South West Water runs a ‘watershare’ scheme in which it shares financial benefits gained from beating its targets with customers.
The company proposed deferring the penalty to offset rewards that will be due at the 2019 price review for beating other performance commitments. The independent watershare panel agreed with this. Ofwat said that it would consider accepting the water company’s proposal in order to smooth bills.
Following consultation, the regulator has now accepted the proposal not to apply the penalty in 2017/18, but said it will consider the timing of the penalty next year when assessing South West Water’s performance. The penalty will be adjusted in line with inflation and interest when it is applied.
Ofwat has also rewarded two companies for beating their commitments.
Severn Trent beat its commitments on category 3 pollution incidents by 32 per cent, internal sewer flooding by 21 per cent, external sewer flooding by 7 per cent and leakage by 2 per cent – equivalent to an extra reduction in leakage of 10 million litres per day. This results in a performance reward worth £18.8 million.
Anglian Water has performed better than its commitment on leakage by 1.5 per cent – equivalent to saving an extra 3 million litres of water per day. This results in a performance reward of £0.5 million.
Ofwat senior director for Water 2020 David Black said: “It is great to see companies stepping up to the challenge to deliver more for less. These incentives are all about driving improvements in the quality of services customers get.”
Anglian Water director of water services Paul Valleley said: “Our leakage is already at record low, industry-leading levels and we are now driving leakage to a new industry benchmark – using every technique available and inventing new ones.
“The targets we set ourselves go far beyond that of any other water company and this year our performance again surpassed the targets set by Ofwat – as it has done for three years running – with lowest ever level of leakage (183Ml of water lost per day). This beat our regulatory target by 5 per cent.
“Going further than any other on leakage is what our customers told us they wanted. We believe it’s the right thing to do for them, and for the environment and resilience against drought. And we’ve made it possible with a 300-strong team focussed purely on leakage coupled with rolling out innovative pressure management schemes across the region, and a range of other innovative approaches.
“We still have ambitious targets to do even more, and that’s why we’re waging a £60 million war on leakage this AMP.”