Minutes of the eighteenth meeting of the Water Forum. Severn Trent Centre, Coventry. 03 June 2016

Transcription

1 Minutes of the eighteenth meeting of the Water Forum Severn Trent Centre, Coventry 03 June 2016 Present: Chair Consumer Council for Water (CCWater) Environment Agency Natural England CBI Gill Barr Bernard Crump, Christina Blackwell Bill Darbyshire Ian Butterfield Richard Butler In attendance: Severn Trent Water (STW) Tony Ballance, Shane Anderson, Sarah Stimpson, Harriet Towler, Leah Fry, Hayley Burdett-Ward, William Corcoran (afternoon session only), Simon Brown (afternoon session only), Jim McLaughlin (for PR16 agenda item). Apologies for absence: Bruce Laughton (East Midlands Councils). 1. Welcome The Chair welcomed attendees to the eighteenth meeting of the Water Forum, and her first meeting. The Chair thanked the interim Chair, Bernard Crump, on behalf of the Forum for his work in the preceding months. The Forum welcomed Bill Darbyshire from the Environment Agency, to his first meeting, and Christina Blackwell (CCWater) back from maternity leave. The Chair explained her motivations for taking on the role. The Chair also provided an update on her recent engagement with Ofwat and observations so far. The Chair reported that Ofwat would be seeking a further step change in the quality of engagement undertaken by companies, building on the successes of PR14. Whilst Ofwat would not seek to mandate the engagement undertaken by companies, it had expressed an expectation that companies would consider:

2 segmentation; continuous customer engagement; deliberative dialogue techniques; triangulation of data; and behavioural economics (and co-design with customers). One Forum member commented that they expected this review, and the communication of final determinations by Ofwat in particular, to take a more rounded view of all the issues and challenges explored in business plans and not only the impact on prices. The Forum discussed the draft working principles proposed by the Chair, and welcomed the ongoing recruitment of subject matter experts. The Forum welcomed the proposal to develop a detailed longer term plan and series of forward agendas for the period until September The Forum agreed there would be benefit in sharing the key elements of this plan with Ofwat with a view to helping inform Ofwat s decisions about when further information should be published throughout the price review. The Chair to discuss with Ofwat how they will ensure a balanced debate about the business plans submitted so that the discussion is not solely price focused. The Chair to meet with STW HR to discuss recruitment for Water Forum members. 2. Governance Members were invited to make declarations of interest: STW reported that it was a corporate member of CBI West Midlands, this declaration was noted. Bernard Crump reported that he was a remunerated member of the CCWater Board, this declaration was noted. Christina Blackwell reported that her husband was an employee of STW, this declaration was noted. The Forum reviewed the minutes from its meetings on: 29 October The Forum approved these minutes. 15 February The Forum approved these minutes. 23 March STW was commended for the assurance carried out that identified ways for strengthening and clarity in a way other companies have not done. The Forum approved these minutes.

3 The Forum reviewed the actions from previous meetings. The Forum noted that the actions were in satisfactory position, subject to the completion of action 17.3 the appointment of a member from West Midlands local authorities. One member reported that the structure of local government in the West Midlands was changing, and this may have a bearing on the Forum s approach to appointment. Action(s): The Chair will discuss with Richard Butler (CBI) with regards to the West Midlands Combined Authority and the impact this could have on future membership of the Water Forum. Interim Chair to sign minutes. 3. PR19 introduction and breakout STW presented a reminder of its approach to the last price review (PR14) and the key lessons learnt and reflections previously shared by the Forum. Previous Forum members highlighted a number of lessons learned from their experience of PR14. In particular, they would welcome: a better understanding of econometric modelling and its role in price reviews STW offered to provide a detailed session on econometrics for those members who wished to attend; continued engagement from the STW Board the Chair would invite the STW Chair to attend its future planning session; the continuation of a customer research sub-group the Chair agreed that the use of expert sub-groups would be integral to the future operation of the Forum; and longer duration of access to price sensitive information STW agreed it would review its processes to ensure members had sufficient time to consider confidential information. STW presented a high-level overview of the PR19 building blocks and strategy. STW left the meeting whilst the Forum discussed the key challenges in developing the plan, and its understanding of what customers would expect them to challenge. Action(s): Forum members wishing to attend a session on econometric modelling to contact Hayley Burdett-Ward. STW/Chair to review STW non-executive engagement with the Forum STW to review arrangements for price sensitive information. 4. PR19 approach STW set out a high-level approach and timeline for PR19.

4 The Water Forum discussed Ofwat s expectation of its future role. It was emphasised that the Forum are not required to endorse STW s plan but rather provide challenge which is duly recorded. The Chair emphasised the importance of the company s strategic framework (including its purpose, vision and strategy) being integral to the development of its plan. STW provided a high-level overview of its approach to customer research. The Forum noted this and discussed a number of customer related topics. STW noted that it already has some preliminary customer research underway. The Forum requested attendance at this session. STW to provide an electronic copy of its strategic framework. STW to provide a full set of draft agendas to Sep 2018 to establish who the Forum need to engage with. STW to provide draft agenda item and discussion on customer research approach and triangulation of data. STW to invite the Water Forum to customer research sessions Performance STW reported the outcome of the full year assurance of its performance commitment and outcome delivery incentive (ODI) data. This assurance had been undertaken by STW s independent technical assurers, Jacobs. The Forum noted the improvements in reporting processes from the half year assurance shared with it earlier in the year. One member requested further detail on STW s assurance processes. The Forum further noted that Jacobs assurance indicated that there were potentially material weaknesses in STW s reported data for two ODIs (although these are not applied until later in the AMP and therefore presented a low risk. STW set out its end of year performance where it had under-performed against its performance commitments and where it had outperformed - including and the extent of net outperformance earned. STW presented stands which set out how the company had delivered significantly better performance in relation to: internal sewer flooding; external sewer flooding; and category three pollutions. One member of the Forum, noting the size of the net reward, challenged STW on how it planned to communicate the impact of this outperformance to customers and reflect it in charges. It was agreed that STW would respond separately and for the member to report back to the Water Forum on the outcome.

5 The Forum challenged STW on where it had failed to achieve its performance commitments this year. It requested further detail on STW s improvement plans at its next meeting. STW also reported that it did not plan to apply to Ofwat to receive the full extent of outperformance earned this year in two areas: Supply interruptions. In the light of high profile events during quarter 4 which may have eroded customer confidence STW would forgo the outperformance earned for supply interruptions. Leakage. STW explained that reported leakage levels may change each year as a consequence of either real changes in leakage levels or improvements in methodology or data. STW would only apply for outperformance where reductions in reported leakage were the consequence of a real reduction. STW provided an overview of how leakage is calculated in terms of changes to methodology and actual reduction. The Forum requested a more detailed explanation of the calculation of leakage at a future meeting. The Forum noted STW s position with regards to outperformance. STW discussed the timeline for publication of its annual performance report. STW provided the Forum with an initial draft of section three of the report which focussed on ODI performance. STW invited Forum members who wished to do so to comment on the draft. In addition, STW provided the Forum with an initial draft of the customer version of the annual performance report. STW requested that members review the document provide and comment and feedback. The Forum agreed to provide a paragraph for the customer report setting out its summary view of this year s performance. The Forum challenged STW on their approach to publishing the customer version of the customer performance report and challenged STW to be more innovative and interactive on social media. STW to follow up with Bill Darbyshire to discuss the approach taken to assuring ODIs. Bernard Crump to feedback to Forum on discussions regarding how outperformance is to be reflect in bills. STW to provide agenda item and discussion on red performance with action plans for improvement. STW to provide agenda item and deep-dive on leakage calculation. Forum members to review Chapter 3 and provide comments and a summary paragraph for the customer report by 20 June.

6 6. PR16 Update STW provided an update on the 2016 review of non-household retail tariffs (PR16). The Forum noted that Ofwat had published its final guidance and that STW was now working to reallocate costs and customers to a new band (0-5Ml/d) not previously included in its scheme of charges. STW reported that it did not anticipate any changes would have a material impact (>5%) on any individual customer s charges, but it would circulate the draft impact of all changes to the Forum for comment. The Forum noted this update. STW to circulate bill impacts for comment by the Water Forum at end of June. 7. Any other business The date of the next meeting is still to be agreed, likely to be in September. 8. Meeting Review The Forum held a review of the meeting in private without the company present.