ANNUAL
PERFORMANCE
REVIEW
2013-14
1
ANNUAL
PERFORMANCE
REVIEW 2013-14
WELCOME
TO OUR
ANNUAL
PERFORMANCE
REVIEW
2013-14
This performance review
describes the service we have
provided for our customers
and the work we have done
to protect the environment
over the last year.
CONTENTS
Welcome to our Review of
Performance for 2013-2014
Page 6
How we manage our business
- our vision, values and
what we aim to achieve
Page 8
How we manage our business
- data integrity
Page 16
Overview of performance
2013–14
Page 18
Looking to the future
Page 78
Regulatory statements
and explanatory note
Page 84
Governance overview
Page 88
Appendix: Glossary of terms
Page 94
Note: this performance review and regulatory statements also meet our
regulatory responsibility to publish a Risk and Compliance Statement.
2
Langford Water Treatment Works
3
OUR
COMPANY
Northumbrian Water Limited
(NWL) operates in the South East
of England, where it trades as
Essex & Suffolk Water (ESW) and
the North East of England, where
it trades as Northumbrian Water
(NW).
ESW provides water services
to two separate supply areas.
Our Essex area, which has a
population of 1.5 million, is
part rural and part urban. The
main areas of population are in
Chelmsford, Southend and the
London Boroughs of Barking
and Dagenham, Havering and
Redbridge. We serve a population
of 0.3 million in our Suffolk
area, which is mainly rural with
the largest towns being Great
Yarmouth and Lowestoft.
NW provides water and sewerage
services to 2.7 million people
in the North East of England.
The major population centres
of Tyneside, Wearside and
Teesside are in our area but we
also serve large rural areas in
Northumberland and County
Durham. We provide only
sewerage services in Hartlepool.
4
17,008
Length of water mains (km)
29,868
Length of sewers (km)
46p
Average household bill (pence per day)
water service
54p
Average household bill (pence per day)
sewerage service
399
Average water delivered
to households (Ml/d)*
1.2m
Total properties served
156
Average water delivered to industry and
businesses (Ml/d)*
8,608
Length of water mains (km)
62p
Average household bill (pence
per day) water service
0.8m
Total properties served
293
Average water delivered to households (Ml/d)*
79
Average water delivered to industry and
businesses (Ml/d)*
*Ml/d = megalitres per day
1 megalitre = 1,000,000 litres
5
WELCOME TO
OUR REVIEW OF
PERFORMANCE
FOR 2013-2014
It is a privilege to serve our
customers in the North East, Essex
and Suffolk. Our customers are
always at the heart of everything
we do. We are working hard to
continually improve service and
are making great progress as
we continue on our journey ‘to
be the national leader in the
provision of sustainable water
and waste water services’.
I am delighted to report improved
performance in a number of key
areas. This includes our best-ever
customer satisfaction scores (as
measured by Ofwat’s Service
Incentive Mechanism (‘SIM’)
score), a continuation of our
industry-leading performance for
interruptions to supply and sewage
treatment, a reduction in sewer
flooding incidents and our best-
ever microbiological performance
at our service reservoirs. We
are confident we will regain our
industry leading bathing water
quality position very soon. We
continue to be recognised as
industry leaders in leakage
control and water efficiency
and the completion of the major
project to expand Abberton
Reservoir has secured supplies
to Essex for the next 25 years.
Alongside all these improvements,
we are very proud of the external
recognition the Company has
received in the last year for
our commitment to providing the
best service possible for
our customers.
We achieved 36 separate awards
in 2013. This included winning a
record five of the 12 categories
we entered at the Utility Week
Achievement Awards 2013,
including the coveted title of Utility
of the Year. Our debt collections
team also won the ‘treating
customers fairly award’ at the
National Credit Industry Awards
2014, which are the biggest
awards in the financial sector.
We have been awarded the
Queen’s Award for Enterprise
(sustainable development), for
an impressive second time. The
judges’ comments specifically
mention the great work we’ve
done to generate 20% of our
energy from renewable sources,
generating electricity from sewage
sludge through our Advanced
Anaerobic Digestion (AAD)
processes, using reed-beds in
water treatment and increasing the
capacity of Abberton Reservoir.
They also praised us for the way
we work with the communities
we serve and our ‘Just an
hour’ employee volunteering
programme, in which nearly 55%
of our workforce participate.
The full Queen’s Award for
Enterprise: Sustainable
Development 2014 citation
reads as follows:
“Northumbrian Water Ltd wins its
second Sustainable Development
Award for upholding exemplary
standards in supplying drinking
water and treating waste water.
Having developed a credible
strategy to generate 20% of its
energy from renewable sources
by 2020, it has contributed
much towards environmental
improvement, developing
innovative methods for generating
electricity from sludge, utilising
reed-beds to treat waste and co-
digesting many waste streams in
anaerobic digester plants. Whilst
increasing the capacity of an
existing reservoir to secure water
for 1.5 million people, it is boosting
the wildfowl and bio-diversity
habitat. It has demonstrated
sector-leading outreach to
communities, including donating
1% of pre-tax profit, establishing
staff volunteer programmes,
sponsoring improvement in a failing
school, offering space to projects
and developing a health centre
within a deprived community.”
Whilst it is pleasing to receive
such external recognition, we are
never complacent and continually
strive to improve the service
we provide to our customers.
We have been talking extensively
to our customers and stakeholders
about what they expect from
us in the future so that this can
underpin our business plan
for the period 2015-20.
To ensure we are listening to
our customers and interpreting
their views fairly we formed two
independent Customer Challenge
Groups (known as Water Forums),
for ESW and NW. Members of the
Forums challenged and advised
us on behalf of our customers
and stakeholders. I would like to
thank the members of the Forums
for their substantial contribution
to the business plan. It was the
better for their challenge.
After more than two years
of meticulous planning and
consulting with our customers,
our plan for the period 2015-
20 was submitted to our
economic regulator, Ofwat
in December 2013.
We have listened to our customers
and our intention to keep
customers’ bills as low as possible,
while delivering great service,
received considerable support
in extensive market research.
Ofwat was very complimentary
about our plan and noted we
were close to satisfying all their
requirements. Since December,
we have been addressing a
few outstanding areas, and we
submitted a revised plan to
Ofwat on the 2 May 2014 putting
incentives in place to drive even
better services to our customers.
Ofwat examined the revised plan
and published its draft decision
(Draft Determination) on the
30 May 2014. This described
the services to be provided
and the prices we can charge
for the period 2015-20.
All parties have recently
responded to the Draft
Determination and we await
Ofwat’s Final Determination
in December 2014.
Things are also beginning
to change for our business
customers. Currently, only business
customers who use more than five
megalitres of water per year are
able to choose who they purchase
their water and waste water retail
services from. The opening of
the water retail market in 2017
will change this position, and all
business customers, charities
and public bodies will be able
to choose their retail supplier.
In April 2014, we successfully
secured a retail licence to supply
business customers and we are
looking forward to competing
successfully in the market and
being the retailer of choice
for business customers.
I hope you find this review helpful
and take the opportunity to find
out about the service we provide.
Heidi Mottram
Chief Executive Officer
Essex & Suffolk Water
Northumbrian Water
6
7
HOW WE MANAGE
OUR BUSINESS
OUR VISION
IS TO BE THE
NATIONAL
LEADER IN THE
PROVISION OF
SUSTAINABLE
WATER AND
WASTE WATER
SERVICES.
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9
HOW WE MANAGE
OUR BUSINESS -
OUR VISION,
VALUES AND
WHAT WE AIM TO
ACHIEVE
We have a clear vision ‘to be the
national leader in the provision
of sustainable water and waste
water services’. To achieve
this we have strong values
and focused key performance
indicators which are embedded
throughout the company to help
us to deliver our commitments
to our customers. All employees
know the part that they play in
helping us achieve these targets.
This allows the NWL Board and
business management team
to send clear messages to our
employees and contractors
about what we aim to achieve for
customers and how we will go
about doing this. The framework
is shown in the diagram below.
Our vision and values are
supported by five themes:
Customer; Competitiveness;
People; Environment; and
Communities which are mutually
supportive. Achieving the right
balance between them is essential
to our success. After extensive
consultation with our customers,
we have developed a set of
outcome statements which sum
up our long-term goals and what
we aim to achieve. A very high
percentage of customers surveyed
(88%) support these outcomes.
Our corporate themes (below)
fully support these outcomes, we
describe this over the page.
Advanced Anaerobic Digestion, Bran Sands
10
11
OUTCOME STATEMENTS
VALUES
AWARDS RECEIVED
The following outcome statements
are our goals, what we want to
achieve against our five corporate
themes. They reflect what our
customers and stakeholders
have told us they want from us.
Competitiveness:
• Our finances are sound,
stable and achieve a
fair balance between
customers and investors.
• We are an efficient and
innovative company.
Doing things the right way is
as important to us as what we
do. This is driven by our five
company values. We are:
Customer focused
• We aim to exceed the
• We are the retailer of choice
for business customers.
expectations of our external
and internal customers.
Customer:
• We provide excellent service
and impress our customers.
• Our customers consider
the services they receive
to be value for money.
• Our customers are well
informed about the
services they receive and
the value of their water.
• We supply clean, clear
People:
• Our people are talented,
committed and inspired
to deliver great services
to customers.
• Our people act in line
with our values.
• We are seen as a great
drinking water that tastes good.
place to work.
• Our workplaces are
healthy and safe.
Communities:
• We are proud to contribute
to the success of local
communities.
• We work in partnership
towards common goals.
• We provide a reliable and
sufficient supply of water.
• We provide a sewerage
service that deals effectively
with sewage and heavy rainfall.
• We deliver water and
waste water services that
meet the needs of current
and future generations
in a changing world.
• We are a company that
customers can trust.
Environment:
• We protect and enhance the
environment in delivering our
services, leading by example.
• We help to improve the quality
of rivers and coastal waters
for the benefit of people, the
environment and wildlife.
One team
• We work together consistently,
promoting co-operation,
to achieve our corporate
objectives.
Results driven
• We take personal
responsibility for achieving
excellent business results.
Creative
• We continuously strive for
innovation and better ways
to deliver our business.
Ethical
• We are open and honest in
meeting our commitments,
with a responsible approach
to the environment and
our communities.
These values are deeply
embedded in our business and
ensure we achieve results in the
right way. Our achievements
have been externally recognised
in 2013-14. Here are some of
the awards we received.
Queen’s Award for Enterprise
(Sustainable Development)
In April 2014, in recognition
of our leading performance in
sustainable development we
received the great news that we
had been awarded the Queen’s
Award for Enterprise (sustainable
development), for the second
time. This means we will keep
our Royal recognition and this
amazing accolade for a further
five years. We are one of only
eight businesses in the North
East to be given this accreditation
and the only one to receive it
for sustainable development.
Business in the Community
We were awarded Platinum
Plus/Big Tick status in the
Corporate Responsibilities
Indices 2008 to 2013.
Sunday Times Best
Companies to work for
We achieved 1 star status in
2013 having being classed
as ‘one to watch’ in 2011.
Utility of the Year 2013
We won a record five of the
seven categories in which we
were shortlisted at the Utility
Week Achievement Awards 2013,
including Utility of the Year. The
judges said NWL had “consistently
outperformed its peers”.
World’s Most Ethical
Companies List
An American think-tank, the
Ethisphere Institute, included NWG
on its list of the world’s most ethical
companies for the fourth time in
2013. We remain the only water
utility in the world to make the list.
Visit England 2014 Awards
Leaplish Waterside Park:
Best Holiday Park
Lowestoft Local Links
Sustainable Travel Awards
Customer: Travel plan
for Trinity House
RoSPA
Health & Safety: Industry
East Anglia Building
Excellence Awards 2014
Scott Everett, Client Project
Manager: Best public service
building (Hanningfield
reservoir building)
Credit Today Awards
Customer: Treating
Customers Fairly
Community Project of the Year
Just an hour: Volunteering Scheme
The Main Event mains cleaning
programme: Customer
Satisfaction Initiative of the Year
PRV (pressure reduction valve)
technology: Most Innovative
Use of an Existing Technology
Hanningfield reed beds:
Water Resource Management
Initiative of the Year
Robert Stephenson Awards
- Institute of Civil Engineers
North East 2014
Investment Delivery: Project
value under £14m
East of England RICS Awards
The Abberton Scheme:
Infrastructure
2014 Environment & Waterwise
Water Efficiency Award
ESW H2eco: Built Environment
Saltersgill Allotments:
Landscape & Gardening
ecoFIT: Built Environment
ESW H2eco: Research & Evaluation
Little Green Riding Hood:
Campaigns & Education
Utility Week Stars Awards
Jane Moreland: Giving Back Award
Supplychain: Team of
the Year Award
Supplychain: Team of the
Year - Back Office
Customer Contact Centre:
Customer Service
Insititute of Civil Engineers
East of England Merit Award
Abberton Scheme:
Physical Achievement
Abberton Scheme: Sustainability
Note: Several of the awards listed were won by Northumbrian Water Group (NWG), but, in
all cases, the entire entry was based on activities undertaken by NWL.
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13
KEY PERFORMANCE
INDICATORS:
The table below summarises our performance in 2013-14. All water companies strive to maintain a ‘satisfactory’ result. The other possible results include marginal or unsatisfactory - where a company must improve its performance.
Some targets are industry wide, set by OFWAT. Some are our own (e.g. sewer flooding), for these we have set very high standards that we are striving to attain.
Key: Satisfactory Marginal Unsatisfactory
OUTCOME
MEASURE AND UNIT
PERFORMANCE LEVEL
COMMENTS
REFERENCE
We provide excellent customer service
and impress our customers; and
Our customers consider the services they
receive to be value for money
We supply clean clear drinking water that
tastes good
Service incentive mechanism (score)
100 is the maximum; the industry average for 2011-12 and 2012-13 was 76
Drinking water quality (%) - North East
Companies are aiming to achieve 100% - the 2012 industry average was 99.96%
Drink water quality (%) - Essex and Suffolk
Companies are aiming to achieve 100% - the 2012 industry average was 99.96%
Water supply interruptions 3 hours or longer (minutes: seconds per property served)
We consider that 10 minutes or lower is satisfactory
Leakage (Ml/d) - North East
Every company has its own regulatory target - our target is not more than 141 Ml/d
We provide a reliable and sufficient supply
of water
Leakage (Ml/d) - Essex and Suffolk
Every company has its own regulatory target - our target is not more than 66 Ml/d
Security of Supply Index (SOSI) - North East
100 is the maximum
Security of Supply Index (SOSI) - Essex and Suffolk
100 is the maximum
We provide a sewerage service that deals
effectively with sewage and heavy rainfall
Repeat internal sewer flooding (number)
Every company has its own regulatory target - our target is 269 or below
We deliver water and sewerage that
meets the needs of current and future
generations in a changing world
Serviceability water above ground
Serviceability water below ground
Serviceability sewerage above ground
Serviceability sewerage below ground
Companies are aiming to achieve stable serviceability
Greenhouse gas emissions (KtCO2e)
We are measured against our PR04 Business Plan target - 288.2 or less
Pollution incidents sewerage (category 1-3) (per 10,000km of sewer)
The industry wide target is 50. The industry average for 2013 was 98
2012-13
2013-14
80.15
85.29
Improvement - close to industry leading
See page 23
99.94
99.89
06:57
136.0
53.9
100
97
1196
stable
214.8
119.56
100
100
351
stable
199.7
77.59
99.95
99.91
04:56
A high level of compliance; an improvement on last
year and in line with the industry average
See page 30
A high level of compliance; an improvement but slightly
lower than the industry average
See page 30
Improvement - maintaining industry leading
See page 38
134.03
Target significantly bettered
58.39
Target significantly bettered
This is the highest score possible
See page 38
See page 38
See page 39
Improvement to achieve the highest score possible
See page 39
Significant improvement but still above our target
See page 44
Serviceability for all services is ‘stable’
This indicates how effectively we are operating and maintaining
our water mains to deliver an expected level of service now and
into the future.
See page 50
We have achieved year on year improvement
See page 59
Significant improvement and significantly better than
the industry average but still above our target
See page 58
We have very few category 1-2 incidents but have
deteriorated slightly. However, we have still performed
better than industry average.
See page 58
We protect and enhance the environment
in delivering our services, leading by
example
Serious pollution incidents sewerage (category 1-2) (per 10,000km of sewer)
The industry wide target is 1.5. The industry average for 2013 is 3.4
1.87
3.05
Discharge permit compliance (%)
The industry wide target is 99% or greater
Satisfactory sludge recycling (%)
The industry wide target is 100%
Return on Regulatory Capital Value (post tax) (%)
100
100
5.2
100
5.3
100% of our sludge was recycled
99.38
A high level of compliance maintained
See page 56
Our finances are sound, stable and
achieve a fair balance between customers
and investors
Credit rating
Gearing (%)
Interest Cover (ACIC post capital charges) (number)
BBB+ (stable)
Baa1 (stable)
BBB+ (stable)
Baa1 (stable)
62.0
1.9
61.1
1.9
A robust and stable financial position
14
See page 56
See page 64
See page 64
See page 65
See page 65
15
HOW WE MANAGE
OUR BUSINESS -
DATA
INTEGRITY
ENSURING OUR DATA IS
RIGHT
ACTIVITIES TO ENSURE
THE INTEGRITY OF DATA IN
2013-14
As well as the robust assurance
processes and procedures
in place, we also ensure our
employees understand the
importance of accurate and
consistent data.
During the year, we have
heightened our employees’
awareness of their responsibilities
and the role of our Board and
Audit and Risk & Compliance
Committees.
We are also carrying out a ‘data
integrity’ awareness campaign to
ensure that everyone involved in
the data collection chain (including
our contractors) knows their
responsibilities and how their
information is used to produce
company performance data.
It is essential that the Company,
our customers, regulators and
other stakeholders have accurate
and complete performance
data that they can rely on. We
have robust and comprehensive
processes in place to ensure we
can do this.
We meticulously record our
activities. If there is a leak, we
record when a customer calls
to let us know and then record
each stage from preparation to
completion of work. To ensure
the consistency and quality of
our activities and records we
have wide ranging processes and
procedures with robust control and
assurance measures in place.
We use our operational records
to create data which can be
used in many different ways. This
includes reporting to customers,
regulators and stakeholders on the
service we are providing (as in this
review), helping us to take action
to avoid service failures before
they happen and planning efficient
and effective operations.
All our records and data are
managed carefully and the
integrity of our published data is
of paramount importance to us. We
work hard to ensure that we never
knowingly or unknowingly provide
data that is not fit for purpose so
that we maintain the confidence of
our customers and regulators.
Personal Digital Assistant (PDA) supporting an efficiency work schedule
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OVERVIEW OF
PERFORMANCE
2013-14
STRONG
PERFORMANCE
FOR 2013-14
We are pleased to report strong performance for 2013–14 with
improvements to performance and service in a number of key
areas. There was improved customer service with our best-
ever customer satisfaction scores (as measured by Ofwat’s ‘SIM’
measure), a reduction in sewer flooding incidents, and our best-
ever microbiological performance at our service reservoirs.
The health (serviceability) of our assets remained satisfactory
and we met our leakage targets in both and NW and ESW. We
also expect to maintain (by a substantial margin) our leading
industry position in relation to supply interruptions and sewage
treatment.
Our performance is described in detail on the following pages.
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19
PERFORMANCE
2013-14:
CUSTOMER
THE NORTHUMBRIA REGIONS
HAVE THE HIGHEST LEVELS OF
SATISFACTION WITH VALUE FOR
MONEY (CCWATER RESEARCH).
High levels
of customer
satisfaction with
overall service
WE PROVIDE EXCELLENT
SERVICE AND IMPRESS OUR
CUSTOMERS
OUR CUSTOMERS CONSIDER
THE SERVICES THEY RECEIVE
TO BE VALUE FOR MONEY
WE ARE A COMPANY THAT
CUSTOMERS CAN TRUST
Nationally,
customers in the
Northumbria region
have the highest
level of trust with
their water and
sewerage company
(CCWater research)
Most improved
company on SIM
qualitative measure
Number of
abandoned calls
reduced by 40% in
2013-14
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21
ENSURING WE MEET
CUSTOMER EXPECTATIONS
Regular customer research helps
us understand what our customers
want and expect from us. Meeting
customers’ expectations is a key
theme in our corporate planning
framework and being ‘customer
focused’ is one of the five values
embedded in our culture.
To help ensure we meet
customers’ expectations we
have two independent panels
of people known as ‘The Water
Forums’ (covering the NW and
ESW operating areas respectively)
who challenge the company on
behalf of our customers and other
stakeholders. The Water Forums
were formed to help us deliver a
customer focused business plan
for the period 2015-2020.
The Forum approach brings
together people from the wide
range of different organisations
relevant to water and sewerage
planning to help ensure our
decisions reflect customers’ views,
particularly on issues that may
impact on standards of service
or the level of customers’ bills.
The Water Forums also recognise
and take into account the legal
obligations faced by the company
(e.g. new drinking water quality
and environmental standards).
The Water Forums advised
and rigorously challenged us
in the development of our plan
for the period 2015-20 which
was submitted to our economic
regulator, Ofwat in December
2013.
Because the challenge made our
plan better we want to build on this
success and, with the agreement
of the Water Forums, plan to
maintain the input from external
stakeholders in the future.
OVERALL CUSTOMER
SATISFACTION WITH SERVICE
AND VALUE FOR MONEY
CCWater has published the
results of its survey of water and
sewerage customers in 2013. This
shows that Northumbria region
has continued to be the number
one water company for satisfaction
with value for money for water and
sewerage services.
The CCWater survey also asked
customers how much they trusted
their water and/or sewerage
company on a scale of one to ten
(1 = no trust and 10 = complete
trust). Nationally, customers in
the Northumbria region have the
highest level of trust with their
water and sewerage company at
7.74.
A high level of customer
satisfaction has also been
confirmed through our quarterly
tracking research, undertaken
for us by an independent expert
company. Companywide customer
satisfaction with both overall
service and value for money
was high in 2013-14 with net
satisfaction levels of 88% and 80%
respectively.
SERVICE INCENTIVE
MECHANISM (SIM)
Ofwat’s SIM survey measures
our customers experience of
dealing with us and provides a
good indication of how well we are
serving our customers.
It includes a survey of customers
who have had recent dealings
with us to understand how well
we performed in meeting their
expectations. We achieved second
in industry ranking, and most
improved company, for both our
water and sewerage operational
services. Scores increased from
4.46 to 4.62 out of 5.
SIM also includes an assessment
of unwanted customer contact and
this has reduced significantly in the
last year by 25%.
We are pleased that our overall
SIM score (a combination of
survey results and unwanted
customer contact performance)
reflects the effort we have
been putting into improving the
experience for our customers.
This score increased from 80.15 in
2012–13 to 85.29 in 2013–14.
There isn’t a single measure that
will provide us with the full picture
of our customers satisfaction. So,
to benchmark ourselves outside
the water industry we have been
measuring our Net Promoter Score
(NPS) which measures customer
advocacy (the loyalty that exists
between us and our customers)
and have seen our score improve
from 24% in 2011 to 32% in 2013.
Our results for the first quarter of
2014 show further improvement;
our NPS has risen by 6% from
2013 to 38%.
This ranks us alongside the
likes of Sony and Samsung who
have excellent reputations for
exceeding customer expectations
in the service they provide.
We have also recently started
measuring our UK Customer
Satisfaction Index (UK CSI) ranking
through the Institute of Customer
Service. This survey measures
the customer’s actual experience
with us and allows us to then
benchmark ourselves against
the wider utility sector and other
customer service industries.
The latest survey results show
the company as being one of the
leading utility companies in this
measure.
We believe that we can only truly
claim to be the national leader
if we are providing exceptional,
industry leading customer service.
In today’s world that includes
an online solution. For us, going
online is about offering additional
choices to customers about how
they contact us or pay their bill
alongside the existing options.
Customer research has been
carried out to understand what
services our customers want to
access online. We continue to
explore ways of improving the
customer service we provide while
also offering our customers choice
of how to interact with us. During
2013 we have improved our web
self-service offerings and have
enabled our website to be mobile
device responsive allowing greater
access for our customers.
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23
GUARANTEED SERVICE
STANDARD (GSS)
PERFORMANCE
We always seek to provide
excellent service and impress
our customers. When things
occasionally go wrong, the
Water Supply and Sewerage
Services (Customer Service
Standards) Regulations 2008
require companies to provide
compensation payments
to customers in certain
circumstances.
We do whatever we can to
minimise service failures and aim
to pay promptly should we fail
to meet guaranteed standards.
GSS payments totalled £941,158
for 2013-14. This represents a
13% decrease from 2012-13
(£1,084,579). The fall is largely due
to fewer sewer flooding incidents.
We are proactive in our customer
communications. We use text and
voice messaging to help keep
customers informed. This could
be reminders on appointments or
updates on operational incidents.
We sent over 500,000 separate
text messages in the last year.
After success in our operational
teams we are now extending this
approach to our billing area. We
are also working to introduce a
web based chat facility as well as
extending our coverage on social
media. Social media allows us to
keep our customers up-to-date,
and also helps us identify and
solve customers’ concerns before
they come to us with a problem.
We recognise that many of our
customers really value the ability
to talk to us directly and we have
worked hard to improve service in
our contact centres. Over the year
we have reduced the total number
of abandoned calls by over 40%,
meaning more of our customers
have been able to contact us when
they wanted.
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25
CASE STUDY:
CUSTOMER
COMMUNICATION
AND DIGITAL
MEDIA
Customer communication can
always be improved. NWL now
uses a mixture of conventional
communications such as letter,
phonecall and email and also
more modern methods including
online, text and social media. Our
aim is to enhance the service
that we provide to proactively let
customers know about issues and
anticipate their needs. We want to
communicate with customers in a
way that suits them and for them to
interact with us 24/7 if they wish.
We have carried out a lot of
research to understand what
services our customers want to
use online. For instance customers
are more inclined to use web
based self service for billing items
than for emergencies, when they
prefer to speak to someone on the
phone.
We’ve launched a ‘my account’
facility on our website and we have
integrated our solutions with back
office systems so that customers
are truly self serving in real time
using web services. This is in
contrast to many organisations
where the reality is that in the back
office companies are still manually
re-entering information provided
by customers into their systems so
customers may not be viewing real
time data.
Customers can register to view
their account online and see their
account balance, details of how
they pay, leave a meter reading,
apply for a meter, set up a direct
debit, register for e-billing and
make a payment online. They can
also ask a question, view useful
‘how to’ videos on the website and
understand what operational work
may be going on in their area.
We are about to launch a pilot
web chat facility. We have also
created a version of our website
that recognises whether it is being
accessed from a phone or a tablet
and displays correctly. This great
new service provides customers
with easy navigation, minimum
scrolling, panning and resizing,
without the hassle of having to
download and install an app.
We use social media to keep
customers up-to-date, and to
proactively identify and deal with
customer queries. We are also
using text and voice messaging
to keep customers informed;
this could be reminders on
appointments or updates on
operational incidents.
Interactive Voice Recognition
is also a key digital channel.
Customer feedback suggested
that they become frustrated with
voice recognition telephone
solutions so we delivered a keypad
solution for customers to make a
payment, leave a meter reading or
set up a direct debit.
What really sets NWL apart is we
haven’t just thrown technology at
our existing processes we have
considered the types of things that
customers want to do online, and
tailored our solutions accordingly.
These solutions are being
delivered in a phased approach
so we can reflect and learn after
each solution is delivered to
ensure an exceptional experience
for customers ultimately enabling
us to operate more efficiently.
We will keep this under review
and continually seek to impress
customers.
26
27
WE SUPPLY CLEAN, CLEAR
DRINKING WATER THAT
TASTES GOOD
THE NUMBER OF SAMPLES
PASSING DRINKING WATER
QUALITY STANDARDS
REMAINED VERY HIGH IN
2013 WITH 99.95% OF
SAMPLES PASSING FOR NW
AND 99.91% FOR ESW
PERFORMANCE
2013-14:
DRINKING WATER
QUALITY
Excellent drinking
water quality
performance
maintained (99.95%
compliance for
NW, and 99.91%
compliance for
ESW)
The number of iron
failures in drinking
water reduced
significantly in the
North East in 2013
Best-ever
microbiological
performance at our
service reservoirs
Significant and
sustainable
improvements
in reducing
discoloured water
contacts
Laboratory testing at Hanningfield.
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29
OVERALL COMPLIANCE
WITH DRINKING WATER
STANDARDS
Providing drinking water and
supplying customers with
clear water remains of critical
importance to us.
The number of samples passing
drinking water quality standards
remained very high in 2013 with
99.95% of samples passing for NW
and 99.91% for ESW.
In total, we carried out 126,361
tests companywide at customer
taps and 126,190 passed our strict
quality standards.
In Essex, the main reason for the
small percentage of failures was
pesticides from agriculture. In the
North East, 2013 performance was
strong with a significant reduction
in the number of chemical failures,
such as iron and manganese,
compared to 2012.
It is important to note that the
levels of pesticides, iron and
manganese, recorded are
extremely small and pose no risk
to public health.
PESTICIDES IN RAW WATER
We have formal agreements
(undertakings) with the Drinking
Water Inspectorate (DWI)
regarding eleven water treatment
works relating to the pesticides
metaldehyde or clopyralid. The
presence of these pesticides
at the points where we take
raw water from the natural
environment (abstraction points)
is linked to farming and other
land management activities, which
result in pollution of rivers and
streams.
These pesticides cannot be
treated to levels that would pass
quality standards. To solve this
we are working with farmers and
other land managers to reduce
or stop pesticides entering the
rivers supplying our treatment
works. This is called ‘catchment
management’ and includes
delivering direct advice to farmers
and working in partnership with
Defra’s Catchment Sensitive
Farming initiative. This approach
also delivers associated benefits
for wildlife and fish.
Our catchment management
approach is expected to deliver
long term sustainable benefits
and, to date, activities have
been relatively successful in
minimising the presence of
pesticides at abstraction points
in the North East. However, in
Essex in 2012-2013, farmers
significantly increased their use of
metaldehyde to treat slugs due to
the wet conditions. This, together
with the high volume of rain water
flowing off already saturated land,
resulted in widespread pollution
causing a high concentration of
metaldehyde in some of our
water sources.
Catchment activities have been
extended this year to include
proactive abstraction management
to help protect water resources.
We have developed a new
faster method for detection of
metaldehyde in raw water. This,
coupled with more raw water
storage at Abberton Reservoir,
means we can choose when
to take water into storage and
avoid peaks in metaldehyde.
We have seen evidence that
metaldehyde concentration is
reducing in reservoirs and we are
detecting less metaldehyde in final
water. We therefore believe our
compliance will improve as the full
benefits of this initiative are felt.
IRON COMPLIANCE
DISCOLOURED
DRINKING WATER
In the North East, the level of
iron in drinking water sometimes
exceeds the required standard.
We’ve delivered a number of
schemes to replace iron water
mains to help increase iron
compliance across the NW
operating area, some of which
were a regulatory commitment
(under Regulation 28). In addition,
we’ve made flushing of smaller
distribution mains a priority as this
removes sediment and ensures it
does not cause iron problems or
discoloured water incidents.
The number of failures recorded
in 2013 reduced significantly
compared to the previous year
with only nine failures recorded.
The water network overall
serviceability (the ability to deliver
service) performance remained
stable.
The key activity to deliver
improved performance during
2014 and into 2015 will be our
programme of flushing our district
metering areas in one direction
only. This innovative and more
effective method for flushing local
distribution mains will deliver
better performance and longer
term benefit to our customers and
we are confident it will also allow
us to meet our target during
2014-15.
Between 2015 and 2020, we intend
to install or improve manganese
removal at a number of our water
treatment works to help protect the
network from future sediment build
up and improve operability. This
will ensure that we can reliably
achieve new tighter internal
standards.
ESW has excellent compliance on
iron levels in water and low levels
of discolouration. This is partly
due to the different characteristics
of the water sources used in the
South East.
Discoloured water is a particular
problem for some of our NW
customers, caused by a build up of
iron and manganese in the network
over many years. When the
sediment is disturbed, for example
by a burst water main, this can
cause discoloured water at the tap.
A programme to reduce
discoloured water contacts was
initiated in 2005 supported by an
agreement with the DWI. A further
agreement with the DWI to deliver
water mains cleaning in Newcastle
and Gateshead aims to reduce
these contacts to less than 4,000
per year. The work consists of a
combination of large diameter
trunk main cleansing followed
by local network flushing. We are
making great progress in moving
towards this target and the annual
number of contacts has reduced to
4,443 (in 2013) from around 14,000
in 2005.
Work is progressing well with
the current cleaning scheme
which is set to continue until 2017
due to unforeseeable delays
because of weather, difficult
working conditions and planning
requirements.
To deliver an equivalent level of
improved service and a reduction
in contacts before this we’ve
identified a number of actions
which will enable us to achieve our
regulatory commitment of 4,000
complaints, despite the delay to
the programme.
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31
MEETING THE NEW
STANDARD FOR LEAD IN
DRINKING WATER
In 2010, the DWI reached
agreement with water companies,
including ESW and NW, about
lead in drinking water with
the objective to replace lead
communication pipes (which
link water mains with customer
pipes) in 11 prioritised ‘hot-spot’
geographical areas. The number of
lead communication pipes found in
these areas was less than originally
assumed, and so the replacement
work is mainly complete.
We are currently in the process
of recruiting a lead liaison officer
to make communication with
external agencies and customers
on lead matters easier and help
promote awareness and identify
opportunities for lead replacement
schemes in our operational areas.
In addition, we will improve the
stability of water leaving our
treatment works during the period
2015-2020. This will make the
water less likely to dissolve lead
from the pipes and ensure lead
control measures, such as adding
phosphate, are fully effective.
MICROBIOLOGICAL
PERFORMANCE AT
TREATMENT WORKS AND
SERVICE RESERVOIRS
The microbiological performance
at our treatment works and service
reservoirs is generally very high,
and in 2013 our performance
improved with only 16 failures
recorded from 50,792 samples
taken during the year. This is our
best annual performance and a
significant improvement on our
2012 performance. However, it is
our aim to have zero failures and
we have developed robust action
plans to help us meet this ambitious
target.
The number of treatment works
with microbiological failures in
the final (treated) water remained
stable in 2013. Inspection and
maintenance regimes on our
treated water tanks, process units
and sample points has been
sustained at an enhanced level
to manage the risk of failure and,
where appropriate, treatment
was enhanced to increase the
effectiveness of disinfection.
This included the installation of
ultraviolet (UV) disinfection at three
groundwater sites to support the
existing chlorination disinfection
arrangements.
Service reservoir microbiological
performance significantly
improved in 2013 with every
site achieving the required 95%
annual compliance to satisfy
drinking water standards. Only
seven failures were recorded
across the 300+ tanks within the
North East, Essex and Suffolk.
This is our best ever performance
and the achievement underlines
the importance of the enhanced
inspection and cleaning regime
implemented in 2009, with all
service reservoirs now inspected
either every three or five years.
FURTHER INFORMATION
Additional information on our
performance with respect to
drinking water quality can be
found in the DWI Chief Inspectors
Report for 2013 by visiting:
http://dwi.defra.gov.uk/about/
annual-report/index.htm
32
33
CASE STUDY:
INNOVATION -
ICE PIGGING
Ice pigging has revolutionised
NWL’s approach to water mains
cleaning and, as a company, we
will be using ice pigging wherever
possible in the future because of
the benefits to customers. This
includes much less disruption and
improved value for money.
Conventional cleaning of water
mains to remove sediment
and biofilms is intensive, time
consuming and disruptive to water
supply operations, customers
and the general public (road
works, traffic, landowners, etc). In
addition, the lengths achieved by
conventional cleaning machinery
is constrained by the configuration
of the pipe (valve, t-junctions,
bends, etc.).
What makes ice pigging different
is that it uses slush like ice to
clean pipes. The ice pig, due to its
slushy consistency, can adapt its
shape to travel through the most
complex configuration of pipes,
including bends and t-junctions.
This means that longer sections
of pipe can be cleaned over a
shorter period of time without
the need for the excavation and
removal of bends and t-junctions
– so reducing time, disruption and
inconvenience to all concerned.
It reduces the time to isolate,
decommission and clean a
length of pipe, for example, a
two kilometre section of pipe
can be cleaned in around two
hours compared to three weeks
using conventional methods. It
uses much smaller excavation
and working areas and it can be
used at night to keep disruption
to supply and customers to a
minimum. It also costs £70 less
per metre compared to other
cleaning techniques.
34
35
WE BELIEVE THAT KEEPING
WATER SUPPLY INTERRUPTIONS
TO A MINIMUM IS WHAT OUR
CUSTOMERS WANT AND WE
REMAIN COMMITTED TO
MAINTAINING OUR INDUSTRY-
LEADING POSITION IN THIS AREA.
PERFORMANCE
2013-14:
MEETING CUSTOMERS
DEMANDS FOR WATER
WE PROVIDE A RELIABLE
AND SUFFICIENT SUPPLY OF
WATER
Water supply
interruptions
reduced once again;
our industry-leading
position is likely to
be maintained by a
substantial margin
We have achieved
our leakage
targets for the third
consecutive year
We have achieved
the maximum
Security of Supply
Index (SOSI) of 100
for the first time in
ESW
Kielder Reservoir
36
37
WATER SUPPLY
INTERRUPTIONS
LEAKAGE
PROMOTING WATER
EFFICIENCY
SECURITY OF SUPPLY INDEX
(SOSI)
METERING
Our performance target, set in
2012, was to reach an average
customer water supply interuption
of 5 minutes for 2014-15. We have
met this target a year early and
our aim is to maintain the current
performance level. We believe
that keeping interruptions to a
minimum provides an excellent
service to our customers.
For the third consecutive year we
have beaten our leakage targets in
both NW and ESW.
In NW, we achieved 134.03 Ml/d,
which is significantly better than
the target of 141Ml/d and in ESW,
we achieved 58.39 Ml/d, which
again is significantly better than
the target set of 66 Ml/d.
This excellent performance
highlights our commitment to
maintain low levels of leakage
across our water supply networks.
To measure our performance, we
monitor the amount of time we
interrupt our customers water
supply for planned maintenance or
during an incident such as a burst
water main. We know a constant
supply of water is important to
our customers and we have made
substantial reductions in supply
interruptions in recent years.
We have done this through the
provision of alternative temporary
supplies and improved operational
practices.
Our performance has improved
once again in 2013-14 with an
average interruption time of only
4 minutes and 56 seconds per
property served. This is better
than last year’s performance of
6 minutes and 57 seconds. Only
216 of the 1.96 million properties
we supply experienced longer
unplanned interruptions of over 12
hours in 2013-14. We believe we
will remain industry-leading in this
area by a long way when results
are published in the summer
and we remain committed to
maintaining our industry-leading
position in this area.
We continue to promote water
efficiency and have achieved
water savings of 2.03 Ml/d for
2013-14, almost 10% better than
our water efficiency target of 1.86
Ml/d.
H2eco is ESW’s leading large
scale retrofit project, which since
it began has delivered 14,999
water audits to metered and
un-metered customers. H2eco
involves a trained plumber visiting
a customer’s home to install/
provide a range of water saving
devices free of charge. The project
won the Domestic Retrofit award
at the Sustainable Water Industry
Group Awards in 2013 and ESW
continues to be regarded as the
industry leader in promoting water
efficiency.
Northumbrian Water’s ‘save a
bucket load for allotments’ water
efficiency award is detailed in the
case study on page 40.
The SOSI is a measure of how
during periods of drought we
can ensure that we meet our
customers’ demands for a reliable
and sufficient supply of water.
Leakage control, water efficiency
and metering together with
appropriate resource all contribute
to security of supply.
The SOSI for the NW continued to
be 100 for 2013-14, reflecting the
sufficiency of water in that region,
including Kielder Reservoir.
However, we do need to improve
supply arrangements in one small
area (Berwick and Fowberry).
We have recently completed an
investigation and are working
closely with the EA to find a
sustainable solution. We are also
liaising with our customers in this
area to minimise demand until a
permanent solution is in place.
In Essex the SOSI increased to
100 as a result of completing the
Abberton Reservoir scheme.
We have continued to offer water
meters, free of charge, on request
companywide and pursued
household selective metering
(where the law allows us to install
a meter) on change of occupier
in the Essex area only. All new
properties are metered.
The numbers of meters installed
on request exceeded the total
assumed in the 2009 price review
(PR09) final determination (FD).
Selective meter installations,
despite a rise in numbers
installed between September
and December 2013, continue to
be lower than assumed for two
reasons:
1. The slow housing market is
limiting house moves and,
therefore, metering on change
of ownership; and
2. Secondly, a growing number
of properties which are selling
have previously changed
hands in the period of our
selective metering programme
and, therefore, are already
metered.
As of 2013-14, 39% of household
properties supplied by the
Company were metered. This
compares to the forecast of 41%
made at the 2009 price review
(PR09).
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39
CASE STUDY:
SAVE A
BUCKETLOAD FOR
ALLOTMENTS
We took the top prize in the
Landscape and Gardening
category of the Water Efficiency
Awards 2014 for our Saltersgill
Allotments project, a joint initiative
with Middlesbrough Council and
Middlesbrough Environment City
which helped to reduce the water
usage of Saltersgill allotments by
over 20,000 litres.
Historically garden water use
at Saltersgill Allotments in
Middlesbrough had ranged from
between 2,500 and 5,000 litres per
day depending on the season, but
in March 2013 it had increased to a
staggering 17,000 litres or 60 litres
per plot per day.
Concerned about escalating
costs Middlesbrough Council and
Middlesbrough Environment City
asked for NWL help to drive down
consumption at the Saltersgill
Allotment sites which houses 260
allotments.
Working together the partners
created the ‘save a bucket load for
allotments’ campaign. The project
would encourage using water
wisely on allotments and promote
behaviour change by introducing
simple water reducing measures
to help prepare the plot holders for
the transfer of management of the
site to the community in autumn
2013. The ‘save a bucket load for
allotments’ campaign ran from
early summer to autumn 2013.
The partners devised a localised
campaign to educate allotment
holders about the importance of
wise garden watering, leakage
control and dripping outside tap
repairs.
The benefits of using water more
wisely at home and in the garden
to the wider community were also
promoted.
Following effective stakeholder
engagement by the partners, the
allotment association incorporated
the following statement into
their site rules: “The tenant
shall not waste, misuse, abuse
or contaminate water and the
Committee encourages the use
of water saving devices such
as water butts.” The rules were
signed by all plot holders to
ensure real commitment to water
saving and protection of the local
environment.
Raising awareness about
unsustainable water use also
led to the identification of a leak
and subsequent replacement
of the existing connection.
Allotment holders received advice
leaflets, gardening products
and opportunities to take part
in demonstrations to learn how
to install water butts and use
ground mulches. Water butts were
available as part of the free prize
draw to those that attended the
event. The site hut was also fitted
with a downpipe diverter and a
recycled industrial bulk container
and hose tap to collect surplus
rainwater, a visible, cheap and
easily replicable system.
The campaign really got allotment
plot holders thinking differently
about using water wisely on their
allotment and average water use
reduced from 60 to 23 litres per
plot.
40
41
WE ARE WORKING HARD
TO PROTECT ALL OUR
CUSTOMERS’ HOMES AGAINST
THE POTENTIAL RISK OF
SEWER FLOODING IN THE
NORTH EAST.
PERFORMANCE
2013-14:
INTERNAL SEWER
FLOODING
The total number of
properties flooded
internally from sewers
was 346 from all
causes (excluding
severe weather) in
2013-14. This is a
significant decrease
on 2012-13
Repeat sewer
flooding incidents
also reduced
significantly to 351
Industry-leading
approach to drainage
partnerships
extended
WE PROVIDE A SEWERAGE
SERVICE THAT DEALS
EFFECTIVELY WITH SEWAGE
AND HEAVY RAINFALL
42
43
PERFORMANCE TARGET
We are working hard to protect
our customers’ homes against the
potential risk of sewer flooding
and have prioritised sewer
flooding as an area for continued
improvement. In 2012-13, a year
of exceptional weather, there
were 1,196 incidents. We set a
challenging target for 2013-14 of
269 incidents. Performance in this
measure for 2013-14 improved to
351. We will continue to address
this area of high importance to our
customers in 2014-15 and for the
period 2015-20.
Our ‘Love your drain’ campaign,
spearheaded by the character,
Dwaine Pipe, tells customers about
the causes of blockages and what
can be disposed of down the
toilet and sink. Working together
with our customers has had a real
impact on reducing the number
of unnecessary sewer blockages
caused by material such as baby
wipes, fats, oils and grease. In
particular our innovative work
with schools and food outlets is
helping to change some customer
behaviour. Please refer to the
following case study for more
information, page 48.
SEWER FLOODING
PERFORMANCE
ACTIONS TO ADDRESS
SEWER FLOODING
The total number of properties
in our area which were flooded
internally from sewers for all
reasons except severe weather
fell from 566 (2012-13) to 346
(2013-14). This improvement is
largely because of investment and
operational activity but has also
been influenced by the weather.
The total number of properties
flooded internally in the year
from all causes (including severe
weather) was 515 compared with
1,797 for 2012-13.
The ‘repeat flooding measure’
(which includes sewer flooding
from severe weather) reduced
considerably in 2013-14
with a total of 351 properties
experiencing repeat flooding.
In 2012-13 1,196 properties
experienced repeat flooding; this
figure was greatly affected by the
intense storms in summer 2012.
We are determined to protect
customers’ homes against the
potential risk of sewer flooding.
The situation is improving although
it remains a significant problem
for NW. It can happen when
rainfall is so heavy that there
is more water than the sewers
are designed to carry and they
become ‘overloaded’. It may
also occur when sewers become
blocked or broken. In either
case, sewage escapes from our
network and may find its way into
our customers’ gardens, business
premises and homes.
Having set out our plans to
reduce the risk of sewer flooding
our performance significantly
improved in 2010-11 and was
maintained in both 2011-12 and
2012-13. Our programme of
work to address sewer flooding
continued in 2013-14 and our
performance has again improved.
Following the extremely high levels
of rainfall in 2012, 2013 has again
seen periods of extreme rainfall
across the whole of the UK with the
South of the country particularly
affected. In the North East there
were a number of significant
rainfall events, mainly between the
May and September 2013, leading
to a combination of flooding
incidents from rainfall, rivers and
streams across our Northern
operational area.
We are delivering a
comprehensive programme,
investing a lot more than assumed
in our regulatory contract to
reduce the risk of sewer flooding
for our customers.
The exceptional weather patterns
experienced in 2012 led to
many properties, flooded for the
first time, being added to our
flooding registers. We forecast
that the total number of newly
flooded properties we will need
to address by the end of 2014–15
has increased to 864 from the 476
assumed back in 2009. These will
be included in our programme of
improvements by the end of
2014-15.
Since April 2010 we have carried
out improvement works to
reduce the risk of flooding from
our sewers at 590 properties
and during 2014-15 we plan
to reduce this risk at over 500
further properties. To do this in
one year will be an industry-
leading achievement. To enable
us to deliver this we have put a
detailed and robust plan in place.
We have also increased available
funding and have committed
additional contractor resources to
ensure we are able to do what is
needed. We are currently on track
to deliver the necessary schemes
(those to protect 80 properties are
already complete) and all planned
works will be completed or under
construction by December 2014.
In order to improve customer
service and complete work faster,
we set up an improvement project
in 2013 to review the end to end
customer experience for sewer
flooding. This will significantly
improve the service we provide
our customers following a flooding
incident, as well as removing
unnecessary delays and rework in
our processes.
As well as conventional schemes
providing additional storage to
reduce the risk of sewer flooding,
we are undertaking pilot studies,
which involve the identification
and delivery of more innovative
sustainable solutions to reduce
flood risk, e.g. rainwater storage
ponds. We are also investing more
than assumed in our regulatory
contract to reduce risks at many
more properties affected by, or at
future risk of, flooding. We are also
further increasing sewer cleansing
and inspection and sewer lining
to address tree root intrusion into
sewers, to reduce the risk from
blockages.
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45
PLANNING FOR THE FUTURE
TRANSFERRED DRAINS AND
SEWERS: PROGRESS
TRANSFERRED DRAINS AND
SEWERS: INVESTMENT
DUTY TO MAP THE
SEWERAGE SYSTEM
The transfer of the sewers
and pumping stations into our
ownership is a significant new
obligation. It is necessary to build
an understanding of the assets and
develop maintenance plans whilst,
at the same time, dealing with
customers’ day-to-day problems.
Our aim is to ensure capital
investment is undertaken based
on sound information and carried
out at the appropriate time to
minimise the impact on customers’
bills. Reactive work such as for
blockages, flooding or pollution
incidents continues and the
transferred network has introduced
some challenging reactive job
locations such as school fields and
playgrounds, graveyards and golf
courses.
We are also proactive and carry
out investigative work and any
necessary corrective action to
improve service or protect the
environment.
Following the successful
completion of the Tyneside
Sustainable Sewerage Study
we have engaged with the
Environment Agency (EA) and
the 13 Local Authorities covering
the North East to share the
principles of a proactive approach
to integrated drainage area
planning to reduce the risk of
flooding. This collaborative and
leading approach has developed
a way of prioritising risk that can
be used to identify a candidate
list for the delivery of jointly
funded drainage studies. This list
presents an opportunity for an
ongoing programme of activity
targeting those areas of highest
risk of flooding with up to 13 areas
identified for progression in 2014.
We believe this to be a leading
approach in partnership working
that brings greater benefits to our
customers and the environment.
We are also continuing to work
closely with our drainage
‘partners’ to promote and deliver
sustainable solutions to surface
water management.
The government transferred
ownership of private sewers and
lateral drains (connected to the
current public sewerage system
on 1 July 2011) from individuals to
water and sewerage companies on
1 October 2011.
In the NW area, we took
responsibility for an additional
13,500 kms of sewer pipes, on top
of the 16,368 kms of public sewers
we already maintained.
Our customers have received an
excellent service. Our contractors,
who attend the vast majority of all
jobs, receive an average score of
4.98 out of 5.0 from our customers
in terms of satisfaction with the
service they deliver.
Water and sewerage companies
must also adopt certain sewage
pumping stations which are
currently in private ownership.
Companies have until 1 October
2016 to identify and adopt these
assets. Our latest estimate of
the number of pumping stations
that will transfer is around 300.
In many cases there are legal
difficulties in adopting these assets
before the legislative deadline and
we have begun on a programme
of operation and maintenance
agreements for these pumping
stations, where we look after them
at no cost to the owner. We have 18
agreements in place to date with a
further 40 planned during 2014-15.
Under the Water Industry Act
(1991), Section 199, we are
required to indicate on a map the
sewers and lateral drains for which
we are responsible. No water
and sewerage companies yet
have maps showing the recently
transferred assets and it would be
extremely expensive to map all
transferred assets in the short to
medium term.
Our current approach is to
capture information from new
development plans in our
possession, map assets on an
opportunistic basis (e.g. when
investigating a persistent problem
on the network) and capture
information where this is needed
to help with sound investment
planning. In addition to this we
have established a programme of
works to survey areas identified as
potential service failure ‘hotspots’
prior to the transfer and also new
‘hotspots’ which are identified as a
result of reactive work e.g. repeat
blockages.
This approach satisfies our
current requirements, it provides
best value for customers and we
believe it is in line with Ofwat and
Government expectations.
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CASE STUDY:
LOVE YOUR
DRAIN
The campaign used two-way
communication and partnership
working to reach its target
audiences. Public relations activity
was supported by a website, social
media, radio and print advertising,
customer roadshows, events, an
education programme with puppet
show, a pantomime appearance,
children’s books and an internal
marketing campaign.
The campaign has led to a change
in behaviour, reduced blockage
clearance costs and got the people
of the North East talking about
what they put down the loo! The
project won marketing campaign
of the year at the Utility Week
Achievement Awards 2013.
“Is that the greatest jingle ever
written? Only toilet paper pee and
poo go down the loo! Love it.”
“Aw man I thought it was ok
because some of the packets tell
u 2 do it! Well I certainly wont b
doing it from now on! My boyfriend
is always telling me they block the
toilet but I never listened.”
Northumbrian Water launched its
‘Love your drain’ campaign, with
mascot Dwaine Pipe, in August
2012 to educate customers on how
to prevent a blocked drain.
The campaign was developed
after a steady increase in the
number of blocked drains and
sewers in recent years, costing
Northumbrian Water and therefore
its customers more than £1.2m
each year to clear. This issue was
compounded with the October
2011 transfer of private drains and
sewers to water companies, with
an additional 1,100 blockages
being reported each month.
More than half of blockages were
caused by the growing use of
‘disposable’ products, such as
wipes, nappies and sanitary items.
These items don’t break down
like toilet paper when flushed and
can cause a blockage. More than
a third of people admit to flushing
these items down the toilet instead
of putting them in a bin.
Research suggested that
customers would be more likely to
change their behaviour via nudge
tactics than using negative “don’t”
straplines. The ‘Love your drain’
campaign was developed, with the
loveable Dwaine Pipe mascot used
to emphasize that only toilet paper
pee and poo go down the loo and
that everything else makes him
poorly.
This is an integrated campaign
that highlights a serious issue
in a lighthearted and appealing
way, provides advice and aims to
change long-term behaviour.
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OPERATING AND MAINTAINING
OUR ASSETS TO ENSURE
THEY ARE ABLE TO PROVIDE
GOOD SERVICE NOW AND IN
THE FUTURE IS KNOWN AS
THEIR ‘SERVICEABILITY’.
PERFORMANCE
2013-14:
SERVICEABILITY
OF ASSETS
Serviceability has
been maintained at
‘stable’ in all areas of
our business
The number of
‘other causes’
flooding incidents
significantly
improved during
2013-14
WE DELIVER WATER AND
WASTE WATER SERVICES
THAT MEET THE NEEDS
OF CURRENT AND FUTURE
GENERATIONS IN A
CHANGING WORLD
Upgrade works at Ryal Tunnel
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51
SEWERAGE
INFRASTRUCTURE
SERVICEABILITY
Stable indicators
Our sewer collapse performance
is excellent. There is a lower
regulatory control limit for sewer
collapses which we have beaten
for the last three years. The sewer
flooding incidents because
of incapacity, sewer pollution,
blockages and equipment failure
indicators are all stable.
As a company we are expected
to make sure our assets are
able to provide good service
now and in the future. There are
four ‘serviceability’ categories;
water infrastructure, water
non infrastructure, sewerage
infrastructure and sewerage non
infrastructure.
Infrastructure assets include our
assets below ground such as
water mains and sewers. Non
infrastructure assets include assets
above ground such as pumping
stations and water and sewage
treatment works.
Our asset health or ‘serviceability’
has been maintained at ‘stable’ for
all four serviceability categories in
2013-14. Sewerage infrastructure
has been a challenge for the
company over the last few years,
and an update on our progress
follows.
Sewer flooding ‘other causes’
indicator
In 2013-14 we continued to have
a very strong focus on improving
our sewer flooding performance.
We delivered a further increase in
operational activities including a
larger sewer cleaning programme,
additional sewer lining and more
sewer inspections. Our innovative
‘Love your drain’ campaign has
continued to reach our customers
and inform them about the correct
use of sewers.
The number of flooding incidents
from ‘other causes’ significantly
improved during 2013-14 and
is within the upper control limit.
We continue to consider this
indicator to be ‘marginal’ and have
planned additional activities for
2014-15 in a drive to reach stable
‘serviceability’ for flooding asset
health or from ‘other causes’.
Overall serviceability for
sewerage infrastructure
With five of the measures stable
(sewer collapse performance,
sewer flooding because of
incapacity, sewer blockages,
equipment failure and sewer
pollution) and one at marginal
(sewer flooding from ‘other
causes’), we assess the overall
sewerage infrastructure area as
‘stable’.
The new approach -
Asset health
The current ‘serviceability’
approach, described above, and
used by Ofwat, will cease to apply
from 2015-16.
We want to ensure that we deliver
our outcome of ‘delivering water
and sewerage services that meet
the needs of current and future
generations in a changing world’.
An innovative and sophisticated
approach has been developed
to ensure excellent long-term
ownership and management of our
assets in the interests of customers
today and into the future. This
will be known by the more
understandable term of ‘asset
health’.
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53
WE PROTECT AND ENHANCE
THE ENVIRONMENT IN
DELIVERING OUR SERVICES,
LEADING BY EXAMPLE
OUR CUSTOMERS WANT OUR
ACTIVITIES TO PROTECT AND
ENHANCE COASTAL WATERS,
RIVERS, LAKES AND STREAMS
ACROSS OUR AREAS.
PERFORMANCE
2013-14:
ENVIRONMENT
Continuing high
levels of Sewage
Treatment Works
(STW) compliance
Excellent
performance for
bathing water
quality
The total number of
pollution incidents
decreased from
198 in 2012 to 133
in 2013
Winner of the
Utility Week
Environment Award
In 2013-14, we
achieved our target
for 20% of our
energy to come from
renewable sources
We reduced our
greenhouse gas
emissions in 2013-14
by a further 7% to
199.7 kilo tonnes of
CO2e
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55
SEWAGE TREATMENT WORKS
(STW) COMPLIANCE
A problem at one of our treatment
works can lead to treated waste
water having an impact on the
water environment. This is why it
is important to monitor discharges
coming from our STWs.
In 2013, the EA’s report shows
three failed STWs for NW. Although
reduced from a perfect 100%,
our performance still remains
very high at 99.4%. Of the three
failed works only one was a true
failure (at Seahouses STWs for
suspended solids). The other two
were ‘technical’ failures caused
by samples being taken from
unrepresentative points at Hendon
and Howdon STWs. This resulted
in insufficient samples being taken
at the correct location. There is
no suggestion that the treatment
provided ever fell below the
required standard.
We passed all ‘Look Up Table’
consent and permit conditions for
the sixth consecutive year.
All of our sludge is recycled to a
satisfactory standard.
COASTAL BATHING WATER
PERFORMANCE
In 2013, of the 34 bathing waters
in the North East, all passed
the ‘mandatory’ standard
(100% compliance) and 30
also passed the more stringent
‘guideline’ standard of the current
Bathing Waters Directive (88%
compliance). The good summer
weather had a positive influence
on bathing water performance and
only the poorer weather during
late September 2013 prevented
this being our best ever set of
results. We are continuing to invest
in schemes to improve bathing
water performance through
increasing storm water storage.
In 2013, we introduced ‘Real
Time Monitoring’ to 31 of the
bathing waters in the North East
(the remaining three have no
NWL assets which might affect
them). This information is sent
to Local Authorities, the EA and
Surfers Against Sewage at the
same time and is also available
on our website. A number of
innovative web pages have been
developed to provide interested
customers with ready access to
easily understood up-to-date real
time information about the bathing
water. We continued this beyond
the bathing season and it is our
intention to continue to provide this
all-year round to beach users.
UPDATE ON THE 2010-2015
NATIONAL ENVIRONMENT
PROGRAMME (NEP) WATER
QUALITY SCHEMES
A scheme was included in our
2010-15 investment programme
to improve the discharge to the
watercourse from Sedgeletch
Water Treatment Works (WTW).
The original proposal was to
transfer the flows but this would
leave little remaining flow in
the watercourse. The EA are
now in favour of keeping the
flow from Sedgeletch WTW in
the receiving watercourse for
ecology reasons and finding
a more sustainable method of
treatment. Further improvements
at this works are also required
during 2015-20 to reduce the
discharge of phosphorous and it
was acknowledged that this would
make all, or the majority of, the
original work unnecessary. It has
therefore been agreed with the EA
to combine the schemes, carrying
out feasibility and design in 2014-
15 to allow construction in 2015-20.
The 2015-20 NEP also includes
three other schemes for the
removal of phosphorous at
Barkershaugh, Chester-le-Street,
and Chilton and Windlestone
STWs. The EA have now requested
that these schemes be completed
in 2014-15.
We are therefore carrying out
the necessary work as soon
as possible. Barkershaugh
and Chester-le-Street will be
completed before the end of
2014. The remaining site will be
completed by March 2015.
THE WIDER ENVIRONMENT
Our customers expect the way
we run our business to bring
environmental benefit rather
than harm; they also believe
that, as a large organisation, we
should be setting an example to
others. We build environmental
considerations into all our activities
and processes and have a number
of environmental duties relating to
the protection of designated sites,
species and the enhancement or
maintenance of biodiversity on our
landholdings.
The Government Public Service
Agreement target said that by
2020, 50% of Sites of Special
Scientific Interest (SSSI’s) should
be in favourable condition and
at least 95% in favourable or
recovering condition. We have
already met that target.
UPDATE ON THE 2010-
2015 NEP BATHING WATER
QUALITY SCHEMES
A scheme was included in the
2010-15 investment programme to
improve the bathing water quality
at Newbiggin North beach to
meet the revised Bathing Waters
Directive (rBWD) ‘Sufficient’
standard. In September 2007
a breakwater was constructed
by the local authority for flood/
coastal defence purposes and
500,000 tonnes of sand imported
to recharge the beach. The
performance at Newbiggin North
has since improved significantly so
that recent performance against
the revised directive is now
forecast as ‘Good’. The EA has
since agreed that the proposed
NWL investment is therefore no
longer required.
The 2015-20 NWL investment
programme also includes schemes
to improve the bathing waters
at Seaham and Saltburn. These
schemes are also required to meet
the rBWD ‘Sufficient’ standard
and have a required completion
date of March 2016. Working with
the EA, we have agreed to start
early and the work has is now
underway so that the schemes can
be completed in time for the 2016
bathing season.
We continue to demonstrate best
practice in the delivery of our
capital investment programme
to ensure minimal environmental
impacts. An example in how we
have delivered a major capital
scheme to raise the level of
Abberton Reservoir in Essex. This
site is internationally designated
as a Ramsar site (a wetland of
international importance) and
Special Protection Area for various
bird species.
Through our excellent partnership
approach with relevant
stakeholders we are now in the
final stages of the project and
have demonstrated that there have
been no detrimental effects on
the bird species. On completion
we will not only have improved
the habitat for wildlife, we will
also have improved recreational
facilities with an additional network
of linked footpaths. This work has
been recognised by awards such
as the Green Apple Award.
In 2013, we installed the world’s
first natural reed bed system for
the sustainable management of
water treatment sludge to recycle
the valuable water at Hanningfield,
near Chelmsford, Essex. Please
see the case study on page 60.
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57
GREENHOUSE GAS
EMISSIONS
The water industry is a large user
of energy and it is important that
we play our part in helping to
reduce greenhouse gasses (GHG).
In 2013-14, our GHG emissions
fell again compared with the year
before and totalled 199.7 kilo
tonnes CO2e, compared with
214.8 kilo tonnes in 2012–13. This
represents a reduction of 7%. This
latest figure means that this is the
sixth consecutive year in which
emissions have reduced.
In 2009, we developed a carbon
management plan with the aim that
by 2020 we will have reduced our
GHG emissions by 35% against a
2008 baseline, which would mean
that total emissions would fall by
50% if government expectations
on grid emissions reduction were
met. We are now well ahead of
target, and emissions are down
by 33% compared to the 2008
baseline. The graph below clearly
shows the great progress we have
made in this area.
Our ambition goes beyond
government targets for emissions
reductions. We also set ourselves
a target to increase our use of
renewable energy to 20% by 2015,
and in 2013 we achieved this target
ahead of time. The pace at which
we have been able to make these
changes puts us at the forefront of
emissions management within the
water industry.
In 2013, for the first year ever,
our award winning Advanced
Anaerobic Digestion (AAD) plants
treated 100% of our sewage
sludge to produce biogas for
energy generation and class A
biosolids for agricultural reuse.
POLLUTION INCIDENTS
In 2013, the total number of
pollution incidents (including from
transferred adopted assets and
water-related assets) decreased to
133 (against 198 for 2012).
We improved significantly in the
less serious category (known as
category 3). The number reduced
from 195 in 2012 to 128 category
3 pollution incidents in 2013. Of
the 128 category 3 incidents,
19 were deemed by the EA to
be discharges made within the
terms of their permits. Five of the
less serious category 3 incidents
relate to water assets in our ESW
operating area and one was due to
a transferred asset.
However, the number of more
serious pollution incidents (known
as category 1 and 2 incidents)
increased from three in 2012 to
five in 2013.
To improve our performance we
continued to invest in sewer level
monitoring (SLM) technology
in 2013 to try to predict where
pollutions might occur and to
detect and resolve problems
before they cause an overflow.
We have installed SLMs to over
80% of our discharge points to
help predict and detect pollution
incidents. For 264 cases in 2013,
operators were alerted and
attended the site to clear the
problem before there was any
overflow.
In 2013, this activity resulted in
far fewer pollution incidents from
our Combined Sewer Overflows
(CSOs). Further activities were
introduced in 2013 to reduce
pollution. Examples include the
use of Trigger Management for
SLMs to highlight the frequency of
spills, the extension of our ‘Love
Your Drain’ campaign to pollution
incidents and pro-active surface
water investigations to detect
misconnections to surface water
rather than foul sewers.
Work towards increasing the
coverage of our SLMs continues
and we are aiming to have SLM
at all our CSOs by 2020. We are
continuing to work hard in 2014
to reduce pollution incidents from
foul sewers further.
The EA has asked water
companies to ensure that all
Combined Sewer Overflows
have an appropriate consent
in place. NWL is carrying out
a thorough review of its asset
base. This is identifying a small
number of CSOs that are not
currently consented. By the end of
2014 we will have identified and
investigated each of these assets
and applied for an appropriate
consent.
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59
NWL emissions 2008-2014, kilo tonnes CO2e
CASE STUDY:
HANNINGFIELD
REED BED SYSTEM
When the original lagoon systems
used in the process for recycling
water treatment sludge at
Hanningfield, near Chelmsford,
Essex, were at the end of their
useful life, an alternative solution
was required for water production
to continue on site. Hanningfield
Water Treatment Works is Essex’s
largest water treatment works
producing drinking water for a
large part of Essex and parts of
East London. Without a method of
sludge treatment, water production
would have to stop at Hanningfield
creating a major impact on
thousands of customers and the
business.
It has been a significant risk for
NWL to progress with the reed
bed system when it could have
used a tried and tested, energy
intensive mechanical solutions
such as a centrifuge, but we
believed there must be a more
sustainable solution.
After three years of research and
trials, we installed the world’s first
natural reed bed system for the
sustainable management of water
treatment sludge to recycle the
valuable water at Hanningfield.
Raw sludge, loaded onto the
surface of each bed in turn, filters
through the reed and media layers
to produce clear filtrate water.
This flows by gravity into the main
raw water reservoir for re-use,
via the newly created 14 hectare
Great Prestons managed reed bed
habitat. This was formed as part of
this project in one of the redundant
settlement lagoons.
The system has provided many
benefits:
• A new wildlife habitat of reeds,
field boundaries, trees and
hedges.
• More water recovery.
• Fewer lorry movements for
sludge disposal due to the
lower water content of the
residual sludge. This is a
benefit for local communities
and reduces emissions.
• Lower energy use as once
sludge is pumped to site,
nature does the rest.
• Lower cost (capital, operational
and carbon): The construction
cost is approximately two thirds
of the centrifuge estimation
and very little maintenance or
attendance is required – just a
weekly visit.
• Less river water extraction
and pumping is required to
replenish the reservoir as more
water is returned through the
reed beds.
• Great Prestons lagoon is
designated a Site of Special
Scientific Interest (SSSI) and
attracts a wide variety of
wildlife including a nesting
pair of rare marsh harriers. The
second lagoon (Whitelilies)
will soon be transformed in a
similar manner.
In recognition of this initiative, the
Hanningfield Sludge Treatment
Reed Bed System was named as
the 2013 winner of the Utility Week
Environment Awards and also
winner of an international Green
Apple Gold Award.
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PERFORMANCE
2013-14:
FINANCIAL
OVERVIEW
LOOKING ACROSS ALL THE KEY
FINANCIAL INDICATORS, THE
COMPANY RETAINS A ROBUST
AND STABLE POSITION.
The company has
maintained a robust
and stable financial
position
OUR FINANCES ARE SOUND,
STABLE AND ACHIEVE A
FAIR BALANCE BETWEEN
CUSTOMERS AND INVESTORS
Abberton Reservoir
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63
FINANCIAL POSITION
RETURN ON INVESTMENT
CREDIT RATING AND
SECURING FINANCE
GEARING
INTEREST COVER
Gearing measures the level of
debt a company has relative to
its total value (measured by the
RCV). The Company’s gearing of
61.1% is below our current internal
targeted level of 65% for 2010-
2015.
Interest cover is a measure of how
comfortably a company can afford
its interest charges. Adjusted Cash
Interest Cover (post maintenance
charges) in 2013-14 remained
unchanged from the previous
year at 1.9 times and remains
comfortably above investment
grade thresholds.
Our RCV was £3,883m at 31
March 2014. The RCV started at
£3,747m at 31 March 2013 and
was increased by £92m due to
inflation (2.5%) with a further
£44m increase due to net capital
expenditure (capital expenditure
less capital charges).
The post tax return on RCV
was 5.3% compared to 5.2% in
2012–13 and is above the PR09 FD
assumption of 4.9%, post revenue
adjustments. The increase in
return is primarily due to the lower
current taxation charge.
Looking across all the key financial
indicators, including return on
Regulatory Capital Value (RCV),
credit ratings, gearing and interest
cover, the Company retains
a robust and stable financial
position. This is important
because the Company needs to
maintain this stability in order
to continue to deliver excellent
water and sewerage services
for customers into the future. It is
also hugely important because
providing water services requires
a significant financial investment
(over £1bn for ESW and NW in
the five years 2010-2015) and we
need to be able to attract available
funding at low rates so that
customer bills can be kept as low
as possible.
Further details follow. Explanations
of the financial terms used in
this section can be found in the
Glossary towards the back of this
performance review.
Credit ratings are independent
assessments of company financial
risk. Stable strong investment
grade ratings are very important
as lower credit ratings will lead
to higher borrowing costs and
limit future access to borrowing.
Our credit ratings remain at BBB+
(Standard & Poor’s and Fitch) and
Baa1 (Moody’s) all with a “stable”
outlook. This means the Company
is in a robust and stable financial
position and retains the capability
to deliver its financial obligations.
In June 2011, we secured a
further £150m loan facility with
the European Investment Bank
(EIB) towards funding the future
capital investment programme.
The final £50m tranche was drawn
in April 2013. In December 2013
we secured a further £100m loan
facility with the EIB, of which £50m
was drawn in January 2014 and the
other £50m drawn in April 2014.
We have also £450m of committed
bank facilities maturing in July
2016 as back up liquidity, and
these remained undrawn at 31
March 2014.
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65
SITTING RIGHT AT THE HEART
OF THE SERVICE WE GIVE TO
CUSTOMERS IS THE SENSE
OF PRIDE AND COMMITMENT
OUR PEOPLE FEEL ABOUT
THE WORK THEY DO.
PERFORMANCE
2013-14:
PEOPLE
One-star rating in
the Sunday Times
Best Companies
Survey: officially a
‘first class’ company
to work for
OUR PEOPLE ARE TALENTED,
COMMITTED AND INSPIRED
TO DELIVER GREAT
SERVICES TO CUSTOMERS
OUR PEOPLE ACT IN LINE
WITH OUR VALUES
WE ARE SEEN AS A GREAT
PLACE TO WORK
OUR WORKPLACES ARE
HEALTHY AND SAFE
High participation
in the Employee
Survey (75%) and
high satisfaction
index (75%)
We achieved our
target of less than 10
reportable accidents
for the year
Royal Society for
the Prevention of
Accidents (RoSPA)
gold award for
Health and Safety
(third year in a row)
Northumbrian Water Group’s
Customer Centre of Excellence
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67
OUR EMPLOYEES
Sitting right at the heart of the
service we give to customers is the
sense of pride and commitment
our people feel about the work
they do.
We employ over 3,000 people
and our people really make the
difference to the overall customer
experience. Over the last few
years, we have worked with a
leading organisation to develop
a bespoke training programme
called ‘Our Way’, which gives
our people the skills, techniques
and language to deliver excellent
customer service. All employees
have now attended tailored
training events and feedback from
customers shows that this has
made a difference in how well we
deliver our services. Results from
the latest Customer Experience
Survey (SIM) show that we have
received our highest ever score for
qualitative customer experience.
We measure our success through
the following internal measures:
• Employee turnover: this is
4.6%, lower than 2012-13
and lower than the industry
average of 9.4%.
• Attendance: we achieved
a high level of attendance
(96.9%, the same as 2012-13).
• Reportable accidents: we
achieved our internal target of
10 or less for the year.
• Employee Survey: 75% of our
employees participated.
• Employee satisfaction index:
75% (compared to 76% in
2012-13).
• ViVa Awards: Our ViVa awards
are our way of recognising
examples of people and teams
who are embracing our vision
and values and making them
part of how they do business
every day. In 2013, 331 people
were peer nominated for an
award (238 in 2012-13).
In 2011, we took a strategic
decision to enter the Sunday
Times Best Companies Survey
to benchmark ourselves against
leading employers in the country.
In 2013, on our second entry, we
achieve a one-star rating. What
this means is that our employees
have officially rated us a ‘first class’
company to work for based on
the different employment factors
in the survey. Our score was 10%
higher than our 2011 result and
was recognised as a ‘remarkable
improvement’.
Our engagement strategy
continues to be developed
following feedback through the
survey, employee roadshows
and benchmarking with other
organisations. Each employee
every year has the opportunity
to discuss the results of the
survey with a Senior Manager in
the business at our ‘Our Survey
Said’ workshops. Action plans
are developed corporately and
at a local level to act upon the
feedback given.
We are also delighted to have
received external recognition
for our approach to engaging
our people through winning the
following awards in 2013:
• Business in the Community
(BITC) national annual
workwell award reaccreditation
following our example
of excellence award for
our health and wellbeing
programme; and
• Royal Society for the Prevention
of Accidents (RoSPA) gold
award for Health and Safety
(third year in a row).
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CASE STUDY:
RAY ARMSTRONG
VIVA AWARD
WINNER 2013
Ray Armstrong was our overall
ViVa Award 2013 winner of the
year. It was a tough decision for
the judges due to the outstanding
quality of all our category winners.
Ray was chosen as winner as he
embraced all our values.
The sewer litter basket is a device
conceived and designed by Ray
as the evolution of some earlier
work he did to trial the use of an
array of wires to capture sewer
litter from overflowing Combined
Sewer Overflows (CSOs),
thereby reducing the resulting
customer complaints and clean-up
operations. The basket captured
in excess of 20kg of litter following
a single overflow incident at a CSO
in Sunderland.
Although the device is in itself a
creative solution that warranted
recognition through a ViVa
nomination, it’s the way in
which Ray has taken personal
responsibility for driving the idea
forward over the last year that has
really impressed his colleagues.
Ray designed the first prototype,
had it fabricated, identified a
suitable problem site to test it
and undertook trials to prove
the concept. This is above and
beyond the requirements of the
day job. Having proved the idea
works, Ray has secured ongoing
support from his managers for a
larger trial, targeting a number of
problem CSOs to reduce pollution
incidents.
Throughout this period Ray has
been focussed on the outcome
for the customer (i.e. reducing
complaints from customers
faced with pollution from sewer
litter), improving business results
(reducing costs of handling
customer complaints and
undertaking clean up operations),
and improving the environment
(reducing pollution).
Ray carried off the top £3,000
prize and was absolutely delighted
to be chosen as our ViVa award
winner of the year!
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71
WE ARE A LOCAL COMPANY
AND BEING PART OF THE
LOCAL COMMUNITIES THAT WE
WORK IN IS IMPORTANT TO US.
WE ARE PROUD TO CONTRIBUTE
TO THE SUCCESS OF LOCAL
COMMUNITIES
WE WORK IN PARTNERSHIP
TOWARDS COMMON GOALS
PERFORMANCE
2013-14:
COMMUNITY
We won Community
Initiative of the
Year at the Utility
Week Achievement
Awards
We were awarded
three Business in
the Community’s
(BITC) Big Ticks
for our work in the
community
An impressive
55% of workforce
participated
in our ‘Just an
hour’ employee
volunteering
scheme
‘Just an hour’ volunteering scheme
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73
We are a local company and being
part of the local communities that
we work in is important to us. We
support our communities in many
different ways and are widely
recognised as leaders in our
support for projects that make the
areas we service better places in
which to live, work or invest.
We have been awarded three
Business in the Community’s
(BITC) Big Ticks for our work in
the community and at the 2013
Utility Week Achievement Awards
we were the winner for the
Community Initiative of the Year,
for our employee volunteering
programme, ‘Just an hour’. 55%
of our employees took part in
the programme in 2013 and
have supported a wide range of
community, environmental and
charitable initiatives.
An example of a recent initiative
is shown in the case study on
page 76.
We measure our success in
supporting the communities
we serve through the following
measures:
•
In 2013, 1,651 of our
employees actively
volunteered in their community
through our ‘Just an hour’
programme, this equates to
an impressive 55% of the
workforce and beats the
internal target we set of 50%.
•
In 2013, 16,132 hours were
spent volunteering on 728
different organisations/projects
in our local communities.
• Over 681 organisations were
given financial or in kind
support in 2013 which equates
to giving back the equivalent
of 1% of our annual pre-tax
profits to our communities. This
is achieved through donating
money, our people’s time and
expertise, or the use of our
facilities.
In order to promote drinking tap
water as part of a healthy lifestyle,
we have a number of initiatives
which we run under our ‘water
for health’ campaign. As part
of this we gave out over 52,000
bottles of our tap water under
the name of ‘tap into’ to charity
groups organising outdoor events
to keep people attending the
event hydrated. Alongside this we
donated 18 water coolers to local
schools and community groups.
In 2013, we again worked in
partnership with Chelmsford City
Council and Chelmsford School
Sports Partnership, to support
the Chelmsford mini games. The
event is a three-day athletics
extravaganza, which provides
new and competitive sporting
opportunities for around 2,000 six
and seven year olds, and supports
our ‘Water for Health’ programme.
This year saw the Lindisfarne
Gospels, one of the greatest
landmarks of human cultural
achievement, return to Durham
in the North East for a three
month exhibition. The exhibition
took visitors on a journey of
exploration, learning how and why
this masterpiece was created, its
influence on Medieval Europe
and how artistic traditions from
Britain and the Mediterranean
mainland came together in
North East England. As part of
our partnership with Durham
Cathedral and University, we
supported the exhibition and
employees volunteered to assist
with the 90,000 visitors, who
flocked to see the Gospels during
its stay in Durham.
Employees clearing a river as part of
‘Just an hour’.
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75
CASE STUDY:
THE CAVE
The biggest project ever
undertaken as part of our ‘Just
an hour’ employee volunteering
programme took place at a youth
project called ‘The Cave’ in South
Shields. The Cave (formerly Tyne
Dock Youth Centre) specialises
in music, dance and drama. They
have a wide variety of projects
that allow young people to get
involved in creative and expressive
activities.
The centre, which was under threat
of closure due to local council
cuts and the poor condition of
the building, provides vital youth
services. The music, dance and
drama activities keep children
off the street and it also houses
the South Tyneside Youth Action
Volunteers, an independent
organisation which helps young
people back to education or
employment, when school or
family circumstances have made
the normal routes too complicated.
The Youth Action Volunteers offer
activities and basic skills training
to increase confidence and
competence. The Vision youth
drama group also run from the
Cave, and have a well established
reputation for quality work with
a wide cross-section of young
people.
To save the Cave, Northumbrian
Water employees spent 386 hours
volunteering on the project and
we also levered an additional 506
hours of support from several of
our contractors. Esh Construction,
Seymours Civil Engineering,
MWH Global, Interserve, Kwikflow,
Grontmij and Lucion worked
alongside Northumbrian Water
colleagues from investment
delivery, networks, finance, internal
audit, corporate affairs, electrical
maintenance and leakage. The
value of the work in time and
materials has been estimated at
over £35,000.
The Cave run youth work sessions
around most performing arts work
and will shortly be able to offer
more informal social activities
using their café and chill-out areas.
Their aim is to let young people
speak for themselves and to
promote their active participation
in both the management of the
centre and the wider community
through events and courses.
The project has secured the future
of ‘The Cave’ for at least the next
10 years and demonstrates the
value of working in partnership to
ensure sustainable change in our
communities.
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77
AT NWL WE ARE NOT
COMPLACENT AND RECOGNISE
THERE ARE NEW CHALLENGES
AND OPPORTUNITIES AHEAD.
PERFORMANCE
2013-14:
LOOKING TO THE
FUTURE
We have continued
our partnership
working to deliver
leading-edge
technical solutions
We are currently
carrying out
research to
understand our
customers’ views on
social tariffs
We support the
opening of the retail
market for business
customers in 2017
We have been
awarded a retail
licence to supply
business customers
OUR FINANCES ARE SOUND,
STABLE AND ACHIEVE A
FAIR BALANCE BETWEEN
CUSTOMERS AND INVESTORS
WE ARE AN EFFICIENT AND
INNOVATIVE COMPANY
WE ARE THE RETAILER OF
CHOICE FOR BUSINESS
CUSTOMERS
Langford recycling plant
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79
FUTURE HORIZONS
INNOVATION
IF OUR CUSTOMERS ARE
STRUGGLING TO PAY
THE FUTURE FOR RETAIL
COMPETITION
We are not complacent and
recognise there are new
challenges and opportunities
ahead. This includes challenges
from climate change and a
growing and ageing population
as well as opportunities from
technology and competition. In
2013, we published our longer
term vision document, Future
Horizons which can be found at
http://nwplanningforthefuture.co.uk
and http://eswplanningforthefuture.
co.uk.
In Future Horizons we describe
our plans for 2015-2020 and
beyond and how we expect
to achieve them in light of the
changes we are likely to face in the
future.
New methods of identifying and
understanding micro biology are
being studied to shed light on
sources of bacterial pollution and
improve treatment processes.
We are working with Newcastle
University to investigate the
potential for the uses of next-
generation DNA sequencing,
including bathing water quality
and the management of the
activated sewage sludge treatment
process.
In addition to applying new
technologies, we are enabling
our people to innovate and find
innovative solutions to problems or
new ways of working. An example
is shown in the following case
study on page 82.
Thinking differently about
operation and maintenance of our
assets is delivering efficiencies
and carbon reduction.
It is essential for us to innovate
in order to improve service,
maintain our efficiency, reduce
our impact on the environment,
maintain our vast asset base and
meet challenges such as climate
change, all at a cost our customers
can afford. We are determined to
drive the development, and make
the best use of, technologies and
business processes to achieve our
goals.
We have a great track record of
applying innovative and creative
solutions, which is a reflection
of the willingness of our people
and partners to continuously
strive for better and more
efficient ways to deliver our key
services. We continue to work
in partnership with universities,
research organisations and the
wider industry to develop and
implement leading-edge technical
solutions. In September 2013, the
British Science Festival was held
in Newcastle upon Tyne and we
took the opportunity to showcase
a range of innovative projects,
including energy generation using
microbial fuel cells and gene
sequencing of waste water (or
sewage) bacteria.
We support our customers who
struggle to pay their water bills.
We help them find the best tariff
for their circumstances and contact
organisations that may help them
check if they are receiving all the
Government support they are
eligible for. We also provide debt
advice.
To further help, we could
potentially give some customers a
lower bill, however, we could only
do this if the rest of our customers
support the idea. A social tariff is
a charge for customers who are
billed a lower amount than other
customers because they cannot
afford their bill. We are currently
carrying out some research to
understand our customers’ views
on a social tariff.
If the results of the research show
there is broad support among
customers we will introduce a
social tariff from 1 April 2015.
We support the opening of
the retail market for business
customers planned for 2017. The
means that all businesses, charities
and public bodies will have the
opportunity to choose their retailer
and preferred service package.
Our aim is to provide excellent
customer service at a competitive
price to make us the retailer of
choice for business customers.
Members of our Board have been
very active in the Market Reform
High Level Group and Programme
Delivery Board respectively. We
are also represented on all Open
Water Working groups assessing
the detailed implementation of
market opening and participating
in pilot studies on central customer
registration.
On 22 April 2014, we obtained a
Section 17A Water Supply Licence
(Retail) for NWG Business Limited,
part of the Northumbrian Water
Group.
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81
CASE STUDY:
INNOVATION -
‘WARMING UP’
MEMBRANES
The aeration control valves have
also been altered to limit the
maximum air flow, ensuring the
diffusers don’t become over-
stretched, resulting in ‘coarse-
bubble’ air.
Results have been excellent.
Power consumption of the aeration
system at Seaton Carew has
been reduced by over 50% (over
£100,000 a year) and the expected
life of the membranes has been
doubled whilst the number of
failures experienced at the STW
has been reduced to zero.
NWL has developed many
innovative ways of working such
as being the first to use 100% of
its sewage sludge to produce
energy and the world’s first use
of reedbeds for water treatment
sludge. Another example was in
response to a real problem at one
of our activated sludge treatment
works which use air and bacteria
to treat sewage.
At Seaton Carew STW, we found
that the diffusers had reached
their end of life after only 3.5 years
even though their expected life
should normally be up to seven
years. (Diffusers are part of the
aeration system; they comprise a
membrane with fine pores, through
which fine bubbles are generated
by the supply of air through
blowers).
In response to the problem we
developed and implemented
a new approach to diffuser
management. Commissioning
now involves gently passing air
through the diffusers to increase
the flexibility of the membrane - in
essence ‘warming them up’. This
prevents long-term damage which
can cause ‘coarse-bubble’ air
production which has low oxygen
transfer rates and requires more
energy to ensure enough oxygen
is transferred into the activated
sludge. An automated weekly ‘flex’
cycle has also been incorporated
to ensure the membranes are
extended and contracted to
prevent the build up of fouling.
82
83
REGULATORY
STATEMENT
AND
EXPLANATORY
NOTE
84
85
STATEMENT BY THE
NORTHUMBRIAN WATER
LIMITED BOARD
It is confirmed that the
Northumbrian Water Limited
(NWL or the Company) Board
members have endorsed this
Risk and Compliance Statement.
The Board confirms that:
•
it considers the Company has
a full understanding of, and is
meeting, its obligations and has
taken steps to understand and
meet customer expectations;
•
•
it has satisfied itself that
the Company has sufficient
processes and internal
systems of control to fully
meet its obligations; and
the Company has appropriate
systems and processes in
place to allow it to identify,
manage and review its risks.
Note: Obligations in this context
relate to those areas where Ofwat is
the relevant enforcement authority.
Each NWL Board member
has reviewed this document
and has had the opportunity
to provide comments.
The NWL Board has given Heidi
Mottram (Chief Executive Officer)
and Paul Rew (Senior Independent
Non- Executive Director) authority
to sign this statement on its behalf.
Heidi Mottram
Chief Executive Officer
Paul Rew
Senior Independent
Non-Executive Director
Date: 15 July 2014
86
STATEMENTS LICENCE
CONDITIONS K AND F6A
AND SECTION 35A OF THE
WATER INDUSTRY ACT
Licence Condition K
The Directors confirm that, as
at 31 March 2014, the Company
was in compliance with
paragraph 3.1 of Condition K of
the Instrument of Appointment
by which the Appointee had
available to it sufficient rights
and assets to enable a special
administrator to manage the
affairs, business and property of
the Appointee, should a special
administrative order be made.
• All contracts entered into with
any Associated Company
include all necessary
provisions and requirements
concerning the standard
of service to be supplied
to the Appointee, to ensure
that it is able to meet all its
obligations as a water and
sewerage undertaker.
In providing this certificate, the
Directors have taken into account:
Ofwat Instrument of Appointment
– Condition F6A.2A Certificate
(Financial & Management
resources to carry out the
appointed business)
The Directors of NWL confirm
that, in their opinion:
• The Appointee will have
available to it sufficient
financial resources and
facilities to enable it to carry
out for at least the next 12
months the Regulated Activities
(including the investment
programme necessary to fulfil
the Appointee’s obligations
under the Appointment);
•
•
•
•
• The Appointee will, for at
least the next 12 months, have
available to it management
resources which are sufficient
to enable it to carry out
those functions; and
the Company’s Licence,
which is in place on a
rolling 25 year basis;
the certainty on customer
tariffs to March 2015
provided by the 2009 Final
Determination of prices
by Ofwat, following its
acceptance by the Board;
the financial strength of the
Company at the balance
sheet date and performance
during the year;
the key financial ratios over
the planning horizon of the
Company’s one year budget
and medium term plan to
2015 as reflected in strong
investment grade credit ratings;
BOARD STATEMENT:
EXPLANATORY NOTES
The Board has confirmed that the
Company has ‘sufficient processes
and internal systems of control
to fully meet the Company’s
obligations’ and ‘appropriate
systems and processes in place
to identify, manage and review
its risks’. This has required the
Board to take a view on the
meaning of these statements.
The Company has strong systems
of internal control and ongoing
processes for identifying,
evaluating and managing the
risks it faces and to ensure its
obligations are met. These systems
and processes are embedded
in the organisation and reviewed
on a regular basis by the Board.
It is important to note, however,
that the systems are designed to
manage rather than eliminate the
risk of non-compliance, and can
only provide reasonable and not
absolute assurance of compliance.
For example, a sound system of
internal control can reduce, but not
eliminate, the possibility of poor
judgement in decision-making,
human error or the occurrence of
unforeseeable circumstances. The
statements as to the sufficiency
and appropriateness of the
Company’s systems and processes
should be interpreted accordingly.
We also note that the
compliance statement relates
to ‘material’ non compliance
or risk of non compliance.
We have reported if the
delivery of outputs is materially
different to the PR09 FD.
•
the fact that the Company has
arranged £450.0m of five year
committed bank facilities as
back up liquidity (maturing in
2016), and that these remained
undrawn at 31 March 2014;
• and financial ratios over
the planning horizon of
the Company’s one year
budget and medium term
plan to 2015 as reflected
in strong investment grade
credit ratings; and
•
the Company’s formal risk and
governance arrangements
which are monitored by the
Audit, Risk and Compliance
Committees and Board.
Licence Condition F6A.6
The Directors also confirm
that throughout 2013-14 the
Appointee has ensured that
it, or an Associated Company
as issuer of debt on its behalf,
has maintained at all times an
issuer credit rating which is
an Investment grade rating.
Statement on directors’ pay and
standards of performance
It is confirmed that a statement
on Directors’ remuneration and
standards of performance has
been published in the NWL
regulatory accounts in accordance
with Section 35A of the Water
Industry Act. Our Regulatory
Accounts are available on our
website or by application.
Martin Parker
Company Secretary
87
GOVERNANCE
OVERVIEW
88
89
Our mature assurance
arrangements provide the Board
with the evidence it needs to sign
off the Compliance statement.
In the following sections we set
out the assurance arrangements
on which the Board has relied in
signing the compliance statement.
BOARD, AUDIT AND
RISK AND COMPLIANCE
COMMITTEES OVERSIGHT
Monitoring and control at
business management team level
This includes specifying and
agreeing objectives, regular
scrutiny of performance (e.g.
through balanced scorecard
and Executive Director reports),
regular scrutiny of the risk
registers, scrutiny of assurance
arrangements, agreement of
the internal audit plan, review
of audit outcomes and review of
compliance statement content.
Polices and guidelines
This includes, for example, water
safety plans, service policies
and treatment management
guidelines aimed at meeting
our key obligation to supply
wholesome water, including
meeting water quality regulations.
Quality systems
Our Integrated Management
System (IMS) provides
coordinated management of our
quality systems. This process
is managed by our Health,
Safety, Environment and Quality
team covering ISO 9001, ISO
14001 and OHASAS 18001.
ONGOING OPERATIONS
Monitoring and control at
business management team level
This includes development of
objectives, planning to meet
obligations and objectives,
ensuring sufficient and
suitable resources – human
and financial - are applied to
meet obligations, scrutiny of
performance, management of
escalated issues and identification
and management of risk.
Monitoring and control at
department management
team level
This includes annual business unit
planning, continuous improvement
and performance review/control
through Monitoring, Control and
Reporting Systems (MCRS).
Monitoring and control by formal
management team sub-groups
(with management team and
executive director membership)
This includes, for example,
the Asset Policy Steering
Group, which signs off asset
management policies and
monitors/controls the delivery of
investment aspects of the PR09
FD, including serviceability.
Operational systems
and processes
This includes comprehensive
systems and processes designed
to meet our obligations and
objectives with controls in-built.
GOVERNANCE OVERVIEW
Throughout the business we
operate to exacting standards with
strong governance, assurance and
risk management arrangements
in place, which are overseen by
the NWL Board of Directors and
its Audit and Risk & Compliance
Committees. In discharging its
duties, the Board has regard to
the UK Corporate Governance
Code, as appropriate to the sector
and the company’s ownership
structure. The Board has also
put in place a bespoke Board
Leadership, Transparency and
Governance Code, following
the publication by Ofwat of a set
of principles for governance.
We have a clear commitment
to continuous improvement
and business excellence. The
Company has set clear corporate
objectives, which are embedded
in the business and consistent
with meeting its obligations.
We continue to actively support
Ofwat’s move to risk-based and
proportionate regulation. We
are committed to maintaining
excellent governance and
assurance arrangements and
the Company and its owners
are working constructively with
Ofwat to develop enhanced
governance arrangements in the
sector. As well as preparing the
NWL Governance Code referred
to above, the Company’s owners
have responded in detail to
Ofwat’s consultation on holding
company governance principles.
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91
We built on this approach for
2012–13 by reviewing the
risk assessments in-depth for
all ‘medium’ and ‘high’ risk
obligations and undertaking audits
of the arrangements in place to
meet obligations. For 2013-14
we have extended this work to
cover all ‘low risk’ obligations.
The Board based its assessment
for the 2013-14 compliance
statement on the assurance
arrangements described in the
governance overview and the
additional assurance provided by
the assessment described above.
POSITIVE ASSURANCES ON
SYSTEMS AND CONTROLS
Quality systems (IMS) audits
Our quality processes are subject
to internal audits and external
accreditation. There is continuous
improvement, including monitoring
the resolution of issues identified
in audits (corrective actions
and improvement actions).
Internal audit and external audit
We have an Internal Audit
department supported by
external professional co-sourcing
arrangements with KPMG LLP,
reporting directly into the Board’s
Audit Committee to maintain its
independence. Scrutiny of financial
areas consists of an internal audit
programme plus external audit
of our Statutory and Regulatory
Accounts by Deloitte LLP, our
Financial Auditor. This is a mature
and well tested approach. Over the
last few years, Internal Audit has
extended its role further into the
scrutiny of non-financial areas. We
have developed and implemented
a risk-based approach (the higher
the risk, the greater the scrutiny)
to systems and data audits, which
uses a targeted mix of Internal
Audit and external Technical
Auditor resource on a best-fit
basis. The Technical Auditor is
always external and typically
used for specialist areas such
as leakage and serviceability.
PROCESSES AND INTERNAL
SYSTEMS OF CONTROL
TO MEET OBLIGATIONS
We keep our assurance
processes continually under
review to ensure they remain
appropriate. A key emphasis
is on ensuring the Company
has sufficient processes and
internal systems of control to fully
meet its obligations, in addition
to demonstrating compliance
through actual performance.
For the 2011–12 Risk and
Compliance Statement we
mapped Company processes
against our statutory obligations
and completed a risk assessment
for each. The assessment against
each obligation was assembled
in a common format including:
• Responsible member of
the management team;
• Formal description of the duty;
• Description of the duty
in ‘plain English’;
• Details of policies, procedures
and responsible departments;
• Governance and assurance
arrangements;
• Risk assessment
(including assurance
gap assessment); and
• Any material performance
departures in the report year.
Risk register and
maintenance and review
The Company maintains a
strategic risk register and
a detailed risk register. The
strategic register captures risks
that are typically in the future
and uncertain, such as potential
EU legislation, Government
policy changes or unconfirmed
regulatory reform. The detailed
register captures unmanaged
and managed risk of failing
our objectives and obligations.
It documents the risk owner,
management actions in place and
is updated and reviewed on a
monthly basis by the Management
Team. Work is now underway to
refresh the risk registers, using
a ‘bottom up’ re-assessment of
risk being developed by each
department in the Company.
A Risk & Compliance Committee
has been created by the Board
to increase the focus on risk and
compliance matters formerly dealt
with by the Audit Committee. This
includes advising the Board on
overall risk appetite, tolerance,
strategy and any risk exposures,
monitoring and reviewing risk
assessment processes and
keeping the effectiveness of
the risk and internal control
management systems under
review. In addition, this
Committee considers business
continuity arrangements and
monitors treasury risks and
compliance with covenants.
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93
APPENDIX:
GLOSSARY
OF TERMS
94
95
GLOSSARY OF TERMS
CREDIT RATING
The credit rating shows the
company’s ability to comply
with our licence requirement
to maintain an investment
grade credit rating.
Credit rating assessments are
defined from rating agencies.
DISCHARGE PERMIT
COMPLIANCE
Discharge permit compliance
measures the performance
of sewerage assets to treat
and dispose of sewage in line
with the discharge permit
conditions imposed on
sewage treatment works.
DRINKING WATER QUALITY
The Drinking Water Inspectorate
(DWI) provides independent
reassurance that water supplies
in England and Wales are safe
and drinking water quality is
acceptable to consumers.
Legal standards for drinking
water are set down in national
regulations which come directly
from European law. The health
based standards are based
on expert global opinion
documented in World Health
Organisation guidelines. These
standards are very strict.
There are also additional national
standards set to maintain the
high quality of drinking water
in England and Wales.
The measure is for overall drinking
water quality which consists of
the average compliance values
for various parameters.
GEARING
This is the net debt as a
percentage of the total RCV
at the financial year end.
GREENHOUSE GAS
(GHG) EMISSIONS
Managing carbon to lower
levels is good for health and
the environment and helps
reduce the impacts of climate
change. We measure the annual
operational GHG emissions
of our regulated business.
Companies report their annual
operational net GHG emissions
as determined by Defra’s
‘Guidance on how to measure
and report your greenhouse gas
emissions’ (September 2009).
INTEREST COVER
This ratio is used to determine
how easily a company is able to
pay interest on outstanding debt.
LEAKAGE
Total leakage measures the sum
of distribution losses and supply
pipe losses in megalitres per
day (Ml/d). The leakage measure
includes any uncontrolled losses
between the treatment works
and the customer’s stop tap.
However, it does not include
internal plumbing losses.
LOOK UP TABLE
Sewage treatment works must
meet discharge consent conditions
imposed by the regulator
(the Environment Agency).
Generally samples of the effluent
discharged must meet certain
quality conditions on more than
95 percent of occasions. Look-up
tables are used by the regulator
to enable this performance to
be measured in a simple way by
giving the maximum number of
samples that can fail in a year.
Ml/d (MEGALITRES PER DAY)
A megalitre is one million litres or
approximately 220,000 gallons. For
comparison an Olympic swimming
pool holds 2.5 Ml (2,500,000 litres).
POLLUTION INCIDENTS
This is a measure of the number
of incidents where an escape from
our sewage network or sewage
treatment works has caused
damage to the environment.
The indicator measures the
total number of pollution
incidents (categories 1 to 3) per
10,000km of sewer length for
which a sewerage company is
responsible in a calendar year as
recorded on the Environment
RETURN ON REGULATORY
CAPITAL VALUE
(RCV) (POST TAX)
The RCV is determined by
Ofwat and is the value of the
capital base on which a return
is allowed for price setting.
The return is calculated as
current cost operating profit
less tax divided by RCV.
SATISFACTORY SLUDGE
RECYCLING
Companies determine their
own definitions of satisfactory
sludge disposal; as a minimum,
companies are expected to adhere
to the Safe Sludge Matrix and
comply with any legal obligations.
SECURITY OF SUPPLY
INDEX (SOSI)
This specifies the extent to
which a company is able to
guarantee provision of its levels
of service for restrictions of
supply and measures security
of supply for two scenarios:
• under dry year annual
average conditions; and
• peak demand conditions.
SERVICEABILITY
The ability of our networks to
provide a good service and
ensure customers’ long-term
interests are protected is critical.
Serviceability assesses recent
historical trend in serviceability
to customers, as measured
by movements in service and
asset performance indicators.
We make judgement about the
overall serviceability in each
sub-service and update the
serviceability status as improving,
stable, marginal or deteriorating.
When making the assessments,
we refer to the serviceability
assessment toolkit and the
2009 price review final
determination, which states
the reference level and control
limits for each indicator.
SERVICE INCENTIVE
MECHANISM
The service incentive mechanism
(SIM) is an incentive mechanism
designed to encourage companies
to provide better service to
customers. It also allows customers
to compare the performance
of their company with others. It
measures the following aspects
of customer service delivery;
• Where customers have made
contact when something
has gone wrong or appears
to have gone wrong, for
example about a billing error
or writing to complain about
a water supply problem.
• A customer survey measures
how well companies have
handled all types of customer
contacts, not just when
things have gone wrong.
SEWER FLOODING
This indicator measures
the number of incidents of
internal sewer flooding for
properties that have flooded
within the last ten years.
Each Company must count any
incident of internal flooding of
a property in the year where a
flooding incident, either internal or
external, has been reported by the
property in the previous ten years.
All incidents of repeat flooding
must be counted, including
those the company assesses to
be caused by severe weather.
Every repeat internal incident
at a property in the year must
be counted and included
in the reported figure.
If there has been no incident
of flooding, either internal or
external, in the last ten years,
but multiple incidents are
reported at the property in
the year, then the first incident
is not counted but all other
subsequent internal incidents are
included in the reported figure.
SEWERAGE
The system of pipes (sewers) that
takes waste water from properties
or highways to our treatment
works or a river or watercourse.
WASTE WATER (SEWAGE)
Water that has been used for
washing, bathing or flushing
toilets etc or rainwater from
roofs, drives or highways etc
or a combination of the two.
WATER SUPPLY
INTERRUPTIONS
This measure reflects the number
of hours lost per property served
in the year with supply interruption
greater than three hours.
This is irrespective of
whether the interruption
was planned, unplanned or
caused by a third party.
96
97
Northumbrian Water
Northumbria House
Abbey Road
Pity Me
Durham
DH1 5FJ
98
www.nwl.co.uk