWaterBecause.
The pledge idea was inspired by and developed with Northumbrian Water.
Sign up at waterwise.org.uk/pledge-2021
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