Utility Week

UTILITY WEEK | 22ND - 28TH NOVEMBER 2019 | 17 Finance & Investment "We are doing long-lived infrastructure, multi-generation infrastructure. Bills sim- ply do not fund all the investment that's needed." Bob Taylor, chief executive of Portsmouth Water, explains the ongoing need: "A back- log of investment was built up because of lack of funding, so when privatisation hap- pened it brought huge need for investment in the sector. But the investment needs in our industry are ongoing and if we are not able to continue making improvements, the sec- tor will su• er. There are still a lot of issues to maintain in the sector and investment needs are increasing." Technological advances Another factor that played a less signi cant role in the 1980s was the use of technology. To address the challenges faced now, com- panies are investing heavily in technology to address leakage, improve customer service, manage catchment areas and monitor the pipes across their networks. In the coming ve-year period from April 2020, Ofwat has set out that it expects com- panies to invest an additional £6 million per day to protect the environment, improve service for customers but also to cut bills. A‰ er the rush of investment in the 1990s, services improved all round but bills shot up by around 40 per cent in real terms and, naturally, customers felt it. Tony Smith, chief executive of the Con- sumer Council for Water (CCWater), recalls the point in the early noughties when the rising bills were coupled with increasing cus- tomer complaints. Smith, a former director of competition and consumer a• airs at Ofwat, says the price rises coupled with complaints led to a feeling that the regulator should be less company orientated. "In the 2004 price review, customers had very little look-in," Smith says. "Government judged that prices going up and a sense that 'all was not well with customers' was a good reason that there needed to be much greater customer orientation." This led to the form- ation of CCWater and the introduction of Service Incentive Mechanism (SIM) scores from Ofwat. This step change led to customers not only being listened to, but made a major focus for the rst time, as Skellett remem- bers. "A highlight really was getting people to talk about customers, not some abstract bunch of consumers – the customer service has been transformed." Customer service is now a focal point— for all rms and something they are account- able for not only to Ofwat, but also CCWater. Smith says the change has seen complaints fall by about 70 per cent since 2006/07. Although complaints are down and Smith says customers are satis ed overall with the service, there are issues of legitimacy and fairness that must be addressed as underly- ing discontents. "At the heart of legitimacy it is not about politics, it's about a sense of fairness. It's not a creation of the media or politicians, it's inherent with customers' view of the water industry," he points out. "That's where the industry hasn't been urgent enough in resolving that problem." Wildlife bene ts As well as improvements in service, leakage and resilience, wildlife has bene ted from the investment. Despite some high-pro le environmental crimes, the overall picture has been positive. "When you look at rivers, tens of thou- sands of kilometres of rivers were in awful quality. There's still a lot to be done for riv- ers, but in the 1970s there were many rivers that were biologically dead and that's not something we talk about nowadays," Simp- son recalls as one of the undeniable victories for the sector. At the time of privatisation, 40 per cent of raw sewage was emptied onto beaches. There's an improved picture today, with 71—per cent of bathing water sites around the UK classi ed by the European Environment Agency as having excellent water quality. Yet 25 EU countries rank above the UK, showing there is more work to be done. However, the challenges faced in the past 30 years are nothing compared to what is to come, as Utility Week will explore more in a future issue. The sector must adapt to the changes that come in thicker and faster, but Southern Water's McAulay for one is con dent solu- tions will be found, because the industry has set a precedent to rise to what is thrown its way. "If someone put the Urban Wastewater Directive in front of us for the rst time now we'd say 'oh ne, that's okay', but back in the day it was di• erent," he says. "The past 30 years have been good and got us to a good place, but looking ahead the challenges are bigger, bolder and we need to engage technology. We've got less water available and more people demanding it. These are big, big challenges." With an election coming next month that could see a Labour government in Down- ing Street bringing plans to renationalise utilities with it, the future of these compa- nies is uncertain. The challenges of the past 30— years have largely been met by the water sector. Despite its many failings, it has achieved these signi cant things. H3O This month marks 30 years since shares in the water and sewerage companies of England and Wales were rst floated. To mark the occasion, Utility Week has launched H3O, a series of articles featuring insight from industry leaders and expert commentators reflecting on the journey to date and the challenges ahead. The campaign, available in full to Utility Week members, covers industry views, the evolution of regulation in the sector, progress on the ambitious Public Interest Commit- ments, the opening of the non-domestic market and the threat of renationalisation. To get full access and to nd out more about the bene ts of membership to you and your team, please get in touch on 01342 332077 or email: JoNikiforov@fav-house.com Simpson rebuts the claim that so much could have been achieved by a publicly owned sector. He says: "Some could argue we could have done those things anyway. But the reason we were privatised was because we weren't going to do it because the money simply wasn't available. We were out of ideas, but now we're at a place where the UK is well ahead of many of our peers in Europe." But for some, concern about who owns the pipes is small beer compared with the fear of what might not come out of them. "The real challenge isn't an ownership debate, it's about climate change and population growth," South West Water's Loughlin says. "As James Bevan warned, we're going to run out of water, and we need to change our habits now. This is what's important more than privatisation. This is what we need to focus on. This is real, we need to do some- thing about it and build reserves and resil- ience, and the ownership debate just takes oxygen away from the main issue." Ruth Williams, water correspondent, Utility Week "There was always a huge scrabble for money and water always seemed to be very low in the pecking order" Peter Simpson, chief executive, Anglian Water "There was always a huge scrabble for money and water always seemed to be very low in the pecking order" Peter Simpson chief executive, Anglian Water

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