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Ofwat Service Delivery Report 2019

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Ofwat Service Delivery Report 2019 October 2019 Trust in water Service delivery report 2018-1 9 www.ofwat.gov.uk Service delivery report 2018-19 Introduction At the 2014 price review (PR14) we required water and wastewater companies (‘companies’) to develop plans based on engaging with their customers about the: • services customers wanted their company to deliver over the long term (‘outcomes’); • specific levels of service they expected companies to deliver (‘performance commitments’); and • value of any outperformance payments and underperformance payments (‘outcome delivery incentives’ or ‘ODIs’) companies would incur for exceeding or failing them. In PR14 final determinations, we set the price, investment (expenditure) and service package that companies deliver and customers receive between 2015 and 2020. Each company must report annually on their expenditure and outcome delivery in an annual performance report (APR). The service delivery report provides comparative information on total expenditure and outcomes delivered to customers reported by the 17 largest companies within England and Wales. This report provides comparative information on important areas of performance and is intended to supplement the more detailed information in companies’ APRs. This information will help us – and stakeholders such as customer groups, environmental groups and investors – to hold companies to account. We recently published ‘Time to act, together: Ofwat’s strategy’. One of the objectives of our new strategy is to turn the data we hold, along with information from other sources, into insight. For 2018-19, we have revised the approach to reporting on performance in the service delivery report to better illustrate the industry’s performance and trends over time. Key changes that we have made are: • providing comparative ranking of companies’ performance; • presenting overall performance on total expenditure and outcomes in a single, tabulated view; and • examining longer-term changes on key indicators since 2012-13. 2 Service delivery report 2018-19 Key messages Our analyses of companies’ relative performance in 2018-19 demonstrate that Anglian Water, Wessex Water and Portsmouth Water are the better performing companies within the sector. There are aspects of leading performance in most companies, as many companies rank in the top 25% in at least one key area. The delivery of services by Hafren Dyfrdwy and Thames Water is notably worse than the rest of the sector and requires improvement in multiple areas. In summary: The sector overspent against its total Twelve companies meet, or are on track Just over half of supply interruptions wholesale expenditure allowance by to meet, their leakage performance targets were achieved in 2018-19, despite 6% in 2018-19. Over the 2015-19 period, commitments in 2018-19. Eight companies more companies achieving their targets in 2018- there remains a cumulative underspend of 2%, have made modest reductions in leakage but 19 in comparison to 2017-18. Performance in although this has decreased over the four years these are more than offset by the increases 2017-18 was adversely impacted by the freeze- of the price control. made by the poorer performing companies. thaw event. Since 2012-13 the sector has However, the sector has made little reduced the total supply interruption progress on reducing leakage since minutes experienced by customers by 2012-13. 24%, or five minutes per property. The sector has made some progress in Customers’ satisfaction has increased Performance of companies in Wales in reducing water quality contacts, sewer since 2015-16 but deteriorated in 2018-19 was similar to 2017-18. flooding and pollution incidents. However 2018-19. In 2018-19 the best performing Dŵr Cymru’s performance on leakage has improvements stagnated in 2017-18 and companies – Anglian Water, South West Water, improved but its performance on water quality 2018-19. For sewer flooding and pollution United Utilities and Portsmouth Water – further contacts has deteriorated. incidents, most companies achieve their improve or maintain their performance. However, performance commitment levels in 2018-19 and significant deterioration in the scores of Severn have done so for a consecutive year. However, Trent Water, Thames Water and Hafren Dyfrdwy most companies fail their water quality results in a deterioration of the sector’s contacts commitment for a second average performance in 2018-19 when consecutive year. compared to 2017-18. 3 Service delivery report 2018-19 Our method of assessing companies’ performance We have assessed and compared company performance across key service areas and total expenditure (wholesale and residential retail). For total expenditure we use cumulative performance since 2015, given the movement of expenditure across years. For outcomes we examine performance in the most recent year, 2018-19. We also indicate the direction of change from 2017-18, for example whether outcomes performance has improved (p), for example a reduction in leakage between the years, an increase in the percentage of performance commitments achieved, or got worse (q), for example an increase in leakage or a reduction in the percentage of performance commitments achieved. We have grouped companies into three categories (better performers, average performers, and poorer performers) based on their in the round performance in relative assessments: • Anglian Water, Wessex Water and Portsmouth Water are better performers. These companies demonstrate top 25% or middle 50% performance across multiple areas. South West Water falls short on its performance on water quality contacts and significantly short on its performance on pollution incidents. As a result it sits between the better and average performer categories. • Thames Water and Hafren Dyfrdwy are poorer performers. The performance of these companies is in the bottom 25% in multiple areas. • The performance of the remaining companies is mixed and they are broadly in line with average performance of the sector overall. Most companies currently have broadly comparable performance commitments from PR14 with similar, but not identical definitions. To allow an indicative comparison between companies of different size we have normalised performance across the PR14 performance commitments, for example by kilometre of water main or sewer. For the next price control, we are introducing common performance commitments with consistent definitions for all companies. This will increase comparability. 4 Service delivery report 2018-19 Overall assessment of efficiency and effectiveness of service delivery Total expenditure Outcomes Top 25% Wholesale Retail Customer Meeting Earning Leakage Supply Water quality Internal Pollution Middle 50% service performance financial interruptions contacts sewer incidents commitments incentives flooding Bottom 25% Improved p performance Better performance Deteriorated q Anglian Water q q p q q q p p p performance Wessex Water q q q p p p q q Portsmouth Water q p p p q p p p - - Marginal performance – better/average South West Water q p p p p p p Average performance Dŵr Cymru q q p q p p p q Northumbrian Water q q q q p q q p Severn Trent Water1 2 Southern Water q p p p q q p p p q United Utilities p q p p p p p q Yorkshire Water q q p q p q q q Affinity Water q p p q q p p - - Bristol Water q q p q p p q - - South East Water q p q p p p p - - South Staffs Water q p p p p p q - - SES Water q q p q q q q - - Poorer performance Hafren Dyfrdwy1 -2 Thames Water q q q q q p q p p 1. Severn Trent and Hafren Dyfrdwy were formed on 1 July 2019 following the realignment of the geographical boundaries of the legacy companies Dee Valley Water and Severn Trent Water. A comparison with 2017-18 performance is not provided for these companies. 2. The legacy company Dee Valley Water provided water services only and therefore the figures presented are representative of the legacy company Severn Trent Water. 5 Service delivery report 2018-19 Water and wastewater Abbreviation Better performance companies Marginal performance – better/average Average performance Anglian Water ANH Poorer performance Dŵr Cymru WSH Hafren Dyfrdwy HDD Northumbrian Water NES Severn Trent Water SVE South West Water SWB Southern Water SRN Thames Water TMS United Utilities Water UUW Wessex Water WSX Yorkshire Water YKY Water only companies Abbreviation Wastewater provider/s Affinity Water AFW ANH/TMS/SRN Bournemouth Water SWB WSX/SRN Bristol Water BRL WSX Portsmouth Water PRT NES South East Water SEW TMS/SRN South Staffs Water SSC SVE SES Water SES TMS/SRN 1. Water services provided under the Hartlepool Water name. 2. Water services provided under the Cambridge Water name. 3. Water services provided under the Essex & Suffolk Water name. 4. Water services provided under the Bournemouth Water name. 5. Hafren Dyfrdwy provides water services only in this area. 6. Hafren Dyfrdwy provides water and wastewater services in this area. 7. Severn Trent Water provides water services only in the area. 6 Service delivery report 2018-19 Underspend and overspend: cumulative wholesale expenditure performance Cumulative Cumulative Cumulative Companies are responsible for their actual spend and may either outperform or spend less than the actual wholesale performance allowed amount or under-perform and spend more than the allowed amount. wholesale totex 2015-19 totex (£m) allowance (£m) The table shows company performance against PR14 cost allowances. If companies underspend Anglian Water 3,044 3,368 q -9.6% (negative figures) their expenditure is less than the allowance we determined at PR14 and when they Dŵr Cymru 2,148 2,060 q 4.3% overspend (positive figures) it is greater. Hafren Dyfrdwy1 86 88 -3.0% Northumbrian Water 1,717 1,888 q -9.0% We have calculated cumulative out- or under-performance for the wholesale water and wastewater Severn Trent Water1 4,225 4,439 -4.8% controls combined for 2015-16 to 2018-19. This compares companies’ expenditure in these controls South West Water 1,157 1,383 q -16.4% against their total allowance in the price control to date.
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