Water sector underperforms but gains trust

Last year saw water companies meet the lowest number of performance commitments during PR14, with only 63 per cent achieved.

Despite this, the latest data from  Ofwat shows public trust in the sector has risen.

In its annual report, the regulator urged all companies to improve and said the “slight” fall in performance over the final 12 months of the PR14 cycle was reflected in the increased underperformance payments from companies back to their customers.

“We would have liked to see greater progress from companies on meeting their commitment to continual improvement,” Ofwat said. “We would also like those companies which are performing badly across a range of indicators, to close the gap so that all customers benefit from a good and continually improving level of service.” The regulator said these ambitions underpinned its approach to PR19.

Ofwat said that Public Interest Commitments (PIC) and efforts to put public service at the core of all business decisions had helped rebuild trust in the sector. Trust levels reached 7.70 out of 10, which Ofwat noted places water ahead of the energy sector at 7.18.

Ofwat’s review showed a very slight decline in customer satisfaction measured by the Service Incentive Mechanism (SIM) score after several years of gradual improvement. This, Ofwat said, was attributable to varied individual company performance because overall most companies showed improvement.

In the non-domestic retail market Ofwat noted that most customers are satisfied with their retailer, however frictions in the market mean complaints have persisted. CCW noted a steady decline in complaints over the past 18 months.

The SIM scores are now retired in favour of C-Mex and D-Mex scores from the start of AMP7.

The number of customers signed up to the Priority Service Register and on social tariffs rose sharply in AMP6 to 486,000 and 509,000 customers respectively by 2019. However water companies reported a spike in people signing up since the outbreak of coronavirus and lockdown.

Ofwat noted that water usage is at its highest level and there is a continued need for public water efficiency messages. Per capita consumption (PCC) has steadily risen over the past five years from 156 litres per person per day (l/pppd) for unmetered properties and 124l/pppd for metered households, to 168 l/pppd and 132 l/pppd in 2019.

The number of households with a water meter rose by around five per cent during AMP6 nationally. Mandatory meter rollout was recommended by the Committee on Climate Change in its annual report last week that highlighted the link between lowering water use and lowering carbon emissions.

In the water sector carbon emissions fell from 3,800Kt of CO2 in 2015 to 2,400Kt of CO2 in 2019 showing progress towards the sector’s PIC to reach carbon net zero by 2030.

Ofwat’s own carbon emissions decreased 10 per cent in 2019/20 due to a reduction in business travel and electricity consumption.