Excerpts from THE WATER REPORT
January 2021 issue 67
FULL STORIES AVAILABLE ONLY IN THE MAGAZINE IN PRINT AND PDF
On the Articles change, he comments: “I think of this as articulating the culture in the strategy…the culture of the business is already socially focused, looking after the vulnerable, looking after the environment. The guys and girls on the ground, that’s what they’re doing all the time.”
Second, late last year ESG benchmarking specialist GRESB named South East Water as the global water sector leader on environment and social governance. Hinton says the process of reviewing progress against these global standards has been an important part of the company’s responsible business strategy; it has been submitting evidence for a GRESB assessment for four years and climbing up the scoring system. This has been managed by a Responsible Business Steering Group comprised of people from across the business as well as the supply chain and other partners.
Ofwat thinks its role as "potentially operating across the spectrum of informing, enabling and/or incentivising a greater focus on, or greater delivery of, public value. This could range from bringing the sector together to share insight and learning, and identifying and highlighting (emerging) best practice; to promoting relevant common enablers; and considering if and how we can best encourage companies to better deliver public value through the price review process.”
It added: “We are also considering, from a regulatory perspective, how we can be assured that progress continues to be made, and we remain open to considering whether, in time, there should be a more direct role for Ofwat through the regulatory framework.”
REPORT PR24 and the design of future price reviews.
REPORT Ofwat sets its sights on getting public value provision to permeate the sector.
INDUSTRY COMMENT Can we – finally – adjust the regulatory regime to mitigate the risk of long term underinvestment?
REPORT National Infrastructure Strategy.
REPORT WICS’ final determinations for Scottish Water.
INDUSTRY COMMENT Frontier Economics’ assessment of the economic impact of Covid.
INTERVIEW South East Water’s new CEO David Hinton looks to deliver, responsibly.
NEWS REVIEW RAPID gives green light to chalk stream schemes.
INDUSTRY COMMENT Proactively plan for supply resilience, whatever the circumstances.
NEWS REVIEW Environmental Audit Committee launches river quality inquiry.
NEWS REVIEW Wessex stays top on service delivery
Among other things, these concern: climate change (resilience, net zero embedded and operational carbon by 2050, normalising use of nature-based solutions); and public confidence and affordability in the face of cost pressures (including from Covid-19 impacts as well as reducing over abstraction, planning to a higher level of drought resilience, dealing with storm overflows, halving leakage and eliminating carbon).
Ofwat noted additionally that: “There is unlikely to be the same level of headroom for bill reduction created by a falling allowed return on capital, as occurred at PR14 and PR19” and looked to innovation, collaboration, digital and tech developments as roots through which the sector might rise to the challenges before it.
There is unlikely to be the same level of headroom for bill reduction created
by a falling allowed return on capital, as occurred at PR14 and PR19” THE WATER REPORT
CONTENTS full contents of the magazine
We project an industry-wide reduction in the return on regulated equity (RoRE) over AMP7 of between 0.35% and 0.97% as a result of the effects of Covid-19 (based on notional gearing and taking account of reconciliation mechanisms).
These are the industry-wide impacts that we can quantify. However, there are some important caveats.
◼ The projected impacts depend on the path of the pandemic and the economic recovery. We have not given probabilities to each of the scenarios as too much uncertainty remains.
ロ The biggest impacts are from low inflation and bad debt, which are functions of our macroeconomic scenarios. While we drew on reputable sources for our assumptions, they are subject to change and can be affected by external factors such as Brexit.
ロ The amount of bad debt will depend in part on how effectively companies manage unpaid bills.
Despite these interventions – the problem hasn’t gone away. On the contrary, there are several reasons to think it is becoming bigger.
• There is strong evidence that the value customers place on a reliable water supply far exceeds what they pay for it. Customers typically pay about £1 a day for the service, yet when it is interrupted – they seek compensation of tens or hundreds of times that amount.
• Customers don’t just want a highly resilient service now, but in perpetuity. As Ofwat neatly summarises one of the things that people want most from the water sector is for companies to act in the long term interests of society and the environment.
• The impacts of climate change, uneven population growth and ageing assets are naturally making it more difficult (and expensive) for companies to provide a reliable service.
• And – perhaps most importantly – there is every reason to believe that powerful economic incentives to minimise expenditure, as well as driving short-term "efficiency", are leading companies to cut non-essential spending to the bone subject only to meeting short-term performance targets and remaining legally compliant.
Millar explained the self-supply community has just 142 LUMs currently, excluding those with bilaterals (such as faulty meters) outstanding.
Its findings show how this has been achieved since March 2019, with the steep vertical increases marking new customers joining Waterscan’s self-supply portfolio.
It was already, Millar said, an “unashamed boast” for the self-supply community to compare its position on LUMs with that of the wider market, where some 10% of meters (140,000 according to Waterscan data; MOSL put the number at 170,000) have not had a read for 12 months or more.
The change, with only minor alterations from the draft consulted on earlier in December, aims to:
• clarify the expectations of retailers in terms of promoting and signing up customers to Covid-19 repayment schemes;
• ensure retailers take reasonable steps (and can demonstrate it) to maintain contact with customers on Covid-19 repayment schemes to understand their circumstances and tailor their plans before any kind of debt collection action (including the use of debt collection agents, interest, late payment fees, disconnection) is pursued; and
• ensure retailers report to Ofwat and CCW from 20 January and monthly thereafter data relating to the number of customers on repayment plans (Covid-19 and any other) and the level of enforcement action being carried out.
The decision fell short of a CPCoP change proposal put forward by CCW, for businesses required to close by law to be protected automatically from disconnection, interest payments and enforcement activities.
The R-MeX consists of ten questions covering topics such as engagement, communication and data quality. Retailers are asked to provide a score between 0-10 with the option to provide additional feedback via an open text field.
The first survey, originally scheduled for April 2020, was delayed by Covid-19 and conducted in October and November.
The table provides a summary of results. MOSL said it had not included wholesalers who received fewer than three reviews, “as we do not believe this shows a true reflection of their positioning in the league table in comparison to those with a higher quantity of responses”.