Operating environment
The Water Services Regulation Authority (Ofwat) regulates prices and levels of customer service, while the Drinking Water Inspectorate (DWI) monitors drinking water quality and the Environment Agency (EA) covers environmental protection. Customers’ interests are represented by the Consumer Council for Water (CCWater).
NWL aims to maintain good working relationships with its regulators and with regional organisations, such as local authorities, which have an interest in the services it provides and can influence the company’s business.
The ‘Cave Review: competition and innovation in water markets’ (Cave Review) published its final report in April 2009. Government has welcomed the report and intends to bring forward measures into the ‘Flooding and Water Management Bill’ in light of its recommendations. In our view, the vital test for any change must be ‘will it improve outcomes for customers?’. While the essential characteristics of the sector mean the scope for competition is likely to be less than in other utilities, we agree that there are opportunities to expand competition beyond its current very limited level. We remain to be convinced that retail business separation would bring benefits for customers. We welcome the emphasis in the report on measures to increase innovation.
Protecting supplies to customers is a high priority. We submitted our ‘Water Safety Plan’ to the DWI in October 2008 and this underpins the drinking water quality proposals.
We commenced Phase I of Operator Self Monitoring in April 2009. This involves NWL taking on responsibility for sampling and analysing the final effluent at sewage treatment works for compliance purposes. This task had previously been undertaken by the EA. The transfer is consistent with the Better Regulation principles and we expect it to result in a small cost saving. The second and final stage of the transfer will happen in January 2010.
We are pleased that the draft ‘River Basin Management Plan’ published by the EA for the rivers in our regions proposed an appropriate balance between challenging environmental targets and a clear evidence base for action. We support the emphasis on tackling diffuse pollution at source rather than end of pipe solutions.
NWL intends to increase the emphasis given to catchment management across its operating areas. This will help tackle emerging challenges from water soluble pesticides and also bring a range of other benefits in terms of habitat protection, biodiversity and carbon management.
Putting customers first
As in the prior year, we have only increased our prices for 2009/10 by inflation and have not used the real increase that Ofwat’s price limits allow. This is the third consecutive year in which we have not implemented the maximum price increase.
By 2010, we expect our combined water and sewerage bill in the north east to be one of the lowest in the country and, in our Essex and Suffolk regions, our water bills will compare favourably with other local suppliers.
We submitted our Final Business Plan, covering the period from April 2010 to March 2015, to Ofwat in April 2009 setting out the short term proposals to deliver our 25 year strategy published in ‘Looking to the future’. Our significant investment programme will continue to deliver high levels of service to our customers and value to our stakeholders. However, within the investment programme, there is a change in emphasis from achieving new quality standards to maintaining the high standards already achieved. We will also be working to tackle the challenges posed by climate change, reducing our operational carbon emissions and improving the resilience of our assets. We believe we are well placed to deliver these objectives and propose raising prices by the minimum amount consistent with both maintaining safe and secure water supplies and our commitment to protect the environment.