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Northumbrian Water Limited Annual Performance Report for the Year

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NORTHUMBRIAN WATER LIMITED ANNUAL PERFORMANCE REPORT FOR THE YEAR ENDED 31 MARCH 2018 Registered company no: 02366703 2 Northumbrian Water Limited • Annual Performance Report 3 CONTENTS BOARD STATEMENT 4-5 CHIEF EXECUTIVE OFFICER’S WELCOME 6-7 WATER FORUMS' VIEWS 8-9 WHO WE ARE 10-12 OUR STAKEHOLDERS 14-17 ASSURANCE SUMMARY 18 INTRODUCTION 19 OUR PERFORMANCE 20-21 • WE PROVIDE EXCELLENT SERVICE AND IMPRESS OUR CUSTOMERS 22-41 • WE PROVIDE A RELIABLE AND SUFFICIENT SUPPLY OF WATER 42-49 • WE SUPPLY CLEAN, CLEAR DRINKING WATER THAT TASTES GOOD 50-59 • WE PROVIDE A SEWERAGE SERVICE THAT DEALS EFFECTIVELY WITH SEWAGE AND HEAVY RAINFALL 60-67 • WE HELP TO IMPROVE THE QUALITY OF RIVERS AND COASTAL WATERS FOR THE BENEFIT OF THE PEOPLE, THE ENVIRONMENT AND WILDLIFE 68-81 • WE PROTECT AND ENHANCE THE ENVIRONMENT IN DELIVERING OUR SERVICES, LEADING BY EXAMPLE 82-87 • WE DELIVER WATER AND SEWERAGE SERVICES THAT MEET THE NEEDS OF CURRENT AND FUTURE GENERATIONS IN A CHANGING WORLD 88-93 • OUR ENABLING AND REPUTATIONAL OUTCOMES 94-102 • WE ARE PROUD TO CONTRIBUTE TO THE SUCCESS OF LOCAL COMMUNITIES 103-106 • WE WORK IN PARTNERSHIP TOWARDS COMMON GOALS 107-115 • OUR PEOPLE 116-131 • WE ARE A COMPANY THAT CUSTOMERS TRUST 132-134 REGULATORY ACCOUNTS 137-203 DIRECTORS’ RESPONSIBILITIES AND DECLARATIONS 138-139 REGULATORY ACCOUNTING POLICIES AND DISCLOSURES 140-142 SECTION 1: REGULATORY FINANCIAL REPORTING 143-154 SECTION 2: PRICE REVIEW AND OTHER SEGMENTAL REPORTING 155-174 SECTION 3: PERFORMANCE SUMMARY 175-181 SECTION 4: ADDITIONAL REGULATORY INFORMATION 182-203 4 Northumbrian Water Limited • Annual Performance Report 5 We have delivered year on year improvement against deliver these ambitions in our business plan for the majority of measures and have achieved our 2020-2025, which has been developed in partnership BOARD STATEMENT – OUR performance commitments in a high proportion of with our customers. This plan will focus on the next our Customer and Environment measures of success. five years but is set in the longer term context of providing affordable and resilient services for today’s VISION AND PERFORMANCE In respect of customer service, as measured by generation and our customers of the future. Ofwat’s Service Incentive mechanism, we were delighted to achieve joint first place in industry in As a Board, we remain committed to continuing our This statement sets out how we, the Board of 2016/17 and, whilst we have seen a slight dip in drive to be the national leader and to deliver performance on the satisfaction survey in 2017/18, we outstanding service to our customers and other Northumbrian Water Limited, set the Company’s remain confident that our Unrivalled Customer stakeholders both for now and into the future. Experience Strategy will continue to drive long term Signed on behalf of the Board of Northumbrian improvements and support our aspiration to be the aspirations in respect of the services we provide to our Water Limited: best service provider that our customers experience. customers and other stakeholders, both now and into the We were pleased to see year on year improvements on our drinking water measures, with improved future, how we are performing against our aspirations overall compliance and further reductions in issues around discolouration and taste and odour. We have and how we structure management rewards to also shown continued improvement across almost all of our sewer flooding measures, pollution incidents Andrew J Hunter incentivise delivery of these aspirations. and maintained strong bathing water compliance. Chairman We welcome the key role that our Water Forums play The Board has a long-term vision for the Company, vision. We re-set these targets each year, taking in providing challenge on behalf of our customers. which is to become the national leader in the account of how other companies in the industry have As part of this process we report to and discuss our provision of sustainable water and wastewater performed and what our customers have told us performance with the Water Forums and they provide services. This will require us to deliver outstanding about their priorities. their independent commentary on pages 8 to 9. service to our customers across our water and As well as highlighting our success in achieving We also work closely with our Water Forums, one wastewater businesses as well as maintaining the ‘self-assured’ status from Ofwat for our reporting, the Heidi Mottram each for our Northumbrian and Essex & Suffolk highest levels of environmental performance. We are Water Forum Chair highlight sour progress in sewer Chief Executive Officer operating regions, which bring together expertise also clear that to be the national leader means to flooding, incident management, pollutions and the from the wide range of stakeholders. Our Water continue raising the bar to improve standards further implementation of our new customer care and Forum Chair has attended a number of full Board and we encourage a culture of innovation to achieve billing systems as directly and positively impacting meetings and our Independent Non-Executive this, as demonstrated by our first Innovation Festival our customers. Directors, and Executive Directors, regularly attend this year, described on pages 94 to 101. Forum meetings and workshops to ensure that the We continually strive to improve our performance for Board understands directly the areas where the customers and accept the challenge from our Water Forum members are challenging us to improve Forums to improve performance on leakage and Paul Rew HOW WE SET OUR ASPIRATIONS performance and outcomes for our customers achieving even higher standards of compliance on Senior Independent Non-Executive Director The aspirations that we set for the current price and stakeholders. drinking water and sewage treatment. control period 2015-20 were developed through a In order to ensure that the Executive Leadership process of engagement and consultation with Team’s focus is aligned with the business outcomes LOOKING TO THE FUTURE customers and other stakeholders as part of our we want to attain, stretching internal targets from business planning process for the period. This across our balanced scorecard of performance Customer engagement and participation is very engagement led to a set of agreed outcomes for measures represent 90% of the potential value of the much an ongoing process, not a once every five years customer service, the environment and the way in short-term incentive plan for our Directors, with a exercise for each business plan. We published our which we manage the business. For each of these further 10% available for the achievement of approach to customer participation in our report outcomes we agreed a range of measures of success bespoke personal targets. The Remuneration ‘From customer consultation to a culture of and challenging performance commitments, which Committee Report in our Annual Report and customer participation’ this year and co-creation of we use to monitor and report on performance. Financial Statements, a separate report available on our plans with customers is part of our DNA. This is We set out outcomes and how we deliver these our websites, provides full, transparent detail on our led from the top with our Independent Non-Executive across our strategic themes and through our directors’ remuneration policy and how remuneration Directors actively engaging in many customer and corporate values, on pages 11 to 12 of this report. We in the year has been calculated. stakeholder engagement events over the year. report on our performance against these outcomes Understanding from our customers what matters most and our measures of success and performance to them about the services we provide shapes both commitments on pages 20 to 24. PERFORMANCE IN 2017/18 our immediate targets and our long term plans, which are being brought together in our 2020-2025 However, in order to drive the year on year Our performance in 2017/18 against our measures of business plan. performance improvements necessary to deliver our success is described in detail throughout this report. vision of being national leader, we set ourselves The information provided is supported by case We set out our ambitions for customers in our long tougher, stretching targets within the business. These studies that illustrate where we are adopting term vision statement ‘Shaping our Future’, targets are reported internally through a balanced particularly participatory or innovative approaches in published earlier this year which looked ahead as far scorecard of key performance indicators which cover the way we deliver services. as 2040. We will publish more detail on how we will the full range of strategic themes that underpin the 6 Northumbrian Water Limited • Annual Performance Report 7 In the wider environment we are proud that all of the LOOKING FORWARD bathing waters in our north east operating region CHIEF EXECUTIVE continue to meet the required standard and that the We are well advanced in our planning for the vast majority achieve the good or excellent standard. submission of our business plan to Ofwat for the OFFICER’S WELCOME We continue to deliver excellent levels of wastewater 2020-2025 price review period. We have been on a treatment compliance and our transformative journey over recent years with our customers towards pollution management programme has helped us to more and more active customer participation and reduce significantly the number of incidents over co-creation. This deeper engagement with our I am pleased to present our Annual Report and Financial recent years. customers has been fundamental to the development of our future plans. We will continue to set stretching Statements for the year ended 31 March 2018. Our One of the highlights of 2017/18 was our inaugural targets in line with our national leader vision which will Innovation Festival where we hosted over 1,000 deliver further service benefits to our customers and vision is to be the national leader in the provision of people over the week-long event with the aim of the wider environment and communities in which finding ways to address environmental and social we operate.
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