South West Water Business Plan

Business plan to 2025: The new deal October 2019

Customer bills to be lower in 2025 than 2010

Customer share ownership scheme – ‘a stake and a say’

£1bn investment programme

Ambitious customer service, environmental and efficiency commitments

Addressing water poverty by 2025

Strong Board leadership and customer driven culture

2 © Pennon Group plc 2017 Investment programme – over £1bn

3 © Pennon Group plc 2017 Investment programme – treatment works

CeraMac (membrane) treatment technology for our strategic WTWs  Knapp Mill WTW 100 Ml/d (160,00 population + 40Ml/d Supply to Site of Critical National Infrastructure). Consideration of 30ML/d transfer to Southern Water under direct procurement.  Alderney WTW 90 Ml/d (250,000 population)

4 © Pennon Group plc 2017 Isles of Scilly Investment

• Challenges maintaining resilient water and wastewater services on the islands (currently operated by Council of Isles of Scilly, Duchy of Cornwall and Tresco Estates)

• SWW working with Defra/Ofwat/EA/DWI to develop an affordable business plan to bring the islands up to modern day compliant standards

• A £36m investment plan to deliver improvements in the 2020-25 period with a further £17m between 2025-30

• Overall bill increase of £2.46 in 2020-25 with a customer WTP assessment of £3.91

• Subject to an extension to the SWW licence and amendments to the Water Industry Act

• Ofwat consulted on licence amendment in Feb 2019 • WIA has been passed through Parliament.

5 © Pennon Group plc 2017 Investment programme – Resilience Drinking Water

6 © Pennon Group plc 2017 Delivering our promises

Building on our strong track record of delivery and the trust that customers and stakeholders put in us to do what we say

- On track to deliver all PR14 Commitments including:

WATER High quality maintained Zero water restrictions

SERVICE Price rises kept well below inflation Significant improvements to customer service

ENVIRONMENT Major investment in wastewater treatment Progress on pollution reduction

7 © Pennon Group plc 2017 Performance commitments

Ambitious targets aligned to strong incentives

• Sector-leading customer service (as assessed by C-MeX) • Region-wide behavioural change initiatives for water efficiency and responsible sewer use (Love your Loo) • Significantly reduced risk of supply interruptions • No water restrictions and a surplus available to trade • Increased protection from flooding and drought • Zero serious pollutions • Industry-leading wastewater compliance • Increased high quality bathing and shellfish waters • Further 15% reduction in leakage

8 © Pennon Group plc 2017 Fair and affordable bills for all

• In real terms average customer bills are forecast to fall by 11% (South West Water) and 9% (Bournemouth Water) by 2025

• Bills will be lower in 2025 than 2010

• Expansion of award-winning affordability schemes

• Dual billing so un-metered customers can make an informed choice

As part of the Business Plan to 2025:

South West Water customers will receive: • a WaterShare’ share in 2020 • a share of company profits • invitation to attend a customer AGM • annual reports and financial statements.

Bournemouth Water customers will receive: • share in any additional successes post 2020+

A more holistic and transparent approach putting customers in control

10 © Pennon Group plc 2017 11 © Pennon Group plc 2017 https://www.water.org.uk/policy-topics/managing-sewage-and-drainage/drainage-and-wastewater-management-plans/

12 © Pennon Group plc 2017 13 © Pennon Group plc 2017 14 © Pennon Group plc 2017 15 © Pennon Group plc 2017 16 © Pennon Group plc 2017 SWIFT (South West Integrated Framework Team)

• South West Water Ltd • The Environment Agency • Lead Local Flood Authorities: • Plymouth City Council – Unitary • Cornwall Council – Unitary • Torbay Council – Unitary • Devon – Two Tier; Devon County Council and District Councils (LPAs) • Highway Authorities (Highways England and unitary/county councils) • SWRFCC Members as appropriate

• SWIFT will be set up as a Sub-Group of the SWRFCC • It uses existing post and roles • Area based structure for delivery • Maximise Collaborative Opportunities through FDGiA and SWW Funding and others • Reduce the reliance on Local Levy to fund schemes