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Bringing Water to Life – Supporting the Lives of People and the Places They Love for Generations to Come

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Bringing Water to Life – Supporting the Lives of People and the Places They Love for Generations to Come Bringing water to life – supporting the lives of people and the places they love for generations to come. Annual Performance and Regulatory Reporting 2021 HOW TO USE THIS REPORT Throughout this report we make reference to Page reference Find out more about South West Water: different resources both online and within the Pages where you can find more information www.southwestwater.co.uk document. The following key reflects the on a related subject symbolism of content throughout: ESG content External link Content in green relates to environmental, social and governance case studies In the interactive PDF these links are clickable Inside this report Overview Operational performance Regulatory reporting Chair’s letter on governance 72 This Annual Performance Report and Summaries of operational performance Board of Directors 74 Regulatory Report provides a summary against our eight outcomes have been The Board and its governance framework 76 of our performance against our provided in the sections of the report Executive Management 88 regulatory outcomes and performance below. An overall two page summary of Audit Committee report 90 commitments in this the first year of the our performance is on pages 16 and 17. Environmental, Social and Governance Committee report 94 2020-25 regulatory reporting period. Nomination Committee report 96 Our water 18 Remuneration Committee report 98 These outcomes and commitments Directors’ remuneration report 100 were agreed as part of our business Annual statement from the Chair plan, where we were the only company of the Remuneration Committee 101 to be granted fast track status by the Annual report on remuneration 102 regulator, Ofwat, for the second Assurance 114 successive occasion. Summary of significant assurance areas 120 Risk and compliance statement Our wastewater 24 126 Managing our risks 130 The outcomes and commitments Independent auditor’s report 140 themselves were developed following Technical auditor’s report 143 our most extensive ever customer Additional financial assurance 146 and stakeholder engagement exercise Regulatory disclosures 147 to date. Regulatory financial reporting 150 Price review and other segmental reporting 158 The Regulatory Reporting section of this Our customers 28 Performance summary 171 report provides annual reporting in line Additional regulatory information 179 with Ofwat’s Regulatory Accounting Cost allocation and transfer pricing 208 Appendix A 213 Guidelines. Glossary Our operations at a glance Glossary 214 Chair’s letter 02 Our environment 34 Business model and strategy 04 Chief Executive’s review 06 Our resilience 38 Our Board pledges to 2025 10 Our community and people 44 Our stakeholders 12 Performance summary 16 Our people 48 Emerging markets 54 ESG strategy 56 ESG KPI performance 58 Net zero strategy 62 Energy 64 Financial Director’s report 66 Annual Performance Report and Regulatory Reporting 2021 – South West Water Our operations at a glance Purpose led business, trusted to deliver We also believe we have a unique role to play in supporting the lives of people We all know that water companies have a vital and the places they love for generations to come. That’s why we exist. role today and every day, providing customers For us it is not just about what we do but how we do it – and that’s why we place with safe and clean drinking water, and clean such importance on living our core values daily, operating in the public interest, bathing waters, with the importance that has in the regions we support. We have set stretching performance commitments against our outcomes which on health and hygiene – Bringing water to life. are subject to significant Board, customer and other stakeholder scrutiny. Progress That’s a given. against these commitments has been summarised in each section of this report. 18,433km 43* Drinking water pipelines Drinking water treatment works Total drinking water pipeline Total drinking water treatment across our operations works across our operations (including eight treatment works on c.2.3m c.1,600 the Isles of Scilly, which we became Residents Employees licensed to serve on 1 April 2020) Residents utilising our water Excludes the South West Water and wastewater services Retail activity which is undertaken (South West Water: 1.8m and by Source Contact Management 23 Bournemouth Water: 0.5m) Ltd who employ c.260 staff. Reservoirs Total reservoirs across our operations (South West Water: 89% 21 and Bournemouth Water: 2) Customer satisfaction Overall satisfaction of services received on the PSR * This includes both the Crownhill water treatment works and Mayflower water treatment works during their transition. South West Water – Annual Performance Report and Regulatory Reporting 2021 01 OUR OPERATIONS Overview South West Water Bournemouth Water We provide water and wastewater We provide water services to services to South West Water Bournemouth Water customers customers in the Isles of Scilly, in parts of Dorset, Hampshire Performance Operational Isles of Scilly Cornwall, Devon and parts of and Wiltshire. Dorset and Somerset. Regulatory Reporting Regulatory 89% 150 Customer bills Designated bathing waters Customers who find their Across our wastewater 653 53 water bills affordable operational areas Wastewater treatment works INNS Site Guardians Glossary Across our South West Established 53 INNS Site Guardians, Water operations who have received training at 31 lakes 19,049km 24 Wastewater network Awards received Total wastewater network Awards received through an EU Life across South West Water pilot project in the South West, AQUA (Aquatic Quality Award). 19 lakes received the Bronze AQUA award, and four lakes have achieved the Silver AQUA award. 02 Annual Performance Report and Regulatory Reporting 2021 – South West Water Chair’s letter A year of challenge and opportunity South West Water – A responsible business, building a sustainable future in the areas we serve. Values rooted in our culture Trusted Responsible Collaborative Progressive We do the right thing for our We keep our promises to our We forge strong relationships, We are always looking for customers and stakeholders customers, communities and working together to make a new ways to improve and each other positive impact make life better Our people pages 48 to 53 South West Water – Annual Performance Report and Regulatory Reporting 2021 03 A year of challenge and opportunity Our performance A sustainable future strategy Overview I am delighted and honoured to have been given Operationally, we have made a strong start to the Our focus on UK Water, together with the the opportunity to chair South West Water at such new regulatory period, with c.80% of Outcome geography of the region and communities we a pivotal time. Delivery Incentives (ODIs) ahead or on track. support, affords us an opportunity to be at the This has undoubtedly been a unique year for South Despite the challenges posed by the pandemic, the forefront of environmental leadership. West Water, and for everyone who works within and performance of the business has been resilient, and As we all know, there is no silver bullet to achieving supports the Company. The human tragedy of loss of testament to the hard work of all our employees. Net Zero and it requires new thinking and resolute life as a result of the pandemic is something that will We continue to provide excellence in many areas, leadership. I am personally delighted that the water weigh heavy on us all for generations to come, and boosting biodiversity in our regions with improving industry is leading the way, with even more ambitious there is every sense that things will never quite be bathing water quality, tree planting and continued timelines to achieve Net Zero by 2030, 20 years ahead the same again. leadership in nature partnerships, and are committed of the Government target. The Board has set out an Performance Operational The worst of times brings out the very best in people to further improving water quality, and minimising implementation roadmap, focused around three key and that’s so true of everyone who works at South customer supply interruptions. pillars - sustainable living, championing renewables West Water. I am so proud of the way our loyal We also acknowledge that we need to do more in and reversing carbon emissions, ensuring we are well employees and supply chain partners have responded some operational areas, notably pollutions. The placed to transform ourselves into a different kind of to the challenge. Board has focused significant attention on this over water company, delivering on our purpose, and putting in place the core building blocks for our next price My sincere thanks go to our Executive team who, the course of the year, ensuring we are working review, and beyond. together, have led the Company through this collaboratively with our regulators and have a robust pandemic from the front, demonstrating what it reduction plan in place. We are a high performing business, focused on a sustainable future for all, committed to delivering takes to be highly resilient, agile and above all We have consistently demonstrated robust operational Reporting Regulatory compassionate. With an unwavering responsibility and resilient financial performance for many years. for all stakeholders, now and into the future. for critical infrastructure providing essential services We are well placed to provide a sustainable platform Focus on Board Assurance to customers and communities, we have continued for delivery, investment and growth. During the year and in our year end reporting, the to deliver, given the extraordinary dedication of our Board has been committed to ensuring it is able to exceptionally talented and hard-working employees. Purpose and culture This year, we refreshed our purpose, reflecting the appropriately assure the data it is providing as well On behalf of the Board, I thank you all. wider social contract we have with all our stakeholders as other key assurances important to our customers Your Board and the region we support.
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