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Northumbrian Water Limited Annual Performance Report for the Year Ended 31 March 2021

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Northumbrian Water Limited Annual Performance Report for the Year Ended 31 March 2021 NORTHUMBRIAN WATER LIMITED ANNUAL PERFORMANCE REPORT For year ended 31 March 2021 NORTHUMBRIAN WATER LIMITED ANNUAL PERFORMANCE REPORT FOR YEAR ENDED 31 MARCH 2021 NORTHUMBRIAN WATER LIMITED ANNUAL PERFORMANCE REPORT FOR YEAR ENDED 31 MARCH 2021 CONTENTS BOARD STATEMENT CHIEF EXECUTIVE OFFICER’S WELCOME WATER FORUM STATEMENT WHO WE ARE VISION AND VALUES OUR PURPOSE OUR OUTCOMES OUR STAKEHOLDERS ASSURANCE SUMMARY INTRODUCTION OUR ANNUAL PERFORMANCE AT A GLANCE – SERVICE OUR PERFORMANCE AT A GLANCE – ENHANCEMENTS OUR 2020/21 PERFORMANCE IN DETAIL UNRIVALLED CUSTOMER EXPERIENCE: • Our customers tell us we provide excellent customer service and resolve issues quickly • Our customers say they feel informed about the services we provide and the importance of water • Our customers say we are a company they trust • Our finances are sound, stable and achieve a fair balance between customers and investors. AFFORDABLE AND INCLUSIVE SERVICES: • Our customers say our services are good value for money and we work hard to keep water and wastewater services affordable for all RELIABLE AND RESILIENT SERVICES: • We are resilient and provide clean drinking water and effective sewerage services; now, and for future generations • We always provide a reliable supply of water • Our drinking water is clean, clear and tastes good • Our sewerage service deals with sewage and heavy rainfall effectively LEADING IN INNOVATION: • We are an innovative and efficient company 15 July 2021 PAGE 1 OF 114 NORTHUMBRIAN WATER LIMITED ANNUAL PERFORMANCE REPORT FOR YEAR ENDED 31 MARCH 2021 IMPROVING THE ENVIRONMENT: • We help to improve the quality of rivers and coastal waters for the benefit of people, the environment and wildlife • We take care to protect and improve the environment in everything we do, leading by example BUILDING SUCCESSFUL ECONOMIES IN OUR REGIONS: • We are proud to support our communities by giving time and resources to their important causes • We work in partnership with companies and organisations to achieve the goals that are most important to our customers 15 July 2021 PAGE 2 OF 114 NORTHUMBRIAN WATER LIMITED ANNUAL PERFORMANCE REPORT FOR YEAR ENDED 31 MARCH 2021 BOARD STATEMENT – OUR PURPOSE, VISION AND PERFORMANCE This statement sets out how we, the Board of Northumbrian Water Limited, set the company’s aspirations in respect of the services we provide to our customers and other stakeholders - both now and into the future; how we are performing against our aspirations, and how we structure management rewards to incentivise delivery of these aspirations. An extensive stakeholder engagement exercise has helped us to clarify our Purpose (the detail of this is on page 14). Set within the context of our Purpose, the Board has a long-term vision for the company, which is to be the national leader in the provision of sustainable water and wastewater services. This will require us to consistently deliver outstanding service to our customers across our water and wastewater businesses, as well as maintaining the highest levels of environmental performance. We also understand that being the national leader means continuously improving standards further. To achieve this, we encourage a culture of innovation, as demonstrated by our annual Innovation Festivals. Many other examples of our innovative approach to improving our customer service and resilience are set out in this report. HOW WE SET OUR ASPIRATIONS The aspirations we set for the current price control period 2020-25 were developed through extensive engagement and consultation with customers and other stakeholders throughout our business planning process. Through this engagement, the company agreed updates to our Outcomes for customer service, the environment, and the way we manage the business. For each Outcome, we agreed challenging Performance Commitments (PCs) which we use to monitor and report on our performance. In this report, we set out our Outcomes and how we deliver these across our strategic themes, as well as through our corporate Purpose and Values. We report on our performance against our Outcomes and PCs in this report. However, to drive the year on year performance improvements necessary to deliver our Vision of being national leader, we set ourselves tougher, stretching targets within the business. These targets are reported internally through a balanced scorecard of key performance indicators which cover the full range of strategic themes that support our Vision. We re-set these targets each year, taking account of how other companies in the industry have performed and what our customers have told us about their priorities. We also work closely with the Water Forum, which brings together expertise from a wide range of stakeholders. The Water Forum’s Chair has attended full Board meetings and our Independent Non-Executive Directors, and Executive Directors, regularly attend Forum meetings and workshops. This ensures that the Board directly understands the areas where Forum members are challenging us to improve performance and Outcomes for our customers and stakeholders. To ensure that the Executive Leadership Team’s focus is aligned with the business Outcomes we want to attain, stretching internal targets from across our balanced scorecard of performance measures represent 90% of the potential value of the short-term incentive plan for our Directors, with a further 10% available for the achievement of bespoke personal targets. The Remuneration Committee Report is available within our Annual Report and Financial Statements. A separate report available on our NWG website provides full, transparent detail on our directors’ remuneration policy and how remuneration in the year has been calculated. 15 July 2021 PAGE 3 OF 114 NORTHUMBRIAN WATER LIMITED ANNUAL PERFORMANCE REPORT FOR YEAR ENDED 31 MARCH 2021 PERFORMANCE IN 2020/21 This report describes our performance in 2020/21 against our Performance Commitments (PCs) in detail. We’re delighted to be in the top three companies in the new C-MeX measure for customer experience and above average for the new D-MeX measure of developer experience. Our customers continue to be very satisfied with the services we provide and consider those services to be good value for money – something we know to be very important to them, particularly in these uncertain economic times. We are very proud to have been found to be the best performing water company, in the 2020 Water Matters Report carried out by CCW, when it comes to overall satisfaction of water service and reliability of services. We are also pleased to have also scored highly in relation to trust and satisfaction in handling queries. Our performance against our new series of measures for both affordability, and support for customers in circumstances which could make them vulnerable, also provided a strong starting point to build upon. We performed well on many customer focused measures of water asset health, such as water supply interruptions, discoloured water contacts, taste and smell contacts, ERI, AIM, risk of severe restrictions in a drought, unplanned outages, water mains repairs and visible leak repairs. We were disappointed not to achieve our leakage targets in both our operating areas this year. We were also disappointed not to achieve our drinking water quality PC but are confident that improvement activities have been identified to achieve the new Compliance Risk Index measure in future. Our sewer flooding performance is improving, despite not meeting some of our ambitious targets for this year. Our progress in reducing the risk of sewer flooding in a storm and repeat sewer flooding is very encouraging. We are also proud of our industry leading performance in pollution, maintaining our strong performance in Bathing Water compliance and delivering the WINEP, while narrowly missing our target for Treatment Works Compliance. We remain strong in Bioresources. We welcome the key role that the Water Forum play in providing challenge on behalf of our customers. As part of this process we report to and discuss our performance with the Water Forums and they provide their independent commentary on pages 10 to 11. 15 July 2021 PAGE 4 OF 114 NORTHUMBRIAN WATER LIMITED ANNUAL PERFORMANCE REPORT FOR YEAR ENDED 31 MARCH 2021 LOOKING TO THE FUTURE Customer engagement and participation is an ongoing process, not a once every five years exercise for each business plan. We published our approach to customer participation in our report ‘From customer consultation to a culture of customer participation’ in 2017 and co-creation of our plans with customers is business as usual for us. This is led from the top, with our Independent Non-Executive Directors participating in many customer and stakeholder events. Understanding from our customers what matters most to them about the services we provide shapes both our immediate targets and our long-term plans, which we brought together in our 2020-2025 Business Plan. We set out our ambitions for customers in our long-term vision ‘Shaping our Future,’ which we published in 2018 but which looked ahead as far as 2040. This vision focuses on the next five years but is set in the longer-term context of providing affordable and resilient services for today’s generations and our future customers. We published more detail on how we will deliver these ambitions in our Business Plan for 2020-2025, which we developed in partnership with our customers. As a Board, we remain committed to continuing our drive to be the national leader and to deliver outstanding service to our customers and other stakeholders both for now and into the future. Signed on behalf of the Board of Northumbrian Water Limited: Andrew J Hunter, Chairman Heidi Mottram, Chief Executive Officer Paul Rew, Senior Independent Non-Executive Director 15 July 2021 PAGE 5 OF 114 NORTHUMBRIAN WATER LIMITED ANNUAL PERFORMANCE REPORT FOR YEAR ENDED 31 MARCH 2021 CEO’S WELCOME Our Vision is to be the national leader in the provision of sustainable water and wastewater services.
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