Water Network Plus: Business Plan Chapter 7: Supplementary Document

Water Network Plus: Business Plan Chapter 7: Supplementary document

Document Reference: S6006

This document provides details of our long term strategy and AMP7 delivery plans

for the Water Network Plus price control. It provides details of our costs relative to customer outcomes and performance commitments and provides details of the activities we expect to undertake to achieve our targets.

United Utilities Water Limited

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Contents 1 Executive Summary ...... 2 1.1 What we plan to do ...... 3 1.1.1 Producing our plan ...... 4 2 Water Network Plus Business Context ...... 5 2.1 Water Network Plus activities ...... 5 2.2 Overview of our operations ...... 5 2.3 Current and future drivers ...... 6 3 Strategic Overview ...... 9 3.1 Current performance ...... 9 3.1.1 Your drinking water is safe and clean ...... 9 3.1.2 You have a reliable supply of water now and in the future ...... 10 3.2 Our strategy for AMP7 and beyond ...... 13 3.2.1 Your water is safe and clean ...... 13 3.2.2 You have a reliable supply of water now and in the future ...... 13 3.2.3 Delivering this plan effectively and efficiently ...... 14 3.3 Use of markets ...... 15 4 AMP7 Delivery Plan ...... 16 4.1 Your drinking water is safe and clean...... 17 4.1.1 Customer views ...... 17 4.1.2 Risks and resilience ...... 19 4.1.3 Activities and costs ...... 21 4.1.4 Water quality first ...... 25 4.1.5 Improving the taste, smell and appearance of water (aesthetics) ...... 26 4.1.6 Working with customers ...... 31 4.2 You have a reliable supply of water now and in the future ...... 33 4.2.1 Customer views ...... 33 4.2.2 Risk and resilience ...... 36 4.2.3 Activities and costs ...... 37 4.2.4 Preserving asset health ...... 40 4.2.5 Quick and effective response to asset failure ...... 43 4.2.6 Building resilience for the future ...... 46 5 Plan Summary ...... 48

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1 Executive Summary What we’ve delivered in AMP6 • We have experienced, and learnt from, the impact of large disruptive events such as the detection of Cryptosporidium at Franklaw WTW • In response, we have made significant improvements in how we operate our systems, plan for issues and respond when they occur • We have developed a thorough understanding of the risks to our water supply system and our approach to managing resilience and risk reflects global best practice. • We have a proven track record of providing reliable safe, clean drinking water to customers.

What we’re delivering in AMP7 • We will mitigate our biggest resilience risk, and secure the long term water supply for the Pennines and Manchester. • We will innovate to drive efficiency and benefit for customers and have set ourselves stretching targets to ensure we focus on the most valued aspects of the service we provide. • We will reduce leakage by 15% to help ensure long term supply resilience. • We will reduce the number of supply interruptions, targeting the industry upper quartile. • We will work with customers to deliver reductions in per capita consumption, reducing it by over 3% in AMP7 and 13% by 2045; a significant reduction

This delivery plan provides details of our long term strategy and AMP7 delivery plans for the Water Network Plus price control. It provides additional details, at a price control level, of how we expect costs to map across customer outcomes and performance commitments and in particular provides detail of the activities we expect to undertake to deliver the targets we have proposed.

This plan sets out how, by investing wisely in the five years from 2020 to 2025, we will continue to deliver efficient, reliable, clean and resilient water services to more than three million residential and around 200,000 business customers in the North West of England.

We have a strong record of investment in our assets and the long-term resilience of our supply system, reflecting our responsibility as a provider of essential services. However, as recent years have demonstrated, extreme and unexpected events can still disrupt these services. The Lancashire Water Quality Incident in August 2015 prompted us to revisit and closely examine our approach to risk and resilience. Among other improvements it prompted us to invest £250m of outperformance into a transformation programme to improve resilience. Initial benefits were seen almost immediately in our response to storms Desmond and Eva, and we saw further progression in our capabilities in our response to the ‘Beast from the East’ in 2018.

Refocusing our strategies and activities in the 2015 – 2020 period onto effective risk management has delivered cost- effective performance improvements, particularly in our water resources and water treatment processes. This provides a template for similar improvements on the final steps of our water’s journey through our distribution network and into customers’ homes and businesses.

We acknowledge that customers, stakeholders and regulators feel very strongly about reducing leakage from our distribution network. There are opportunities through lower leakage, reduced demand or identifying new sources to build resilience in our system and to create the headroom for potential future water trading.

This document covers the two outcomes and the performance commitments and activities aligned to these:

• Your drinking water is safe and clean

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• You have a reliable supply of water now and in the future

1.1 What we plan to do

Our business is driven by the dependencies and interactions between different elements in our end to end system. By optimising and proactively managing these relationships, we can increase efficiency and improve performance across all of our catchment, process, network and customer operations, providing a reinforced source to tap approach.

As our digital capabilities develop it will enable water quality, sufficiency and resilience risks to be identified across the whole water source to tap system in real time within our central Integrated Control Centre (ICC) and enabling actions to be taken to proactively manage them with no or minimal customer or quality impact.

The Water Transformation programme started during AMP6 signified a step change in our approach to resilience and continues to focus on managing the fundamental, inherent operational risks associated with our assets, treatment processes and people. This approach has delivered impressive performance improvements over the past few years and will continue to embed the solid foundations providing a safe, reliable supply of water during AMP7 and the longer- term.

We will address resilience to over 2,500,000 customers in the Manchester area through major investment to the aqueduct which supplies water to Manchester and Pennine areas. The development of solutions to address this risk are referred to as ‘Manchester and Pennine Resilience’ and is addressed in Manchester and Pennines resilience - Ref: UUW WN1M

Sustaining our current focus on drinking water quality is fundamental to our plan. Our innovative engineering led operational risk assessment HAZREV approach will become central to our investment strategy for process sites. We will develop and implement a similar approach for our network sites, which we will call NETREV. We will build on our industry leading approach of shut down and start up to waste by installing further risk mitigation technology at our water treatment works (WTWs).

Our long term approach to lead will focus on working with a wide range of stakeholders to investigate the practicability of full lead replacement – ‘water main to the customer’s tap’ – sustainably addressing this public health legacy issue. We will work closely with our customers to improve awareness of the impact that internal plumbing can have on the quality of the water that they consume and drive promotion of the industry approved plumbing scheme ‘Water Safe’.

We will address taste and smell issues caused by algae at four of the highest risk upland WTWs and continue to reduce risk through our algae management plans. We will manage chlorine with greater consistency, proactively informing customers when there is a change. We will lower residual levels and use innovative solutions to plan the optimum disinfection strategy, for example the use of ‘chlorine decay modelling’ when planning the required chlorine dosing requirements for area to be supplied by new WTW at Williamsgate, West Cumbria.

For our water network, we will improve the reliability of customer supply by undertaking a phased replacement of high consequence network assets, focused on those with the highest failure rates. We will continue to embed our rapid response capabilities by use of our innovative operational strategy supported by the largest fleet of Alternative Supply Vehicles in the UK. We will implement a comprehensive programme of asset and operational improvements to meet our challenging targets across both outcomes. We will continue to manage the risks associated with our service reservoirs by continuing our industry leading approach of enhanced flood testing and repair.

In AMP 7 we are proposing a 15% reduction in leakage from the base year position and reduction of 42% by 2045. We have developed a comprehensive strategy for managing leakage to deliver the stretching target we have set in an affordable and sustainable manner that will comprise of; managing the network to reduce the number of leaks, employing the latest technology to find leaks more quickly, working closely with the supply chain to repair leaks more efficiently & increasing our metering coverage to reduce customer side leakage.

Finally and most importantly, as a key enabler for effective risk management we will continue to focus on the training and continuing professional development of our staff.

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1.1.1 Producing our plan

Our plan is fully aligned to the requirements stipulated by customers, following extensive research (for details see Chapter 2 – Voice of the customer: our approach to engagement) and can be implemented within affordability constraints. In producing this plan we have had the support of YourVoice who took an active part in developing our proposals to make sure they focus on customer priorities whilst protecting the impact on customer bills. This plan promotes a long-term requirement to ensure resilience of our water systems and resulting service provision in the face of increasing external stresses, such as environmental pressures, population growth and changes in consumer behaviour. The consistent message from customers is that a clean, safe and reliable supply of drinking water remains customers’ number one priority.

The Drinking Water Inspectorate and Environment Agency have been actively engaged in determining our drinking water and environmental quality programmes and support the statutory obligation schemes in our plan. To accommodate these customer priorities we have set ourselves challenging efficiency targets. After considering these efficiency challenges, we are proposing a stretching and efficient totex cost of £2,074m for delivery of the Water Network Plus plan.

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2 Water Network Plus Business Context

2.1 Water Network Plus activities

United Utilities Water is the main licensed water company Figure 1: Our integrated supply network for North West England. On a typical day we provide

1,730 million litres of drinking water to a population of over seven million people and 200,000 businesses. On exceptional days – such as those seen during the recent freeze-thaw and heatwaves - the adaptability of our network allows us to respond to these customers’ changing needs. During the recent heatwaves, for example, we have provided in excess of 2 billion litres per day to customers.

We receive water from a wide range of sources – including boreholes, rivers and reservoirs – across and outside our region. We treat this water to exacting and rigorous water quality standards before delivering it through over 42 000km of mains to customers whenever they need it. We have developed a bid assessment framework, which can be found in S5006 Bid Assessment Framework, through which we will select preferred suppliers of raw water including third party suppliers and the UU Water Resources business unit. The Water Network Plus business unit (which is the subject of this document) plays a pivotal role as the system operator. We use our extensive and integrated system to balance the parallel priorities of water availability, water quality, environmental protection, and cost.

In setting the correct balance between these priorities we engage closely with customers, stakeholders and regulators to ensure that their views are reflected and their expectations met.

2.2 Overview of our operations

Our 2015 Water Resources Management Plan identified a future deficit in the West Cumbria Resource zone and selected the Thirlmere Transfer scheme as the best Figure 2: Constructing the Haweswater Aqueduct solution. Construction of a new water treatment works and pipeline is now well underway and ahead of schedule (see Accounting for past delivery – Chapter 8). With the new supply to West Cumbria in hand, our 2019 Water Resources Management Plan forecasts a surplus until the 2040s. Our focus, therefore, has shifted to reducing leakage, building resilience and the opportunities for the North West to trade water with other regions. The availability of water supplies in the North West has, historically, meant less focus on reducing leakage and we currently have the second highest level of leakage in the industry. This is a significant concern for our customers and stakeholders which we will look to address in this plan. Across our region, we are proud custodians of the historical infrastructure – such as the Thirlmere Reservoir – which

Chapter 7: Supplementary Document - S6006 unitedutilties.com were built to support the industrial needs that grew since the 19th century. Key systems such as the Haweswater and Vyrnwy Aqueducts (Figure 1) link upland reservoirs to the major conurbations of Greater Manchester and Merseyside. Sustaining this critical infrastructure is key to supporting the development of the North West under the Northern Powerhouse initiative with the revitalisation of local economies and associated growth in population.

We have invested to maintain this aging infrastructure and have one of the youngest water distribution networks in the UK. This has contributed to our continued recognition as ‘World Class’ through the Dow Jones Sustainability Index. Notwithstanding, some of our strategic assets need considerable ongoing investment to continue delivering a resilient supply of safe and clean water for present and future customers. The Haweswater Aqueduct, which supplies customers in Manchester and the Pennines, is one specific and unique risk. Manchester and Pennines resilience – Ref: UUW WN1 M provides greater detail on this risk and our plan to address it.

The resilience of our water business was tested at the very Figure 3: Franklaw WTW start of the period by a sequence of events that included a large loss of supply and water quality event in Bolton, the detection of Cryptosporidium at Franklaw WTW in Lancashire, and the combined impacts of storms Desmond and Eva. As we discuss in Our Resilience Track Record – Ref: S4002, we learnt many lessons in this period to emerge a more resilient company. This allowed us to respond better to each subsequent event and minimise the impact of the ‘Beast from the East’ cold weather event in 2018. How we will build further resilience on these foundations is a key theme of this document.

The other central theme of this document is how our Water Network Plus business will operate more efficiently to deliver a higher level of service for customers without increasing bills. This is vitally important in the North West where almost a half of households are under financial pressure, and fewer than one in three have a month’s income in reserve. We outline in Addressing affordability and vulnerability – Chapter 3 how the affordability of their water bill is a significant risk and concern for many customers.

2.3 Current and future drivers

Two customer outcomes lie at the heart of our Water Network Plus business; i) providing safe and clean water, and ii) providing a reliable supply.

With respects to safe and clean water, we enter the 2020-2025 period with strong performance against the Drinking Water Inspectorate’s rigorous quality standards - in 2017 we were the leading water and sewerage company - but continue to target 100% compliance and customer satisfaction. To achieve this ambition we must minimise the risk of: • Asset failure across our treatment and distribution systems to ensure they remain effective barriers against contamination. • Fluctuations in taste, smell or appearance. This poses a particular challenge in the North West as the majority of water comes from soft, upland sources which are more prone to these problems. • Contamination on the final steps of the water’s journey. Some of this risk relates to customer’s limited awareness of how they can affect the water quality in their home, but there are also specific concerns about lead pipes in United Utilities’ and customers’ ownership.

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The reliability of supply can be affected by factors outside Figure 4: Dealing with extreme weather our control as our large asset base is exposed to hazards such as extreme weather, security risks and third party damage. However, we can build resilience into our assets, so they resist hazards, and into our systems, so they absorb the effects of losing assets. Redundancy in systems also reduces the risk of failure against our own assets, whether they are pipes, valves, pumps or treatment works. We monitor these risks carefully to plan investment and recognise that we need to adapt our plans in response to change customer expectations.

The longer term outlook for our supply-demand balance is positive and we forecast a surplus into the 2040s. Achieving the right balance between a resilient supply and affordable bills for customers, however, necessitates risk based decisions and unavoidable uncertainties exist across the system. As we prepare this plan, for example, we are experiencing a period of prolonged dry weather which has affected both supplies and demand. We include a carefully calculated ‘headroom’ in our plans to accommodate these uncertainties and longer term risks.

Increasing innovation – both within United Utilities and across our network of suppliers – is one of the key trends which we are carrying into the 2020-2025 period. Our Innovation Lab, for example, has brought in seven new small companies with ground-breaking technology to meet challenges across our operations. Innovation, of course, is about more than simply new technology. We have shown in the current period that the best improvements are gained by understanding how all the components of a system – assets, information, people, the environment & customers – fit and work together. Further information on our approach to innovation is contained in Using markets and innovation – Chapter 6.

Tackling problems at the most effectual point will be vital to meet the trend for increasingly rigorous drinking water quality standards. New approaches - such as the UV LED technology developed by Typhon in our Innovation Lab (see Using markets and innovation – Chapter 6) – have the potential to deliver better treatment for substantially lower costs than the traditional techniques. A particular area of uncertainty is the European Union’s Drinking Water Directive which, in draft form, proposes radically tighter water quality standards1. Though it is anticipated that the Directive will be implemented within the 2020-2025 period, the high level of uncertainty around the proposed standards means that we cannot make allowances for them in this plan. There is a substantial risk that if the standards proposed in the draft Directive are implemented they could not be met without additional investment.

The National Infrastructure Commission’s forecasts for the additional water capacity required under future population and climate scenarios.2

1 Irrespective of Brexit, we anticipate equivalent water quality standards will be implemented in the UK. 2 National Infrastructure Commission 2018 Preparing for a drier future: England’s water infrastructure needs.

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Climate change constitutes the majority of the ‘headroom’ allowance (assessed by calculating the supply demand balance) for future uncertainty that we have made in our 2019 Water Resources Management Plan- S5003. On the demand side of the equation, we have used the latest research to further ‘uplift’ our existing forecast for demand in a dry year. On the supply side, we have used industry-leading modelling techniques to complete a comprehensive impact assessment. This showed that there is no impact in our smaller Barepot and Eden zones but deployable output in our Strategic and Carlisle resource zones will fall by 6% and 2% respectively by 2045. We also need to be alert to the fact that the upland catchments and reservoirs which supply much of our water are complex hydrological and biological systems and the changing climate is likely to affect raw water quality. Specific risks include warmer temperatures causing more algal blooms and extreme rainfall events washing more material into rivers and reservoirs.

Our models forecast that we can accommodate the impacts of climate change within the existing supply demand balance without changing the frequencies with which we require hosepipe bans or drought permits / orders. However, the combination of climate change, population growth and sustainability reductions are creating more severe challenges in other regions and the National Infrastructure Commission forecasts that the country will require an additional 2.7 – 3 billion litres of water a day by 2050. Water trading is one way to address this future national shortfall and the North West has a significant role to play as a potential donor region; a role which customers and stakeholders support providing that service and the environment within the region does not suffer as a consequence3. Establishing the national that the National Infrastructure Commission envisage will take a number of years but it is important to start preparing a pathway for trading in the 2020-2025 period. Our bid assessment framework ensures that we will explore opportunities for 3rd parties to supply water at a lower cost or higher quality to provide the best value for customers. Full details of the bid assessment framework can be found in S5006 Bid Assessment Framework.

3 The Customer and Stakeholder Technical Appendix to our 2019 Water Resources Management Plan – S5003 contains detailed discussion on customers’ views of water trading.

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3 Strategic Overview

In planning for AMP6 we established outcomes which encapsulate how we meet customers’ expectations. Our ongoing conversations with customers show that these continue to capture customer priorities4 so we carry these outcomes, and the overarching strategic direction that they set, forward into AMP7.

3.1 Current performance

How we have delivered these outcomes, and our performance against the measureable commitments that we made, is described in detail in Accounting for past delivery – Chapter 8. Two of these outcomes, however, are particularly relevant to our Water Network Plus plan so we summarise the current performance to set the scene for our future strategy.

3.1.1 Your drinking water is safe and clean

We are proud to serve the population of the North West with safe, clean water. The recent Drinking Water Inspectorate In 2017 we achieved the 99.97% Chief Inspectors’ Report (2017) indicated that for overall water quality compliance water quality performance (measured as mean zonal compliance or MZC) we are ranked as first amongst the water This is the joint 3rd highest in the and sewerage companies, delivering water that is 99.97% industry compliant. Next AMP this measure will be replaced by Compliance Risk Index (CRI) and, for 2017, we are 3rd amongst water and sewerage companies with a CRI score of 1.28: performance which is considerably better than the CRI average for England and Wales of 3.56. This equals our best ever previous performance.

This good performance has, in part, arisen out of our experiences in 2015 when the detection of cryptosporidium at Franklaw WTW led us to issue a boil water notice to customers across Lancashire. The lessons we learnt through this - the largest water quality incident in our history - have been built into a transformation plan which has refocused our organisation on managing water quality risks.

4 UU Customer Priorities –Final Debrief, Boxclever.

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Table 1: Your drinking water is safe and clean: Our performance in AMP6

Performance Commitment Actual Projected

2015/16 2016/17 2017/18 2018/19 2019/20

A2: Water quality events DWI category 3 or above 35 22 27 >15 >15

A3: Water Quality Service Index 120.465 116.923 98.645 114.119 117.791

WTW Coliform non-compliance (%) 0.06 0.01 0.01 0.01 0.01

SR integrity index (%) 99.98 99.98 99.97 99.97 99.97

WTW turbidity fails (No) 1 2 1 1 1

Mean zonal compliance (%) 99.96 99.96 99.97 99.97 99.97

Distribution maintenance index (%) 99.89 99.85 99.89 99.89 99.85

Customer contacts for water quality (No) 9171 9605 11652 10013 9605

3.1.2 You have a reliable supply of water now and in the future

In AMP6 we have invested in reducing the amount of water we lose through leakage. As shown in Table 2, this means we outperformed our targets in each year of the period to date and absorbed the impact of severe weather in 2018. This good performance has been underpinned by the condition of our assets, with mains repair rates close to the industry upper quartile and far fewer than average numbers of customers experiencing chronic low pressure problems. However – particularly given the prolonged dry weather as we prepare this plan – we recognise that customers want us to do more and reduce leakage further in AMP7.

109 The number of mains repairs per 1000km of mains completed by United Utilities vs. Industry average of 153 per 1000km of main (2016/17)

1.05 The number of customers receiving below standard pressure per 10,000 connections in United Utilities region vs. Industry average if 1.26 per 10,000 connections (2016/17)

In terms of water availability, performance in AMP6 has been mixed. We’ve delivered improved underlying performance against most measures such as mains repairs, chronic low pressure and the number of customers contacting us about supply issues. However, individual major events in a number of years have led us to miss our performance commitments against supply interruptions and the interruptions over 12 hours component of the Reliable Water Services Index. Similarly, the prolonged dry weather as we prepare this plan in 2018 is placing unprecedented demands on our system. This reinforces the focus on building resilience for our long term strategy.

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Table 2: You have a reliable supply of water now and in the future: Our performance in AMP6 Performance Commitment Actual Projected

2015/16 2016/17 2017/18 2018/19 2019/20

B1: Average minutes supply lost per property (a 16:42 13:33 13:09 12:00 11:40 year, mm:ss) B2: Reliable water service index 16.447 77.840 70.83 75.911 97.043

Total bursts (No) 4785 4590 4484 4594 3826

Interruptions > 12hrs (No) 11431 3759 4631 4117 1800

Properties below ref level (No) 262 345 278 291 272

Unwanted contacts for water availability (No) 47011 43740 46487 42371 39000

B4: Total leakage at or below target (MLD) 10.8 23.4 9.1 13.4 13.4

B6: Thirlmere transfer into West Cumbria (% 0 5 25 57 99 project complete)

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Figure 5: Our 2045 ambition for water quality

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3.2 Our strategy for AMP7 and beyond

This section sets out our strategic direction to deliver these two outcomes. In both cases, this direction is mirrored in our two long-term plans looking ahead to 2045 (and beyond to 2080 for long term issues such as climate change, water trading and managing water quality risk from lead):

• Securing water quality for future generations: This is our Long Term Water Quality Plan, provided to the Drinking Water Inspectorate, which aligns to our plans for delivering safe and clean water.

• United Utilities Water Resource Management Plan 2019: This plan, provided to Defra, aligns to our plan to provide a reliable supply of water now and in the future.

The final part of this section summarises the mechanisms we will have in place to deliver this plan, including how we will manage our assets, how we will develop our people, how we will work with customers and how we will use markets to deliver value for customers.

3.2.1 Your water is safe and clean

Securing water quality for future generations establishes our overarching vision for water quality:

Our water quality vision is 100% compliance with current and future drinking water quality standards, providing a reliable supply of safe clean drinking water for future generations.

Figure 5 summarizes our four ambitions to deliver this vision (shown in grey) and the interventions we will make across our water supply system to achieve them. Continuous improvement is a theme that runs through our plan with a focus on our understanding and management of risk. This encompasses a wide range of activities; working with the Water Resources business unit to obtain high quality raw water through management of the water catchment; managing inherent risk in our operations; training our staff; and building customers’ understanding of water quality risks such as lead and how they can be mitigated. This broad view of system risk and resilience, including how our processes and services interact, will enable us to make the best decisions for customers.

3.2.2 You have a reliable supply of water now and in the future

To achieve our ambition of providing customers with 100% wholesome water for 100% of the time without affecting the affordability of their bill we must innovate and capitalise on the opportunities created by new technology.

This is why our approach is built around understanding risk and increasing the flexibility of our systems, allowing us to respond to the diverse range of hazards to which our systems are exposed. We have, for example, worked closely with Exeter University for a number of years at the forefront of machine learning to develop our ERWAN event recognition system (for further details see p.13 of Using markets and innovation – Chapter 6). As we look to the future, we continue to sponsor doctoral research projects at Exeter and Sheffield universities to develop the next generation of machine learning and artificial learning capabilities to, for example, detect treatment anomalies or to find leaks more efficiently.

Increasing – and increasingly intelligent – use of data is critical to the central role of our Integrated Control Centre (ICC) in our current and future plans. The ICC is conceived as the central hub of our operations, maintaining constant situational awareness of the services we are offering customers and the risks which could impinge on these services. This awareness will be underpinned by a broader and better range of options to mitigate the impact of events such as alternative supply tankers, intelligent valves and operational staff with information at their fingertips. As we continue to build our response capabilities we will be able to resolve an increasing number of issues before the customer experiences any impact, working towards our 2045 ambition of 100% wholesome water, 100% of the time.

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This ambition cannot be achieved unless the underlying risks are effectively managed. As noted previously, and discussed in detail in Manchester and Pennines resilience – Ref. UUW WN1 M, the condition of the Haweswater Aqueduct is a particular risk which we will seek to address over AMP7 and AMP8. More broadly speaking, the outlook for water resources in our region outlined in our 2019 Water Resources Management Plan – S5003 is positive with only a small deficit forecasted from 2041 to 2045. Our plans to reduce both leakage and demand, however, will more than offset this deficit without any requirement to investigate large supply side solutions. In line with long-term national ambitions, we will continue with our strategy to explore future water trades from the North West to other parts of the UK. Although other water companies have not required such a trade in their water resource management plans, our plan presents how an alternative future could look in an adaptive pathway and still recommend that such opportunities continue to be explored.

Figure 6: Our plan to manage water resources to 2045

3.2.3 Delivering this plan effectively and efficiently

Continuing the approach from AMP6, our outcomes will be underpinned by specific and measureable performance commitments that are in place to protect current and future customers. To meet these targets we will need to operate and invest effectively and efficiently.

This investment will be delivered through our current and future employees. Chapter 4 - Securing long term resilience describes how we plan to recruit, develop and maintain a skilled and capable workforce who have the skills and confidence to make the correct decisions and to embrace innovation. Developing a new electronic ‘Licence to Operate’ is just one of the steps we have taken since the Lancashire Water Quality incident to build an intrinsic understanding of risk throughout our business.

Our risk management framework that analyses, captures and escalates risks raised from both top-down and bottom-up sources within the business will drive our future investment. The bespoke needs of the Water Network Plus price control — with a particular focus on our ambition of providing 100% wholesome water 100% of the time — are met by our Drinking Water Safety Plan risk scoring and the systematic review approach of hazards encapsulated in our HAZREV / NETREV methodologies. These various risk assessments are drawn together into our Wholesale Risk and Asset Planning framework. Further detail on how we manage risk is provided in Corporate resilience: Our corporate risk management framework – Ref: S4003.

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Our risk and value process provides a robust internal cost challenge once an escalated risk is identified as an investment requirement. This challenge ensures that the need is genuine and the proposed solution will deliver the most effective and efficient solution for the customer. In addition to a robust internal challenge we will also, where appropriate, explore whether looking to the market for an external solution will deliver better value.

3.3 Use of markets

Our intelligent use of markets will deliver substantial efficiencies and improvements for customers. These benefits are threaded throughout our plan with highlights including:

• Our Market Efficiency Mechanism (MEM) dramatically expanded the range of procurement routes at our disposal identifying []

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• We have identified a direct procurement route as our proposed solution to provide a resilient supply to Manchester and the Pennines. []

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• Third parties provided over 20% of the feasible options considered in our 2019 Water Resources Management Plan (for further details see Supplementary – WRMP – Ref: S5003). Responses to the draft plan we published for consultation recognised this as good practice and we will continue to consider many of these options as we explore opportunities for water trading.

• Our Innovation Lab (as outlined in Using markets and innovation – Chapter 6) epitomises our broader openness to new ideas. By engaging with forward thinking suppliers we continue to support and guide the development of new approaches. As outlined in the following sections, we can then feed these innovations directly into our plans to deliver better services for customers.

• Our bid assessment framework ensures that we will explore opportunities for 3rd parties to supply water at a lower cost or higher quality to provide the best value for customers. Full details of the bid assessment framework can be found in S5006 Bid Assessment Framework.

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4 AMP7 Delivery Plan

This section sets out our AMP7 plan to deliver these two outcomes: 1. We consider each outcome in turn, first setting out the specific customer views which have shaped our plan and the risks to delivering the service which our customers expect.

2. We then describe the activities through which we intend to meet the performance commitments that underpin the outcomes. For clarity, we have combined these activities into six groups, three for each outcome, as shown below. Inevitably, there are synergies between the outcomes and activities where our interventions deliver benefits across multiple areas.

Chapter sections Outcome Customer Risk & Performance commitment Activity groups views Resilience Water quality first Water quality compliance Taste and smell contacts Improving water Reducing discolouration from Your drinking water Customer Risk and aesthetics Vyrnwy is safe and clean views resilience Water in the home Working with customers Number of properties with lead risk reduced Unplanned outage Maintaining asset Mains repairs health Reducing areas of low water pressure You have a reliable Quick and effective Leakage supply of water Customer Risk and response to asset Reducing interruptions to water now and in the views resilience failure supply future Water service resilience Manchester and Pennine Building resilience for Resilience the future Per capita consumption Drought risk resilience

The costs associated with this outcome:

Outcome Opex Capex (£m) Totex (£m) (£m) Maintenance Enhancement

Your drinking water is safe and clean 572 138 10 720

You have a reliable supply of water now and in the future 854 112 287 1253

The natural environment is protected and improved in the way we deliver 2 7 0 8 our services You're highly satisfied with our service and find it easy to do business 5 39 48 92 with us Total 1433 296 345 2074

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4.1 Your drinking water is safe and clean

Customers want a reliable supply of high quality water that they can trust, in terms of both water quality and acceptability. To deliver this outcome we will continue to ensure water quality is at the heart of our decision making, achieving a significant reduction in water quality events and an improvement in the aesthetic parameters that impact customers’ perceptions of water quality.

Our water quality vision is 100% compliance with current and future drinking water quality standards, providing a reliable supply of safe clean drinking water for future generations.

4.1.1 Customer views

In considering the best options to secure safe clean drinking water it is important to both listen and react to the views of our customers, and incorporate their views into our preferred options. The majority of our customers have confidence in their drinking water (84%) and 81% of customers’ support what we are doing now to provide quality drinking water and feel no more is needed. Furthermore almost 40% reported that changes to their bill is of greatest importance5. With a large proportion of the North West in water poverty it is clear that increases in bills are to be avoided, and a capital intensive programme of work to add additional treatment processes does not feature in our plan.

Customers expect a safe clean supply of water that meets the required standards, but that provision of safe clean drinking water is judged by what they taste, smell and see. Safe drinking water and providing water that tastes and smells good and isn’t discoloured are two of the top three priorities identified by customers. A customer panel during July and August 2017 centred on three key themes - how important do customers perceive issues to be, what customers do and what do they want us to do.

Headline findings are:

• 84% of customers have confidence in their drinking water • 39% of customers will contact us about an anomaly with 10% contacting us when they initially detect a change in quality. • Customers are using a wide variety of newer channels to contact us and want us to communicate proactively with them to meet their growing expectations of service. • Areas for improvement that will be built into our plan are ease of use of our website for water quality and informing customers immediately, if not before an issue occurs, including the likely timescale to resolve the issue.

The Lancashire water quality incident was one of those instances where we let our customers down. Since then we have made many improvements based on lessons learned, extending those lessons to our colleagues in other water companies, so that this type of event need not occur again. We have also completed specific research related to this event and the Tameside event in December 2016 and built this feedback into our plans. For further details see Our Resilience case studies – Ref: S4002.

In our 2016 “YourChoice” customer survey, almost a third of customers said they are concerned about the quality of drinking water in their home. The research also found that customers are ‘very open’ to hearing more about water quality. Customers said they would be surprised and angry if told an issue was due to their own home (the DWI estimate that around 30% of regulatory failures are due to issues in the customers’ home).

5 As recorded in the Service valuation for PR19 (willingness-to-pay) Document – Ref: T1027 and Safe, clean drinking water research Debrief – Ref: T1050

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Figure 7: Your drinking water is safe and clean

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4.1.2 Risks and resilience

In developing our plan, we have identified the key risks that relate to the delivery of the Safe, Clean water outcome:

Inherent risk, asset health and maintenance

In response to challenges faced during AMP6, we have transformed our understanding of inherent operational risk, improving resilience of service and customer experience and the developed a multi-pronged strategy to risk management on our water treatment works and network assets.

This has included the development of an approach to review hazards affecting all elements across the water supply system. We have developed this ‘HazRev’ approach to ensure that we have a wider understanding of risk and effectively manage investment to mitigate against that risk. This approach is also being applied to network systems.

We have improved the resilience of our WTW though ensuring effective scheduling of maintenance activities, a review of all site specific disinfection policies, deployment of UV units and rapid UV deployment capabilities to protect the health of our customers.

We have improved site and central visibility and control supported by better data availability and use. The effective management of data is essential to totally understand and manage the risk to delivery of great customer service. We have addressed this with the delivery of a number of integrated systems including Aquavista (to visualise live and historic water quality results, customer contacts, events and the location of our network staff), our ERWAN system that monitors pressure and flow and our network SCADA systems which can now be used to collate data into reports to recognise issues over a long time series.

The Lancashire incident in particular identified a need to improve our capability to respond to incidents, as detailed in the case study box.

Third parties, stakeholders and customers

There are risks to water quality that lie outside of our direct control such as the activities of third parties, management of non- owned catchments and within the customers own home.

There are risks to the quality of our raw water from third parties, such as run off from farmland, storm damage, moorland fires, etc. We will continue to work with other organisations and stakeholders to increase awareness and identify joint interventions with our catchment based programmes. We are also continuing to work with stakeholders to identify joint interventions on non-owned catchments to both protect water quality and reduce discolouration. This is covered in more detail in our plan for the Water Resources Price Control, see Water Resources BP – Ref: S6007.

Public health

Lead in water poses a cumulative water quality health risk to customers that is mitigated through phosphate dosing. However phosphate is a costly and finite resource and the only sustainable way to reduce lead in water, and therefore the risk of lead exposure to the customer, is to remove all lead pipework from the water supply system.

Within the north west of England there are approximately 500,000+ lead communication pipes (company side) and estimated 1,000,000 lead supply pipes (customer owned). Whilst we can replace the company side pipes, there are currently limitations to what can be done on the customer owned side as this requires consent and co-operation from the customer. Lead risk reduction relies on the ability to influence the behaviour of the customer. We have developed two performance commitments to focus on this risk reduction ‘water in the home’ and ‘reducing lead risk’ that will be discussed in the Safe, Clean water outcome section of this document.

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Lancashire water quality Incident: Risks revealed and mitigated in AMP6.

The 12 months to December 2015 were very difficult operationally, with two category five water quality incidents and two boil waters affecting a significant number of customers, the most significant being the ‘Lancashire’ Cryptosporidium incident. This led to a challenge from the Drinking Water Inspectorate (DWI) that ‘UU needs a complete transformational change’. Through our water quality transformation programme, we refocused our AMP6 programme, working closely with the DWI to develop the programme of work, implementing lessons learned from incidents and a wide range of other projects across our water assets to reduce our inherent operational risk and to improve our service to customers. Also key to the transformation has been our ‘back to basics’ approach to operational procedures and practice, underpinned by ensuring water quality is at the heart of our decision making process and part of the culture of our organisation.

Some of the key projects in the AMP6 transformation programme are: • Ability to start up to waste at WTWs to prevent improperly treated or compromised water entering supply - we will be the first company to have delivered this to ensure we reduce operational risk and meet regulatory requirements • A holistic approach was agreed, completing a risk assessment of options for each WTW. Where there was no operational option available, innovative use of a flexible ‘bladder bag’ solution was considered and is now in use at a number of sites (as shown on the right) • Installation of UV and covering post first stage filtration processes • Rollout of a hazard review (HAZREV) approach to water treatment - the majority of interventions being completed in AMP6, with a small amount of early start AMP7 work, with action plans in place to mitigate any identified risks to water quality • Ensuring backwash water handling at all sites complies with the Badenoch and Bouchier (Cryptosporidium) recommendations • Accelerated inspection and cleaning of service reservoirs and completion of engineering studies required to bypass all service reservoirs • Targeted network cleaning of 70 water supply zones to reduce discolouration, with an accompanying long term strategy to address discolouration

In addition to the actions above, a resilience programme was established and subsequently 33 key resilience recommendations were agreed, each assigned a senior manager owner and an expert business lead. These recommendations are grouped into one of the following areas: • Root cause process • Incident management • Operational improvements • Customer management • Stakeholder and media communications • Risk management • Resilience

Water appearance and aesthetics

The soft, upland water sources that make up around 70% of our raw water sources mean that we are at a greater risk of discoloured water and taste and smell issues particularly an earthy-musty smell that is linked due to Geosmin (an algal metabolite) or 2-Methylisoborneol (2-MIB) from microbial by-products. It is predicted that changing weather patterns will impact on algal growth in reservoirs and these issues are likely to continue to be a challenge.

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The WRC report on climate change in January 2013 confirmed that “…Climate change is likely to lead to increased algal growth ….” and “…Cyanobacteria grow better at higher temperatures … the predicted warmer world of the late 21st century will be more suitable for these algae”.

‘WRC CP450 Climate change, algal growth and management of water supply’

These metabolites cannot be removed with conventional treatment processes like coagulation-clarification or filtration, and require more complex removal processes. Tackling these challenges, as well as continuing to reduce the impact of taste and smell experienced by the customer requires a holistic strategy.

Data analysis shows a strong correlation between discolouration rates and the hardness of water. Companies located South East of the geological divide, with a higher proportion of hard water have lower discolouration rates.

Figure 8: Geographical distribution of Water Companies across the UK and the corresponding underlying geology

Another risk to achieving targets for customer taste and smell contacts is chlorine. It is critical to maintain the balance between ensuring bacteriological compliance with a disinfection residual and minimising customer contacts. We have considered alternative disinfection strategies such as Chloramination used by Thames Water, a frontier company in this area. However, a number of complex factors including water chemistry, treatment, water stability and the highly integrated nature of our distribution network make this an infeasible option. Being able to re-zone the water supply system provides resilience in the system to provide customers water from alternative sources, however a change in source and chlorine can lead to an increase in customer contacts. We will mitigate this by improving customer communications where changes are required.

4.1.3 Activities and costs

This section summarises at a high level the actions we will take to deliver this outcome for our customers in AMP7. We then break down the performance commitments which underpin these outcomes into three activity groups which are covered in more detail in following sections. The diagram below shows the expenditure for the performance commitment associated with this outcome alongside the other costs which cannot be attributed to a specific performance commitment such as Environment Agency fees and business rates.

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Customers trust the quality of water that we provide because, as shown in Table 1 in the previous section, we act at every step of its journey from source to tap to ensure that it meets customers’ expectations for safe and clean drinking water. Underpinning this activity is a culture that puts protecting water quality at the heart of decision making; something which was reinforced by the Lancashire Water Quality Incident early in AMP6 (for further details see Our Resilience case studies – Ref: S4002). However, the same incidents identified areas for improvement, particularly around our understanding of operational risk, which we will continue to address in AMP7 through investment in training and developing our staff.

This enhanced understanding of risk will also translate into a more resilient and efficient programme of investment and maintenance in AMP7.

• We will work closely with the Water Resources price control to resolve water quality risks at source and manage long term water quality risks.

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• At water treatment works, alongside our Figure 9: Our industry leading approach to service conventional maintenance programme, we plan reservoir flood testing ensures potential routes of to invest £35m in solutions identified through ingress are identified engineering-led reviews of treatment processes (see details on HAZREV below).

• Within the distribution network, we plan to invest £36m in our service reservoirs to continue provide a resilient supply of water without prejudicing water quality. Other routes for ingress will be limited by investment to maintain our valves and reduce pressure transients (see the Reliable Water Supply section below).

Customers’ trust in water is - to a large extent - driven by how their drinking water tastes, smells and looks. Therefore we will invest £19m to remove the typically earthy and musty tastes which algae can impart to water from upland sources and optimise our chlorine doses to supply safe water without an unpleasant taste or odour. To manage the risk of discolouration we will extend our programme of water treatment works optimisation and mains cleaning. We will also instigate cleaning of the Vyrnwy Aqueduct if our manganese removal project at Oswestry water treatment works proves unsuccessful at resolving the problem at source.

By building customers understanding of water quality through our Water in the Home performance commitment, and the associated investment, we will also seek to address the risks that exist within their properties. Customer awareness of the risk posed by lead, alongside concerns over water pressure, drives our Lead and Common Supply Pipe replacement scheme. We will also forecast that we will invest £16m in removing lead pipework, including our innovative proposals to explore full lead pipe replacement.

Further detail on these investments - including the options considered, costs and activities - is Activity groups Performance commitment provided over the following pages. The five performance commitments which align to the Water quality first Water quality compliance Safe, Clean Water outcome have been grouped by Taste and smell contacts activity areas as shown on the right. Improving water aesthetics Reducing discolouration from Vyrnwy

Water in the home Working with customers Number of properties with lead risk reduced

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Outcome: Water Quality First Your drinking water is safe and clean

Summary

The activity grouping ‘Water Quality First’ aligns to the performance commitment ‘Compliance risk index’ (CRI). CRI is a new common performance measure developed by the Drinking Water Inspectorate (DWI) in consultation with water companies. It will replace the current mean zonal compliance (MZC) metric. This new measure takes into account the consequence of failures using the prescribed values in the Regulations, any potential health risks, the population affected and the assessed actions of the company in response.

Current Performance In 2017, we achieved 99.97% compliance in the current water quality measure ‘Mean Zonal Compliance’, compared to average performance of 99.96% in England and Wales Overall trend of reducing the number of customer contacts for taste and smell, and discolouration Overall trend of improvement for water treatment works bacteriological compliance, and improvements in service reservoir coliform performance Shadow reporting for CRI has shown improving performance from 4.45 in 2016 to 1.28 in 2017. Target is zero.

£450m Totex Efficiency Customer Expectation Our WRAP framework, decision Majority of customers have confidence support tools and robust internal cost in their drinking water (84%) and 81% challenge will guide us to select the of customers support what we are best option for customers. doing now to provide quality drinking water and feel no more is needed

Risks Innovation Performance for this measure can Increasing use of 24/7 monitoring fluctuate significantly depending which ! in the ICC to proactively intervene parameters fail, where they fail and how to improve WQ the DWI inspector assesses the fail. This makes this a volatile measure and difficult to assess future performance. End of AMP Future Targets

Performance Commitment Units AMP6 AMP7 AMP8 AMP9 AMP10

Water Quality Compliance (CRI) Index 2.92 0 0 0 0

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4.1.4 Water quality first

We will continue to embed and refresh the culture change work started in AMP6 to ensure that water quality is at the heart of our culture and decision making process. This activity will ensure that we continue to make water quality the central focus for all that we do, building on transformation programmes started during AMP6.

• We will continue to train and develop our staff so Figure 10: Maintaining high standards at Water they have the skills and confidence to make the right Treatment Works is recognised through our Sites decisions to protect water quality and ensure our Standards scheme processes are efficient.

As a basic requirement, everyone who works in, or supports, the water element of our business completes regular water quality awareness training. This is supported by more in depth training such as Regulation 316 training for project managers and Water Hygiene accreditation.

We are closely involved - chairing the National Working Group - in the Licence to Operate scheme for Water Treatment Works Process Controllers and by 2025 intend to move to an ‘electronic Licence to Operate’. This will provide an online training record, a knowledge assessment every 3-5 years, and development of an individual training plan to raise

competence across the business to a consistently high level.

• Our HAZREV approach will identify and mitigate Figure 11: Investment needs raised through WRAP and risks to water quality through our treatment our bottom up tier process are prioritised through processes. This is a review, led by our expert WRAP. deployed engineers, of how each element of each site was designed and how it is operated to meet the current needs of customers. By bringing together all the underlying data with the know- how of our operational staff - and viewing the system in its entirety – our use of HAZREV in the latter half of AMP6 demonstrates that it is highly effective at identifying inherent risks and inefficiencies in our sites.

Moreover, when the solutions that are generated are compared against alternative options through our Wholesale Risk and Asset Planning they are frequently shown to be more efficient than the traditional alternatives. Building on this success, we have earmarked £35m to invest in solutions developed through HAZREV process. For further details, see Corporate Resilience – Ref: S4003

• We will also continue to increase the efficiency of our conventional, bottom up maintenance activities. This is covered in more detail in ‘Reliable Supply of water’ section below.

6 These regulations govern which construction products and materials can be used without prejudicing water quality. See: http://dwi.defra.gov.uk/drinking-water-products/what-is-reg-31/index.htm

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• We will continue to develop an integrated network Figure 12: Our treatment processes are supported by through increased automation and remote control an increasingly intelligent array of monitoring, with in order to identify issues earlier, respond quickly mimics for analysis in our Integrated Control Centre and therefore minimise impact on customers and deliver cost efficiencies. This will be linked to our Integrated Control Centre where improved data coverage, the analytical tools and the technical expertise will give the situational awareness and oversight necessary to protect water quality. Building on the success of our ERWAN event recognition software in the water network, we are applying the same principles to water treatment and expect to trial a prototype in 2019. We will take opportunities to broaden this approach in AMP7 if it proves successful.

• The development of our intelligent centre will be supported by ongoing work with suppliers and

academia to develop and refine the next generation of water quality monitors, with an emphasis on gaining fast results and increasing portability. Examples include flow cytometry, a technology which has advanced rapidly in AMP6 to quantify and differentiate between alive and dead cells, and more forward looking technologies such as Ion Mobility Spectrometry to identify substances.

• In AMP7 we plan to invest £10m to complete our Figure 13: An connection is made as part of our project to enable all of our treatment works to ‘Start 'Start up to waste' project up to waste’. This is a critical milestone – which we will be the first in the UK to achieve – that means sites do not introduce water into the distribution network until the treatment process is properly established and water is being treated fully. At Watchgate WTW, our largest production site, the preferred solution will also increase the resilience of supplies by creating multiple streams which can operate independently should individual pieces of equipment require repair.

4.1.5 Improving the taste, smell and appearance of water (aesthetics)

Our current strategy to deliver water aesthetic improvement is based on combined source to tap interventions starting with catchment management and raw water sources, optimised water treatment and water network management. By balancing interventions across a multitude of areas, we are able to achieve the best overall improvement strategy and cost for customers.

Our performance commitment sets us a target to reduce customer contacts regarding taste and odour by 20% by 2025 and 50% by 2045, leading us to look at options across catchment, treatment and distribution. Our plans to offer an enhanced service to customers and meet this stretching target are detailed in a specific document (Ref: 6026 Taste and Smell) so we include only a brief summary here:

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• We will continue to work with the Water Resources Figure 14: The bubble barrier at Wayoh WTW, price control to reduce the risk of taste and smell visible due to low water levels in summer 2018. through our 42 Algae Management Plans. The learning that we have gained from implementing these plans in AMP6 will be supplemented by new developments, including enhanced production planning capabilities in our Integrated Control Centre to maximise the opportunities offered by our supply system and select the best sources for customers.

• Our mobile powdered activated carbon rigs give us the flexibility to provide temporary treatment at different treatment sites, reflecting the transient nature of algal Figure 15: Rivington WTW, one of the sites where blooms and avoiding the cost of installing permanent we intend to install granulated activated carbon treatment. At present we use chlorophyll-A as a in AMP7 surrogate to deploy the rigs because the existing

methods to detect geosmin, a key compound which causes taste and smell, take four days to produce a result. Therefore we are collaborating with Liverpool University to develop faster sensors; for more details see Innovation in action – Ref: S5001.

• Where portable activated carbon is not cost effective, due to the concentration of geosmin or the length of time it occurred, we plan to invest £3.5m to install granulated activated carbon treatment at four of our water treatment works. This offers a lower whole life cost than the existing options for advanced oxidation which carry high chemical or power costs.

• In UV LED technology we have identified a potential Figure 16: The prototype UV LED reactor at disruptive technology that offers the opportunity to Cumwhinton Water Treatment Works achieve advanced oxidation for substantially lower cost. We are working in partnership with Typhon Treatment Solutions Ltd, to trial their prototype UV LED treatment unit at Cumwhinton water treatment works. Early tests are producing positive results for geosmin removal, alongside a potential 90% lower energy requirement.

• UV LED may also address the other main source of contacts about taste and smell; changes in the level of chlorine. In AMP7 we plan to optimise chlorine residuals within the water network to provide customers with a consistent level whilst still ensuring that we protect the quality of water all the way to the tap. The more accurate chlorine decay modelling technology and real- time monitoring of residual chlorine levels, that we have pioneered in West Cumbria will support this, provided more detailed information on changes in water quality once it enters the distribution network.

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A reliable supply for West Cumbria decay modelling to ensure consistent water quality

By 2022 as part of our Water Resources strategy, raw water from Thirlmere Reservoir will be treated at a new water treatment works. A network of new distribution pipes will take the treated water from the site to service reservoirs, where it will be stored ready to supply customers in West Cumbria. This will mean a change of source water for Allerdale and Copeland DMZs.

We have worked with Atkins to develop and implement industry leading modelling of the network for chlorine decay, using the latest monitoring technology. This predicted chlorine levels required at the WTW and whether secondary dosing would be required to achieve the optimal chlorine residual at the customers tap. The diagram below shows the chlorine decay findings.

The calibrated solution model, using temperature and organics has identified a need for secondary chlorination at three service reservoirs (SRs), one in the West and two in the South of the region. Feasibility studies are now underway for the lowest totex solution at each of these sites.

Similarly, successfully reducing discolouration contacts will require a combination of proactive risk reduction measures and operational control. There is also an area of specific concern related to customers who receive greater than 50% of their source water from via the Vyrnwy aqueduct (for further details S3001 Performance commitments technical document). Meanwhile, water quality samples which fail to meet turbidity standards (or related parameters such as iron or manganese concentrations) will be recorded against the Water Quality Compliance performance commitment discussed in Section 4.1.4 above (as a consequence, investment to reduce discolouration is also mapped to that commitment and outcome).

In AMP7 and beyond our focus will be on the delivery of the revised discolouration risk assessment and the subsequent interventions at source, treatment, storage facility, and distribution assets in partnership with an enhanced awareness of the effects of asset operation on the risk of discoloured water. This will be complimented by our network hazard review approach. This new approach will identify, document, and prioritise mitigation actions to manage holistic water quality and water supply risks across the distribution system.

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To reduce contacts regarding discolouration we plan to:

• Continue our focus on water treatment works Figure 17: New lamella clarifiers installed at optimisation to reduce the residual metals, Oswestry WTW as part of optimisation in AMP6. especially iron and manganese, entering the distribution system. We will also explore how we can stabilise the chemistry of the water we abstract from upland sources to make it less susceptible to discolouration (whilst ensuring that these changes do not affect the taste or smell of the water).

• Our activities in the water network will be spread across three areas:

o Prevention: Through training our staff to assess the risks of discolouration and Figure 18: Samples taken to assess the effectiveness operate network properly, maintaining the of robust flushing health of our network to prevent bursts (see

Section 4.2 below), and trialling new concepts such as ‘smart District Meter Areas’ which stabilise pressures we will prevent the sudden flow changes which can mobilisation of discolouration materials.

o Intervention: The data gathered in our integrated control centre, and disseminated through our Wholesale Risk and Asset Planning process, will identify assets with a high risk of causing discolouration and the most effective mitigation action. We have earmarked £10m to invest cleaning mains through AMP7, including robust flushing and the PODDS approach developed by Sheffield University.

o Reaction: When disruption occurs in the network, due to bursts or other factors such as third party damage, our actions to restore supplies quickly and effectively (see Section 4.2 below) will also reduce the risk of discolouration. The intelligence held in the Integrated Control Centre, and analytics such as ERWAN, will allow us to proactively intervene and manage network events (ERWAN is further discussed in the Reliable water outcome).

• Vyrnwy LDTM mains cleaning – During AMP6 we are tackling discolouration in the water supply zones downstream of the Vyrnwy treated water aqueduct through the innovative and more cost-beneficial solution of manganese removal at Oswestry WTW. Following assessment of the discolouration levels after the completion of this scheme - if the discolouration target is not met - we will be obliged by the DWI to provide a proposed future programme of work for the zones supplied by the Vyrnwy aqueduct under the terms of the current legal Notice or face prosecution.

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Outcome: Working with Your drinking water is safe and clean customers Summary The activity grouping ‘’Working with Customers’ aligns to the performance commitments ‘Number of properties with lead risk reduced’ and ‘Helping customers look after water in their home’ The lead measure aims to sustainably address the long term challenge of customers’ exposure to lead in the north west of England by the complete removal of any lead pipework in the supplying service pipe. This has been grouped with ‘helping customers to look after water in the home’ as both measures rely on customer information, education and cooperation.

Current Performance

Lead performance has been improving with 99.715% compliance against the standard of 10ug/l in 2017. This equates to 5 sample failures out of 1754 samples. Successful trial schemes have been completed during AMP6 and we will build on this in AMP7. We will continue to improve customer communications moving away from a silent service approach

Efficiency £3.8m Totex Customer Expectation The replacement of lead pipework From priorities research, the will enable a reduction in phosphate provision of good quality, safe dosing and in the long-term drinking water and a reliable supply efficiencies in chemical costs of water was the top priority for 78% of surveyed customers.

Risks ! Innovation We are proposing to investigate This is a new approach to addressing alternative ownership models and trial lead and water issues in the customer replacement of all lead pipework, home. We will investigate new Customer attitudes to this are ownership models and technologies to untested and therefore level of support this approach support is an unknown

End of AMP Future Targets

Performance Commitment Units AMP6 AMP7 AMP8 AMP9 AMP10

Number of properties with lead pipes Replacements 0 2,800 29,500 85,000 100,000 removed per year Helping customers look after water in Increase in Baseline 10% 20% 30% 40% their home awareness

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4.1.6 Working with customers

The water quality that the customer receives at their tap can be influenced by the plumbing at the customer’s property as well as how they use their water in the home. This includes water quality, particularly in relation to lead supply pipes which are currently under the ownership of each customer.

We will improve how we communicate and the frequency, moving from a silent service to working together to highlight risks within the confines of the home to water quality. We will deliver a customer water quality communication plan, to explain the risks and possible solutions to encourage customers to change their behaviour. We will work with customers to ensure that the activities they undertake within their own home will not have a negative impact on their water quality. We will also cover water efficiency within these communications; the intention being that we will communicate key water messages in a simple way to avoid confusion. We will work with members of our customer panel to develop the most effective communication styles. In developing this plan, we have considered the long-term balance between phosphate dosing and optimisation and lead pipe replacement.

To reduce the risk from lead we plan to:

• Build on the success of our trials in Newton-in-Bowland Figure 19: Connecting a lead pipe replacement to and Maghull (see case study below) to explore new the customer's tap ownership models that permit full lead pipe removal in high risk areas. This will be backed up by a bespoke performance commitment to incentivise full lead pipe replacement and the £2.8m associated investment. We believe that full replacement – removing lead pipe from the customers’ supply – is the best long term approach to reduce public health risk and meet the 5ug/l threshold that is likely be imposed through the Drinking Water Directive. For further details see S3001 Performance commitments technical document.

• Continue our existing approaches to opportunistic lead replacement (taking opportunities to replace lead pipes as part of other work) and our Lead and Common Supply Pipe scheme (where a customer replaces their part of the lead pipe and satisfies qualifying conditions, we will replace our part as well). As in previous years this will be supported by customer communication and education, particularly aimed at public buildings. This approach is in line with the latest DWI guidance and better protects public health.

• Maintain phosphate dosing where required to reduce the rate at which lead dissolves from pipes, fixtures and fittings into the water supply.

To help customers look after water in their home we will:

• We will work closely with customers to improve awareness of the impact that internal plumbing can have on the quality of the water that they consume and drive the promotion of the industry approved plumbing scheme ‘water safe’.

• Develop and deliver an on-going customer water quality communication plan ‘Helping customers look after water in their home’. For further details see S3001 Performance commitments technical document.

• We will work with partner organisations to promote plumbing systems compliant with the Water Supply (Water Fittings) Regulations at every opportunity (we use the Water Industry Approved Plumbers' Scheme administered by WRAS - the largest of the industry-backed Approved Contractors' Schemes).

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Removing lead risk – working with customers in Newton in Bowland and Maghull

Newton in Bowland is a small discrete supply with an individual phosphate dosing rig. The work we carried out was to test the impact of replacing lead pipes in the water supply, with a view to removing the phosphate treatment. The test was to see whether there was a negative impact on lead compliance with the treatment removed.

We explained to the community the benefit of replacing all lead pipes in the supply system, including the customers own pipework, to permanently remove the risk, rather than continuing to dose phosphate which minimises but doesn’t eliminate the risk.

All lead has been removed and we had stopped phosphate dosing in this DMA in September 2016. These customers are no longer at risk from lead in their drinking water. Stopping the phosphate dosing has delivered small efficiencies, (mostly because of the scale of the treatment) and has helped us to understand what happens in the supply network when phosphate dosing is removed.

The trial area in Maghull was quite Figure 20: Customer engagement ahead of full lead different; it is a larger area and has a high pipe removal trial in Maghull risk of lead non-compliance. The aim was testing the rate at which customers would accept a full lead pipe replacement that the company is funding. Maghull was chosen because it has a high non- compliance for lead relative to other surrounding zones. The uptake rate of the 1846 properties was just less than 60%. A comprehensive lessons learned review was completed and the findings captured in an understanding risks and issues report. These findings, both strategic and relating to specific operation of the project, will be applied to future projects.

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4.2 You have a reliable supply of water now and in the future

This section describes how we have determined our plan to deliver this outcome with input from customers and stakeholders, explains our understanding of key risks and how we will manage these to improve resilience. Figure 25 shows the investment that we have allocated to implement these plans; the final pages of this section summarises where this investment will be made.

4.2.1 Customer views

Put simply, customers expect a supply of water that they can rely on. This section summarises their specific views on this outcome, for further information on how we engaged with customers see Chapter 2 – Voice of the customer: our approach to engagement.

Our long term strategy to balance supply and demand reflects extensive customer research and stakeholder engagement; this has been recognised as good practice in the consultation responses to our draft Water Resources Management Plan. Broadly speaking, they are content with the existing balance of risk but - as a matter of principle - they expect us to reduce the amount of water which is wasted. They want us to achieve a meaningful leakage reduction and to work with them to reduce the demand for water. Further details on the customer research underpinning our Water Resources Management Plan is available in the Revised Draft WRMP19 S5003.

Reducing interruptions is a significant priority for 95% of customers7 and is a consistent theme throughout our conversations about i) short-term supply interruptions8; ii) low probability, high impact risks such as the loss of major assets9; and iii) preserving a sustainable balance of supply and demand for the future10. However, as outlined in the ‘Customer expectations for resilience’ section of Securing Long Term Resilience– Chapter 4, their tolerance of risks and willingness to pay for improvements is more nuanced.

On the subject of supply interruptions, customers have some tolerance of brief interruptions but longer periods without supply create real issues8. For these substantial interruptions, customers tell us that it is more important that we reduce the number of interruptions experienced over the duration of incidents when they do occur8. This is reflected in the activities outlined below with their focus on preventing the failure of our assets, responding quickly to failures before they affect customers and building resilience to major risks. The appetite for bill increases to pay for improvement is limited7, making it critical that we innovate to operate more efficiently and deliver better service for a lower cost.

Customers’ specific views on the loss of critical assets echo their more general views on supply interruptions but their appetite for investment is greater; they want permanent solutions to restore supplies almost immediately, not cheaper solutions which would take 2-3 days to implement8. Our specific research relating to the resilience of supplies to Manchester and the Pennines tells a similar story – albeit on a somewhat larger scale – with both residential and business customers show a clear preference for solutions that provide secure a low residual risk (this is described in greater detail in Manchester and Pennines Resilience – Ref: UUW_WN1_M).

7 Service valuation for PR19 (willingness-to-pay) Document – Ref: T1027 8 Interruptions to supply research – Ref: T1052 9 Manchester & Pennines resilience research – Ref: T1047 10 See Revised Draft WRMP19- Ref: S5003

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Figure 21: Securing reliable water supplies

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4.2.2 Risk and resilience

Maintaining a reliable supply of water for customers is multifaceted and there are interacting factors which, together, can both build resilience and increase risk.

The key area under our own control is the health of our Figure 22 Screen shot from Augmented Reality method own assets; if we fail to maintain a healthy, functioning statement for PLC replacement at Sweetloves WTW system then we will see a decline in the service offered to customers. Conversely, if we continue to invest wisely in New technologies allow us better manage service risk whilst our assets, they will continue for provide services for maintaining the health of our assets. generations to come. In AMP7 we have opportunities to take advantage of rapid developments in technologies and ways of working to maintain our assets more efficiently and effectively.

Asset health indicators can react unexpectedly to different drivers and new developments. Finding and repairing long-standing hidden leaks, for example, will simultaneously increase the number of mains repairs and improve the health of our distribution network.

Figure 23 [] []

[]

[] [].

There are also risks arising from the impact of external Figure 23: Challenging conditions during the 'Beast for influences. Examples of acute shocks over recent years the East' in Spring 2018 rd include Storm Desmond flooding assets in Cumbria, 3 party damage to mains in Widnes, and the impacts of the ‘Beast from the East’ freeze thaw event. Prolonged hot and dry weather, such as we are experiencing in 2018, can also affect both demand and availability.

In all cases, it is important that we reduce risk and build resilience wherever in the system it provides the most effective benefit for customers. This may be at an asset level, for example, cutting leaks to reduce wastage. Equally, it could be at an organisational level, for example, by proactively responding from an intelligent centre. Our response to the ‘Beast for the East’ demonstrated the value of centralised intelligence and awareness of an evolving situation.

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4.2.3 Activities and costs

This section summarises at a high level the actions we will take to deliver this outcome for our customers in AMP7. We then break this down into three activity groups which are covered in more detail in following sections. The diagram below shows the expenditure for the performance commitment associated with this outcome alongside the other costs which cannot be attributed to a specific performance commitment such as Environment Agency fees and business rates.

Figure 24: You have a reliable supply of water now and in the future: AMP7 Totex

Our long term investment in maintaining our water network has delivered at high level of asset health; the average age of our mains is 46 years compared to an industry average of 55 years, and our mains failure rate is one of the lowest in the industry. This gives us a strong foundation for the future which we will sustain by investing in more controlled and intelligent operation of our network, particularly installing advanced control valves and minimising pressure transients. We also plan to invest £25m in proactively replacing mains that our Mains Cohort Analysis identifies as having an elevated high risk of failure, affecting both leakage and the reliability of supplies.

However, the relative availability of water resources in the North West has allowed us to maintain a higher level of leakage than much of the industry whilst still remaining in a water supply/demand surplus. We will embrace the challenge from customers and stakeholders to change this and reduce our annual leakage by 15% by 2025. This will be achieved by a direct investment of £299m, and crossover investment against other measures such as mains repairs. On top of our activities to maintain a healthy distribution network, we will build our capabilities to find and fix leaks faster using an innovative array of techniques. This includes a £40m investment outside of our base maintenance program in a network of acoustic loggers to find hidden leaks and detect new ones faster (see Ref: S6022).

Our supply interruptions performance, equally, does not match our aspirations to deliver upper quartile performance. Therefore we have set this upper quartile threshold as our performance target for AMP7, which would halve the disruption experienced by customers. The step change needed to hit this target may not be achievable within the five year period but the £286m investment that we have earmarked - and the protection for customers provided by the associated outcome delivery incentive - creates the conditions for substantial service improvements for customers in the long term.

This investment stretches across our whole system funding both the maintenance of assets, as outlined above, and improvements to deliver the step change in performance. At Water Treatment Works we plan to invest £20m to complete the work we began in AMP6 to i) construct a new, highly resilient, works to supply West Cumbria and ii)

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ensure that all sites can start up to waste without sending improperly treated water into supply. This will establish the baseline for our Water Service Resilience outcome delivery incentive. Within our distribution network we have earmarked £40m for specific purposes like reducing the likelihood of bursts, enhancing and enabling our contingency plans and trialling intelligent valves that can open up connections between areas.

We also plan to build resilience for the long term. The biggest component (£73m) of this will be establish our project to enhance the resilience of supplies to Manchester and the Pennines. In other areas, our innovative Water Service Resilience performance commitment will protect the level of resilience to which we have already committed, and incentivise innovative solutions which build resilience. Our plans to reduce per capita consumption by 3%, in concert with reducing leakage, will increase the headroom in our supply-demand balance. Reducing leakage helps to mitigate the risk of longer-term uncertainty such as climate change, whilst also reducing the frequency of drought permits/orders and improving drought resilience.

The following three sections contain details on our planned costs and activities to meet the performance Activity groups Performance commitment commitments related this outcome. For clarity, we organise them into three activity groupings as shown Unplanned outage on the right. Maintaining asset Mains repairs health Reducing areas of low water pressure Quick and effective Leakage response to asset Reducing interruptions to water failure supply Water service resilience Manchester and Pennine Building resilience for Resilience the future Per capita consumption Drought risk resilience

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Outcome: Maintaining You have a reliable supply of water now and in the future Asset Health Summary

We will invest wisely in our assets so they continue to provide a reliable service for current and future customers at an affordable cost. We’ll measure the health of our assets using three performance commitments:

1. B04-CF: Unplanned outage 3. B07-WN Reducing areas of low water pressure 2. B02-WN: WN Mains repairs Current Performance The investments we have made over the last 30 years have resulted in a dependable asset base. Our rate of mains repairs and low pressure problems comfortably out-perform the industry average, and the reliability of our water treatment works is benefitting from increasing proactive maintenance. Meanwhile, our large fleet of reservoirs (many of which sit in the Water Resources Price Control) has necessitated an industry leading approach which continues to build more resilience.

Efficiency £152m Totex Customer Our WRAP framework, decision support tools and robust internal Expectation cost challenge will guide us to Customers expect us to continue select the best option for to deliver services for current and customers. future generations, and support phased investment in our assets to deliver this.

Risks Innovation New technologies, such as The key risks to this outcome are ! intelligent control valves, will environmental; changes in weather protect assets and prolong their could drive increased mains failure lives. rates or deteriorating raw water We will innovate across our quality. The rate and predictability operations to maintain our asset of new development is also a factor more efficiently and without in low pressure problems. putting customer service at risk.

End of AMP Future Targets

Performance Units AMP6 AMP7 AMP8 AMP9 AMP10 Commitment Proportion of total Unplanned Outage 11.02% 10.58% 10.06% 9.57% 9.10% production capacity Repairs per 1000km Mains Repairs 90 125 125 125 125 of main Properties with low Reducing areas of low pressure, per 10,000 0.811 0.647 0.626 0.610 0.592 pressure connections

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4.2.4 Preserving asset health

The health of our assets underpins our ability to deliver a reliable service to customers. Aiming for efficient maintenance leads us to look at options across the lifecycle of the asset including when and how the asset is operated, monitored, maintained and replaced. To guide investment we will continue to use and improve our industry-leading range of decision support tools (See Asset health - Ref: S4001). We will use these tools to build, test, and evaluate the whole life cost and benefits to customers of all interventions and programmes of work.

Highlights of our planned interventions at water treatment works include:

• Embedment of our Hazard Review (HAZREV) process, backed up with £35m of planned investment, to increase efficiency and lower risk at water treatment works. As discussed in the previous section, HAZREV uses the expertise of our team of Deployed Engineers and operational staff to complete a comprehensive review of the process, what hazards exist and how they can be mitigated most efficiently.

• In AMP6 we have completed our Mobile Asset Figure 25: Our MARS project in AMP6 allows Resource Scheduling (MARS) Programme, which will proactive and reactive work to be scheduled to translate into more efficient operations in AMP7 and staff through their mobile devices beyond. The investment made in this programme enables activities – including inspection and maintenance of equipment – to be scheduled for field staff through their mobile devices. Our scheduling team sits within the Integrated Control Centre managing both preventative maintenance to manage risk and reactive maintenance to bring failed assets back into service before they affect customer service.

In the distribution network we plan to:

• Replicate the success of our HAZREV process and, through NETREV, applying the same principles to reduce risk in the water network.

• Continue to optimise pressure through the deployment of pressure management systems. This is now business of usual activity and we have allocated £5m for work that has been prioritised through our WRAP process (see Corporate risk management framework – Ref: S4003). We will invest in new schemes, installing more intelligent valves, and more effective maintenance of the existing valves.

• Work closely with developers to ensure new and existing customers receive a reliable supply of water with sufficient pressure. The growth within our region, we forecast, will generate a £41m investment requirement to reinforce our network (see S6023). We will also engage with developers to ensure that new connections and requisitions are of sufficient standard to provide good service to customers; our existing good work in this area already having been recognised by Fair Water Connections11.

• Reduce the number of poor condition mains which have a high risk of failure and affect water pressure customers. This will be done by investing £10m in targeted replacement or rehabilitation of our poorest performing assets be identified through our distribution operation and maintenance strategy (DOMS). We also propose investment of £25m to proactively replace entire cohorts of distribution assets from within areas of our distribution system where this represents the cheapest whole life cost. This proactive investment is focused on the replacement of asbestos cement mains (80%) and cast iron mains (20%) were we can demonstrate that they have reached the end of their useful asset life, and replacement or refurbishment with

11 See Fair Water Connections Assessment, of Water Companies Compliance Against Ofwat Adoption Code Requirements. (http://fwconnections.org/FWC_Support/FWC_Assessment_Water_Co_Adopt_Code_Compliance_(Apr18).pdf)

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new polyethylene pipe will deliver a service improvement to customers. The average return period on this investment is 12 years, and will provide new assets with a 90 year service life.

• Proactively maintain non-infrastructure such as pumping stations and reservoirs to ensure availability and maintain a low risk of failure. We will also invest £6m in maintenance and modifications to pumping stations to ensure they do not create pressure transients – damaging pressure shockwaves that can spread through the network when pumps either start or stop suddenly.

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Outcome: YouOutcome have a : Quick & Effective Response You have areliable reliable supply supply of of water water

Responseto Asset Failure to Asset Failure nownow and and in in the the future future Summary

A certain number of asset failures are inevitable but our resilient systems will protect customers from the impact. We will measure this through the two performance commitments which directly reflect customers’ priorities:

1. B01-WN: Leakage 2. B03-WN: Reducing interruptions to water supply Current Performance

Our current performance against both measures falls short of our aspirations. Driven by the relative availability of water resources in the North West, our leakage rates are the second highest in the industry so we are setting stretching targets to reduce them in AMP7 and beyond. Against supply interruptions, we have reduced disruption by 70% since 2001 but set ourselves a target to go further and reach upper quartile in AMP7. Though we may not hit this very stretching target, the commitment creates the necessary incentive to drive performance improvements for customers. Customer Expectation Efficiency These are two key areas where • A fast and effective response, £585m Totex customers expect improvement. coordinated from our ICC, • 90% of customers want us to focus typically will build more efficient on reducing leakage. and flexible resilience than hard- • For 95%, reducing supply engineering solutions. interruptions is a priority. • Our Market Efficiency Mechanism However, customer acceptability of has identified a £105m efficiency bill increases in low so efficient, against our repairs and innovative solutions are at the heart maintenance contract. of our plan.

Risks Innovation External factors - such as extreme ! Innovation will deliver more weather and 3rd party damage – can intelligent, efficient responses. We will affect performance. be able to find and locate leaks faster, It is also important to recognise that and have enhanced capabilities in our stretching performance targets, ICC to identify, diagnose and guide our requiring a step change in response to failures. performance, carry an inherent risk. End of AMP Future Targets

Performance Units AMP6 AMP7 AMP8 AMP9 AMP10 Commitment Leakage Reduction from Baseline 15.0% 23.5% 29.8% 36.0% (annual performance) baseline (annual) Leakage Reduction from (performance baseline (three year Baseline 8.7% 21.1% 28.5% 34.8% commitment) average) Supply Interruptions (performance Average minutes 12:00 06:00 06:00 04:40 04:05 commitment) and seconds lost Supply Interruptions per customer per (anticipated year (mm:ss) 11:50 07:57 06:00 04:40 04:05 performance*)

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4.2.5 Quick and effective response to asset failure

It is neither efficient nor realistic to prevent all asset failures. However, as part of ensuring resilience in the round, we will have the interventions in place to prevent or minimise the impact on customers. This is ultimately about the impact on customers so we measure this with the performance commitments that reflect their experience.

To reduce leakage, in addition to the asset health activities described in the previous section, we will:

• Apply the findings of our extensive search for Figure 26: Snipe, our first leakage snigger dog, is innovative and effective approaches to conduct trained to detect chlorine our existing leakage detection activities more effectively and efficiently, allowing us to find more leaks for a lower cost. For example – having proved their value finding leaks on lengthy rural mains where poor access makes traditional leakage detection inefficient – Cape SPC are training further sniffer dogs to build capabilities for the next five years. For further details see S3001 Performance Commitments technical document.

• Invest £40m in a new network of acoustic loggers providing long-term, sensitive and continuous observation of the network. The purpose of this system is twofold: i) it will locate small existing leaks that we cannot detect with the current techniques, and ii) we will be able to respond to new leaks faster, reducing burst run times and increasing our efficiency. This is discussed in more detail in Ref: S6022.

Figure 27: Leak localisation outputs from one of our • Repair leaks quickly and efficiently. The volume of acoustic logging trials repairs which we will complete - we have

earmarked £299m for the identification and repair of failed mains in AMP7 – places an even greater emphasis on the efficiency of our repair costs. As discussed in Using markets and innovation - Ref: Chapter 6, our Market Engagement Methodology identified that a ‘Strategic Relationship’ approach offered the best combination of £105m savings and access to specialist external skills, whilst retaining our own integral role of delivering high- quality service for customers.

£105m prospective savings on Repairs & Maintenance work across our Wholesale business through our Market Engagement Methodology

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To reduce supply interruptions, in addition to the asset health activities described in the previous section, we plan to:

12 • Invest £13m to install connections and valves Figure 28: Our fleet of 'Water on wheels' tankers, or which enable i) areas affected by interruptions to 'alternative supply vehicles', ready to support be quickly isolated and resupplied, and ii) our fleet customers' supplies following a burst in Runcorn of ‘Water on Wheels’ tankers to be quickly and safely refilled and deployed into the network. For further details see Ref: S6025. We also plan to trial ‘dynamic DMAs’ which use intelligent valves to open up a resilient network during the day and close it down again at night to identify leaks.

• Continue to learn from experience and test new ideas – such as having tankers driver trained in protecting water quality available 24/7 and rapid response repair gangs – to maximise the effectiveness of our contingency plans.

• Invest £10m to replace sections of asbestos cement and polyvinyl chloride mains which, when

they fail, typically break along a full 6 metre length and therefore pose a higher risk to customers’ Figure 29: A burst on a 10" polyvinyl chloride main in supplies. Chorley, 2018

• Bring more live data into our Integrated Control Centre, develop the teams and processes to analyse this data and give them the skills and confidence to lead a response based on the best intelligence. Developing these operational monitoring capabilities lays the foundations for the next generation of predictive analytics and monitoring to resolve asset failures before they affect customers.

12 This £13m also includes funding for the reduction of pressure transients as outlined in the previous asset health section.

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Outcome:Outcome : QuickBuilding & EffectiveResilience for the YouYou have have a reliable a reliable supply supply of water of

Responsefuture to Asset Failure water nownow and and in thein the future future Summary

The impact of some events – such as the loss of critical assets like the Haweswater Aqueduct and a severe drought - is so large as to be unacceptable to customers. Therefore we will intervene to manage these risks at an acceptable level. Two bespoke performance commitments will measure our progress reducing risk whilst two further common performance commitments monitor our supply-demand balance.

1. B08-WN: Water service resilience 3. B05-WN Per capita consumption 2. B09-DP: Manchester and Pennine resilience 4. B06-CF Drought Risk Resilience Current Performance

The comprehensive analysis informing our Water Resources Management Plan shows a supply demand surplus until 2040 but we will work with work customers to reduce consumption (as well as cutting leakage), thereby increasing resilience and maintaining opportunities for water trading. We recognise that currently the risk of failure at key assets is too high and have established projects to reduce these risks.

Efficiency Customer Expectation • The DPC route for the £226m Totex Customers show stronger support Manchester & Pennines for reducing risks that could cause Resilience scheme offers disruptive supply losses for large indicative savings of 13%. numbers of people. This is • Our WRMP selected the best exemplified by their £15/year strategic choices, informed by an valuation for securing a resilient appraisal of well over 300 supply for Manchester and the options. Pennines.

Risks Innovation Risk is at the heart of these Outperformance against the Water service resilience ODI can only be performance commitments. Notwithstanding the chance of them ! achieved through cost-beneficial, materialising before we can act, non-traditional interventions. there will also remain the residual Our work to reduce per capita risk associated with exceptional consumption relies on constant weather and other unforeseen innovation and fresh ideas to events. End of AMP Future Targets maintain and increase engagement.

Performance Units AMP6 AMP7 AMP8 AMP9 AMP10 Commitment Water service Customer supply days lost per year 26 642 25 115 18 000 12 000 6 000

resilience (risk) Manchester & Pennine Percentage 0% 100% n/a n/a n/a Resilience completion Per capita Reduction from baseline (three year Baseline 3.12% 6.00% 8.41% 10.70%

consumption average) Customers that would experience Drought risk resilience 0% 0% 0% 0% 0% severe restrictions in a 1 in 200 yr drought

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4.2.6 Building resilience for the future

Some events are simply too big to manage through either ensuring assets are in good health, or by being ready to respond to incidents. Customers tell us that they want us to plan ahead and ensure we are resilient to these threats. The threats can be roughly divided into two types; those related to the sustainable supply of water for future and those related to failures at critical assets.

To preserve a sustainable supply for the future we plan to:

• As discussed in the previous section, reduce the volume of water lost through leakage by 15%.

• Invest £49m to install 180 000 new meters through our Free Meter Option scheme to give customers more control over their consumption and incentivise water efficiency. We forecast that 55% of our residential customers will be metered by 2025 and 75% by 2045, delivering a 130 Ml/d reduction in consumption. Fear of larger bills is the biggest obstacle to meter uptake so we will introduce our lowest bill guarantee. In our trials this increased uptake by 26%, with 98% seeing a bill reduction. For further details see Ref: S6024.

Figure 30: We will continue to increase the number of customers on a metered supply For further details, see our revised draft Water Resources Management Plan 80%

70%

60%

50%

(excl. voids) 40%

30% Households metering penetration metering Households 20% 2010 2015 2020 2025 2030 2035 2040 2045

Reported Forecast

• Continue installing Automated Meter Read (AMR) equipped meters that allow readings to be taken frequently and remotely, typically by around 650 data collection devices installed on Local Authority refuse vehicles. Among other benefits, this allows us to proactively inform customers when we identify a leak and opens up opportunities to make consumption data more visible to our customers.

• Conduct a wider customer communications campaign to further reduce consumption. Our Water in the Home programme, as discussed previously, will educate customers about both water consumption and quality. We also plan to continue attending events, schools and communities across the region and use our other contact points with customers (e.g. social media, bills etc.), to increase awareness. Our approach will continually evolve to ensure it remains fresh and reflects our latest understanding of customers’ views and behaviours.

• Improve our production planning capabilities to deliver the correct balance between cost and risk for customers. For example, we’ve been working with Emagin - one of our Innovation Lab participants - to demonstrate how artificial intelligence can increase efficiency within our distribution network.

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To manage the risk of critical asset failure we will:

• [] [].

• Establish our broader project, which will be delivered by direct procurement for customers, to secure resilience for customers in Manchester and the Pennines. This £73m investment is described in detail in Manchester and Pennines resilience – Ref: UUW WN1 M.

• Through our Water Service Resilience performance commitment, implement innovative and inventive solutions to reduce risks at highly critical water treatment works and trunk mains. For further details see S3001 Performance Commitments technical document.

Figure 31: Emagin's Artificial Intelligence framework for Figure 32: [] optimising pumping in our Oldham DMZ. Early results indicate potential savings of 10% []

[]

Figure 33: Our inspections of the Haweswater Aqueduct identified the risks which we will address through our Manchester and Pennines Resilience programme.

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5 Plan Summary

Our purpose is to provide a great water service to the customers and communities in the North West, creating long- term value for all stakeholders. This plan is focused on delivering two customer outcomes that align to customer priorities of delivering safe, clean and reliable supply of drinking water.

This plan will focus on delivering key projects to improve resilience, mitigating our biggest risk, the Haweswater Aqueduct to secure the long-term water supply for the Pennines and Manchester. We will reduce leakage by 15% and reduce the number of supply interruptions to help ensure long term supply resilience.

We will continue to ensure that water quality is at the centre of everything we do, with stretching commitments to improve the taste, smell and appearance of the water we deliver.

We have engaged with customers and stakeholder to ensure that our plan is fully aligned to their requirements and set challenging efficiency targets to ensure that we deliver the best value plan for customers.

This plan supports our long-term aim to ensure the resilience of our water systems with focus on our main activities:

Outcome Activity groups Performance commitment

Your drinking water is safe Water quality first Water quality compliance and clean Improving water aesthetics Taste and smell contacts Reducing discolouration from Vyrnwy

Working with customers Water in the home Number of properties with lead risk reduced

You have a reliable supply of Maintaining asset health Unplanned outage water now and in the future Mains repairs Reducing areas of low water pressure

Quick and effective response to Leakage asset failure Reducing interruptions to water supply

Building resilience for the future Water service resilience Manchester and Pennine Resilience

Per capita consumption Drought risk resilience

Our vision is to be the best UK water and wastewater company. We have been consistently clear that we will achieve this by providing great service to our customers, at the lowest sustainable cost, in a responsible manner. We commit this plan for Water network+ as central to achieving this vision.