Flexibility in water regulation is required to ensure companies can react to evolving consumer expectations such as sewer overflows, Pennon chief executive Susan Davy has argued.
Reflecting on performance in AMP7 the chief executive of Pennon Group, which encompasses South West, Bournemouth and Bristol, acknowledged there are areas where targets are not being met.
Ofwat’s latest performance report showed South West underperformed in five of its 12 outcome deliver incentive (ODI) metrics for 2022/23. The regulator classified its overall performance as ‘average’, while Bristol lagged behind with just two of its eight ODIs met.
Davy said the company had to do better to meet them and deliver against customer and regulator expectations, but tempered this with the need to recognise that expectations change over time.
“Five years ago we would not have been talking about combined sewer overflows,” Davy said in reference to the billions of pounds of investment laid out to improve water quality and drive down the use of overflows.
At PR19, CSOs were not mentioned in the strategic policy statement from government to Ofwat, and consequently were not a spending priority for companies.
As public awareness around river health has changed and anger focused on CSOs has built, they have rapidly become an area for significant work. For PR24, the SPS had eight references to CSOs.
Storm overflows and pollution is one of the four core topics in Pennon’s proposals for 2025-30, which prioritises eliminating risks from CSOs near bathing waters as part of 15 year investment programme.
“We need to be more agile and flexible because priorities move and change so there must be flexibility,” Davy said while acknowledging the areas her company and the sector needs to step up.
Speaking alongside Davy at Moody’s 2023 Water Conference, head of regulator Ofwat David Black stated that “sugar coating” performance as a regulator would not help the sector to improve.
“The public are not happy about performance levels,” he said. “Our targets (for PR24) must reflect where the public mood is at.”
Black added it “should not be that hard” to drive better customer service and pointed to this as an area companies were lagging behind other industries in terms of delivering for billpayers. He defended Ofwat’s targets as “stretching, but achievable”.