Utility Week

18 | 13TH - 19TH DECEMBER 2019 | UTILITY WEEK Policy & Regulation Analysis O ver the past 30 years the water sec- tor has become more efficient, raised standards of drinking and bathing water as well as cleaning up beaches and riv- ers but issues over public trust remain stub- bornly high profile. The environmental challenges ahead and the burden of the growing population add huge pressures to water companies (as iden- tified in the first article in our H3O series, see Utility Week, 29 November). The cases for and against public ownership arguably take attention away from the main issue, but the underlying problem is that trust with the public has been slowly eroded. Ofwat recognises the role companies should be playing and has been instrumen- tal in banging the drum to rebuild public confidence in water companies by address- ing financial practices as well as connecting better with customers. Last year the regulator's chair, Jonson Cox, set out a programme of reform that he said should "bring the water sector back in balance, including getting back to a proper sense of public service provided under pub- lic ownership". In October this year, Ofwat chief execu- tive Rachel Fletcher spoke to the Institute of Economic Affairs about the importance of embedding social purpose into business and the benefits yielded for the company and the public. She told some commentators the "public service nature of these companies was overlooked" 30 years ago when water companies were privatised and she urged that steps be made now. Public service is becoming more central to company thinking, with a duty to custom- ers as well as to the wider community and environment increasingly critical. While the regulator mulls over a compul- sory commitment, several companies have proactively brought social contracts into their business models. Anglian Water and Welsh Water have each taken this to the heart of their busi- nesses. Anglian changed its articles of asso- ciation to embed public interest within the constitutional make-up of the business. It plans to publish annual statements setting out how it is performing against key envi- ronmental, social and ethical targets. Mean- while, Welsh Water is preparing to vote on changing its own constitution in a similar fashion – a move which could come into practice from next year. Pennon Group, including South West Water and Bournemouth, is introducing a scheme from April next year that will make customers shareholders, giving them a voice at the AGM. Concurrently to individual plans, the water companies in England and Wales have set out Public Interest Commit- ments (PICs) – spearheaded by Water UK as the trade body rep- resentative. The five PIC goals focus on some of the most important issues for society: leakage reduction; affordability; emissions; plastic waste; and social mobility. Each company has committed to the vol- untary goals and one or more chief executive has been nominated to oversee and coordi- nate the industry's efforts on each PIC. Peter Simpson, chief executive of Anglian, says he knows that goals such as delivering on net zero emissions ahead of government targets have the strong support of customers. "We're serious not just about delivering the status quo, we've got some real ambition in there," he says. The Five Public Interest Commitments Triple the rate of sector-wide leakage reduction by 2030. The first PIC relates to leakage. As well as featuring heavily in Ofwat's goals for PR19, leakage is central to these commitments. Championing this mammoth task are three chief executives: Pauline Walsh, Affin- ity Water; Peter Simpson, Anglian Water; and Bob Taylor, Portsmouth Water. On behalf of the three, Taylor tells Utility Week the goal to triple the rate of leakage reduction by 2030 is a major upward step in performance. "[It] represents an unprecedented rate of improvement to help us meet the wider chal- lenges posed to water supplies and the envi- ronment by climate change and population growth," he says. The three chief executives jointly pre- sented a keynote speech at the 20th Annual Leakage Conference in October. Taylor says: "The presentation focused on ways in which we need to up our game as an industry to secure success in this area. The keys to this success were identified in a number of areas: an increase in the sharing of know-how and good practice across the industry; more collaborative efforts to iden- tify research and development needs and potential solutions; ensuring we have a pipe- line of talented engineers and technicians with data analysis skills; making better use of the large volumes of network performance data in order to identify ever smaller leaks more quickly and efficiently; and industrial- ising the repair process to deliver improved efficiency and better customer experience. The service ethic Water companies are taking positive steps to re-establish their relationship with customers as trusted providers of a public service. As part of our H3O series, Ruth Williams reports on progress.

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