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Delivery Plan Update 2018 March 2018

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Delivery Plan Update 2018 March 2018 Delivery Plan Update 2018 March 2018 Table of Contents Overview .................................................................................................... 3 1. Delivering for our customers .............................................................. 5 2. Delivering our investment programme .............................................. 7 3. Providing continuous high quality drinking water ......................... 11 4. Protecting and enhancing the environment ................................... 16 Overview 5. Supporting Scotland’s economy and communities ....................... 26 6. Financing our services ...................................................................... 32 7. Looking forward ................................................................................. 42 8. Scottish Water’s Group Plan and Supporting the Hydro Nation .. 43 2 Overview This update to our Delivery Plan is submitted to Scottish Ministers for approval. It highlights those areas where the content of our original Delivery Plan for the 2015-21 period, and the updates provided subsequently, have been revised. We have taken the opportunity to set out key highlights of our progress so far and to confirm the investment agreed with the Output Monitoring Group through the rolling investment review 2018 (IR18) to improve drinking water quality, Overview protect and enhance the environment and support economic development. Key highlights of our progress In our 2015 Delivery Plan we stated that we are determined to deliver significant further improvements for our customers and out-perform our commitments. As we conclude the third year of the 2015-21 period we continue to achieve this ambition. Key highlights of our progress so far include: • We have successfully driven up household customer satisfaction and driven down the number of complaints. As a result, our household Customer Experience Measure (hCEM) has risen further this year to 86.4 at December 2017, well above our Delivery Plan target of 82.6. • Since the start of the regulatory period in 2015 we have reduced the level of customer complaints by 42% with an increase in the level of customer satisfaction from 88.0% at the end of 2014/15 to 91.1% by December 2017; • Service levels to Licensed Providers have improved with year-to-date performance up to 97% of requests processed on time, above our target of 95%. We are trialling the measurement of the service experience of our non-household customers and Licensed Providers through a separate CEM, the non-household Customer Experience Measure and propose that our outturn score in 2017/18 be set as the baseline to improve on for the remainder of the regulatory period. • We are maintaining momentum in our investment delivery; over half our programme, around 1,650 projects, has already started on site; • Since April 2015 we have delivered over £1.5 billion of investment and are investing on average over £53 million a month. As a result, our Overall Measure of Delivery score at the end of December 2017 is already well above our Delivery Plan year-end target of 126 points; • We have completed the boring of the 5 kilometre-long Shieldhall waste water tunnel in the south of Glasgow. The tunnel is part of the biggest upgrade of the city’s waste water network in more than a century; • We have worked with stakeholders to agree our IR18 investment plan with the Output Monitoring Group; 3 • The water quality we delivered to our customers’ taps in 2017 continued to outperform levels delivered in previous regulatory periods, and remains well above our Delivery Plan target; • We have delivered further leakage reduction in 2017/18, continuing to out-perform the target level set in the Final Determination for the end of the regulatory period; • We continue to support new housing and economic growth across the length and breadth of Scotland. In the first 3 years of the period we will Overview have connected over 64,000 new properties to our network against our Delivery Plan forecast of 56,500; • We now generate and host twice the amount of renewable electricity than we consume in our operations; and we have reduced our carbon footprint per household from 115 (kg CO 2e) in 2014/15 to 100 (kg CO 2e) in 2016/17; • Through our financial planning and innovation, we are continuing to outperform the challenging financial limits set out in the Final Determination 2014 and now forecast a closing cash balance in March 2021 of £76 million compared to our 2015 Delivery Plan forecast of £40 million; • Charge levels for 2018/19 will rise by 1.6% for household customers. The financial forecasts in this update assume charge increases of 1.6% in 2019/20 and 0% in 2020/21 in line with the regulatory settlement for the 2015/21 period. However, during 2018 we will explore the merit of smoothing charge levels into the next regulatory period in line with the Water Industry Commission’s initial decision papers for the Strategic Review of Charges 2021-27; and • We implemented charging at vacant properties on 1 April 2017 and have worked extensively with the water retail market to implement charging on the basis of ‘current rateable values’ from 1 April 2018. This update to our Delivery Plan builds on our success to date and remains ambitious. We have delivered strong financial out-performance to date on revenue and costs. We are forecasting that this will allow us to manage the pressures and opportunities associated with the investment programme within the price limits set out in the 2014 Final Determination and the agreed borrowing of £760 million from the Scottish Government. 4 1. Delivering for our customers Our plan has been established to ensure that we maintain the high service levels that we have been delivering and will further improve services in those areas identified as a priority by our customers. Here we set out updates on the key high level customer service metrics. Customer Experience Measure (CEM) We introduced our household Customer Experience Measure (hCEM) to ensure that the delivery of service to our customers continues to sit at the heart of what we do and be a key driver of our performance. Our commitment is to improve on the score of 82.6 (out of 100). Since the start of the regulatory period all components of the hCEM have seen an improvement in performance, in particular we have reduced the level of customer complaints by 42%. The level of customer satisfaction has increased from 88.0% at the end of 2014/15 to 91.1% by December 2017; a significant improvement in overall satisfaction. Improvements have been achieved by reviewing all customer feedback that indicates where our service could be improved, intervening to prevent issues escalating, managing a programme of proactive communication with customers and learning lessons to improve our performance. As a result our hCEM at December 2017 is 86.4, well above our Delivering our for customers Delivery Plan target of 82.6. We are trialling the measurement of the service experience of our non- household customers and Licensed Providers through a separate CEM, the non- household Customer Experience Measure. We propose that our outturn score in 2017/18 be set as the baseline to improve on for the remainder of the regulatory period. We are determined to achieve year on year improvements in the service experience to our non-household customers. Overall Performance Assessment (OPA) In our 2015 Delivery Plan we set out our commitment to achieve an OPA score at, or above, the threshold for leading water and waste water companies, (380 points in 2015/16 rising to 385 points by 2020/21), and our aspiration to be best in class, achieving an equivalent OPA score at, or above, 400 points. We are again on track to exceed our 2015 Delivery Plan OPA commitment and be close to our aspiration to be ‘best in class’. 5 Customer Trust We are pleased that the water industry in Scotland continues to be the most trusted sector among Scottish consumers, (WHICH? Sept ’17). We continue to benchmark our level of service through the Institute of Customer Service’s UK Customer Satisfaction Index (UKCSI) survey to understand customers perceptions of our service experience compared to other services in Scotland. Retail Market Developments Activity in the retail market has continued to grow in recent years with 27 Licensed Providers now operating in Scotland and more than half of the market having switched provider since market opening in 2008. We continue to refine our wholesale service, with the first release of our Ascend customer experience programme already delivering a more efficient, responsive and automated service to Licensed Providers with further enhancements planned in future releases. Service levels to Licensed Providers have improved with year-to-date performance up to 97% of requests processed on time, above our target of 95%. From April 2017 water and waste water charges have applied at vacant non- household properties, aligning with the existing charging policy for households. We are working closely with the market to improve the quality of market data and to support the smooth implementation of this change. Delivering our for customers The rateable value used in the calculation of some elements of the water and waste water charges for business customers will be aligned with the current values used for business rates from April 2018. The impact of the changes will be phased in over 3 years, April 2018 to April 2020. Safety, Health and Wellbeing We are proud to have achieved the Royal Society for the Prevention of Accidents (RoSPA) United Kingdom Water Industry sector award for four years out of the last six. Over recent years, we have made real improvement in our health, safety and wellbeing performance achieving lost-time accident rates amongst the lowest in the UK Water Industry. However we believe that there is no acceptable reason for anyone to be injured or to suffer ill-health as a result of work, no matter how infrequent.
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