Our future plans. Consultation document April 2018 < > Our proposals What happens next? Choices for customers

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1 Our future plans Consultation document April 2018

2 Welcome to our future proposals - working in partnership with and communities We re currently delivering an ambitious business plan which takes us to We ve been working alongside and stakeholders to develop our next business plan covering the years 2020 to This document sets out for consultation what services can expect from us and at what price. What tell us every day In shaping these proposals, we ve taken into account what tell us every day when they contact us and detailed feedback from 7,000 current and future through our online community, focus groups and surveys. These proposals also aim to address requirements and from our regulators and stakeholders such as Ofwat, the Drinking Water Inspectorate, the Environment Agency and Natural England. Views of over 7,000 existing and future Business Planning Now we re with you on our proposals We re really keen to hear your views on what we re proposing. Further information on how to take part is available at: and on page 23 of this document. Views of our regulators (economic, quality, environmental) Water Resources Management Plan Consultation We are also currently on our Water Resources Management Plan which informs our Business Plan. This consultation runs until 23 May Further information is available at 2

3 Welcome About us Your bill Customers 1 2 Who we are and what we do Our vision is to be the leading community-focused water company. This means we ll do our best to ensure our service reflects the priorities of the communities we serve. We supply on average 900 million litres of drinking water every day to approximately 3.6 million people (1.4 million properties) in the South East of England. We divide our supply area into eight different communities, each named after a local river. This helps to emphasise the link between the areas we supply water to and the local environment from which we source that water. The water we supply is mostly from underground sources. We also take water from rivers and import and export water to neighbouring companies. Our biggest challenge is to continue to be able to provide enough high-quality water for into the future. Our plans for doing this are detailed in our draft Water Resources Management Plan. More information can be found at: 3

4 Welcome About us Your bill Customers 1 2 Here are some of the things we do Supporting in vulnerable circumstances 48,180 benefit from our low income tariff Provide clean and safe water 99.96% compliance with the measure used by the Drinking Water Inspectorate to assess overall drinking water quality Educate children about water efficiency and the environment over 33,727 children last year Reducing leakage by 14%, a saving of 27 million litres of water per day currently delivering the largest reduction in the industry Reduce the amount of water we take from the environment by 2020 we will have reduced this by 42 million litres per day which is the equivalent of 17 Olympic size swimming pools 4

5 Welcome About us Your bill Customers Your bill Households are charged for the supply of clean water and the taking away of waste water. Although we only supply clean water, charges for both services are itemised separately on water bills, except for households in our Dour community where charges for waste water services are billed directly by Southern Water. We work hard to keep your bills low whilst maintaining a high quality and trusted service. Between 2015 and 2020 our average household bills are well below the industry average, as illustrated below. Where each pound of our charges is spent Local and central government 8p corporation tax, business rates, abstraction charges, employer s national insurance, climate change levy and street work permits Our assets 38p for treating and supplying water and maintaining equipment Our shareholders 10p dividends returned on money invested to pay for treating and supplying water and maintaining existing and new assets Our bondholders 11p interest paid on money borrowed for treating and supplying water and to pay for water and maintaining existing and new assets Our suppliers for operating services 16p Our people 17p we employ over 1,400 people. 80% of these are also Average Household Bills (Clean Water) / / / / /20 Affinity Water Industry Average Average water only bills are based on data from each water company. The average household bill is an average across all. All bills are shown in 2017/18 prices (and do not show the effect of inflation). 5 Figures are based on our statutory financial statements for the year ended 31 March 2017.

6 1 2 Customers.now and in the future We continue to reflect views in the way we provide their water service, in order to meet their Making sure and communities have enough water while leaving more water in the environment Minimising disruption to you and your community Supplying high quality water you can trust Providing a great service that you value We ve developed proposals based on your feedback and interactions with us, that set out how we will continue to meet your between 2020 and 2025, whilst also considering longer-term challenges such as making sure we can provide enough water in the future. This consultation gives you information on our proposals for. In all of the proposals presented, we will continue to provide high quality drinking water. These are explained in the following sections. 6

7 1 2 Customer experience and satisfaction Most are very happy with the service they receive and have little reason to contact us. When do contact us, we listen to their feedback so that we can improve our service. Fewer are having to contact us and those who do are using new improved self-service channels, such as webchat and our updated website. Our Customer Charter Five commitments that flow through everything we do It starts with our dedication and focus on supplying high quality drinking water Our empathy with our and commitment to always being effective, efficient and safe The way we talk and listen to our and stakeholders The pride we take in our delivery and performance An Affinity for our colleagues, and the environment we serve What have told us and the insight we have Through reviewing the day-to-day contact we have with, we have identified some key opportunities, including: Receiving a bill is the main contact point for us with many. With most not having the need to contact us the rest of the time, this is the most important customer communication opportunity for us to manage People consider themselves as users of water, rather than or consumers Customers are interested in a discount to use an online selfservice portal Ambitions for our next plan Our proposed plans will improve customer experience and satisfaction. We are committed to delivering effortless and simple ways for to contact us so we can deal with any issues quickly. We will provide great customer service with simple interactions across multiple customer channels. We will focus on getting things right first time and maximising the opportunities from digital technologies, to make things as easy as possible and work with third parties and other industries for best practice. Providing excellent customer service will continue to be driven by our customer charter and commitments that flow through everything we do, while recognising the need to do more to support in vulnerable circumstances or those struggling to pay their bills. Our plan seeks to build improved relationships with to help them better understand how much water they are using and support them to manage this by providing more frequent information to them. The Affinity Water name and brand is not well known 7

8 Fixing leaks With a network of over 16,000 kilometres of pipes, leaks do happen. To tackle leakage, we must consider the cost of finding and repairing leaking pipes (and the impact on traffic from carrying out repairs) compared to the cost of treating and supplying more water. Our current performance On average, we distribute 900 million litres of water per day. Currently, 19% of this leaks from our network, a quarter of which leaks from own water pipes. We make around 27,000 leakage repairs to our network each year to reduce leakage. During the period 2015 to 2020 we will have reduced leakage from 189 to 162 million litres per day, a saving of 14%, or 27 million litres of water per day. This is the largest percentage reduction in the water industry. Leakage (as litres per property per day) Affinity Water Industry Average What have told us and the insight we have They think leakage is wasteful They don t appreciate being asked to save water when they see leaks unrepaired They recognise that there are different severities of leaks, and that some necessitate a faster response than others We should meet or exceed Ofwat s leakage reduction Complaints about leakage are quite frequent They don t immediately make the connection between leakage and the environment When asked if would support an increase in their bill to support leakage reduction, most are supportive. This is without understanding the implication for their bill Metering will encourage households to reduce leakage from their own pipes. Ambitions for our next plan We ve developed two options for 2020 to 2025, reflecting our preferred and alternative draft Water Resources Management Plan: 1) Reducing leakage further by 11% (18 million litres per day), to 144 million litres per day. 2) Reducing leakage further by 15% (25 million litres per day), to 137 million litres per day. 8

9 Sourcing water more sustainably Around 65% of the water we use comes from the chalk aquifer (porous rock where groundwater is stored). Where there is evidence of environmental benefit from taking less water from these sources, and provided there is sufficient water available to us to supply a growing population, we will reduce the amount of water taken from these sources. Our current performance Working with our environmental regulators, we are taking less water from the environment now and we plan to continue to reduce this in the future to make abstraction more sustainable. In some areas, we believe it will be more effective to restore and enhance habitats than to take less water. Going forward, we propose making reductions where this is supported with robust evidence of ecological improvements and, where there is less certainty of benefits, carry out restoration and enhancement works. What have told us and the insight we have The connection between water use and the environment is made, but it is not immediate It is unclear how well we manage and protect the environment. We should do more to let know A small proportion of, when asked, would support an increase in their bill in order to have a reduction in the water taken from the environment. Ambitions for our next plan We propose to continue with our river restoration and habitat enhancement work where it makes most sense for and the environment. We are on two options to further reduce abstraction from our most environmentally sensitive sources. We will select where to make reductions, by considering all the evidence available to ensure it will deliver the most benefit. We ve developed two options below reflecting our preferred and alternative draft Water Resources Management Plan: 1) Taking 10 million litres of water per day less from the environment between 2020 and ) Taking 39 million litres of water per day less from the environment between 2020 and

10 Reducing personal water use Our supply area has some of the fastest-growing populations the UK. Despite England being perceived as a wet country, in our area, typically we receive three quarters of its average rainfall. As water is a limited resource, it is important to help people manage their water usage. Our current performance Our currently use an average of 160 litres (35 gallons) each per day, which is above the national average of 141 litres each per day. Average daily water use in litres per person per day Affinity Water Industry Average What have told us and the insight we have High levels of water use result from a lack of awareness rather than a lack of willingness to change habits. Customers want to save water and think they can if supported Our water-saving meters webpage is significantly viewed, with seeking further information on this topic Customers are keen to be offered advice on how they can manage and reduce their consumption, and some identify awareness-raising and publicity as important Customers consider themselves average and efficient in terms of water consumption with little means to draw these comparisons Agreement that reducing the amount of water they use is the responsibility of the individual Water saving devices/fittings are not enough to ensure water savings. These have to be accompanied by information, prompts and ongoing support to ensure lasting change. Ambitions for our next plan We ll continue to install meters in homes that do not already have them and implement a new innovative option to provide with frequent information about their water use. Customers will be able to get a more detailed picture of their water use which will help them to manage the amount of water they use. We ll continue to provide with free water saving devices such as shower heads and tooth timers to help them save water, save energy and save money. We will strive to work together through a partnership approach involving, local partners, water companies, government and regulators, to encourage to use less water. We will seek support for a national water-saving campaign. We ve developed two options below when planning for the long-term, reflecting our preferred and alternative Water Resources Management Plan: 1) Taking steps to reduce water use from an average 160 litres per person per day to 129 litres through existing plans to save water. 2) Taking steps to reduce water use from an average 160 litres per person per day to 124 litres by providing with more frequent, accessible information about their water use. 10

11 Risk of supply interruptions Interruptions to water supply can happen without warning, usually because of a burst water main in a nearby area. In 2016/17 there were 79,000 properties affected by interruptions to supply lasting more than 3 hours. Our current performance Customers currently experience a 6%, or a 1 in 18 chance, per year, of a supply interruption of longer than 3 hours. Interruptions (minutes per property served) Mains Bursts (per 1,000km of main) What have told us and the insight we have Complaints about interruptions to supply are the most common reason for customer contact However, a high proportion of agreed that their water supply is reliable and is hardly ever interrupted We need to improve our communication with who experience a supply interruption, to provide information about the interruption, the anticipated time of restoring supply and the provision of bottled water in an emergency Customers do not wish to have any interruptions to supply. Ambitions for our next plan We ve developed two options below, both of which offer significant improvements on recent past performance: 1) Reducing the likelihood of interruptions longer than 3 hours to a 0.8% chance (1 in 130). 2) Reducing the likelihood of interruptions longer than 3 hours to a 1.5% chance (1 in 65) Affinity Water Industry Average

12 Severe drought restrictions Drought can have a significant impact on and this may become more noticeable as a drought becomes more severe. In a severe drought, we may need to take additional water from the environment, including rivers and streams, which can extend the amount of time it takes for a river to recover after the drought has ended. Severe drought measures go much further than temporary use bans (hosepipe bans). For example, water could be rationed through standpipes in the street and water companies could take water from sources they would not normally use. We have never had to use these measures, but our proposals would reduce the likelihood of this happening, reducing the chance of needing to use them. Our current performance We currently estimate that there is a 2.5% (1 in 40) chance every year, that we will need to apply to take additional water from the environment because of severe drought. We anticipate, on average, there is a 10% chance every year of implementing temporary use bans. Our current Drought Management Plan provides further detail about our use of these measures What have told us and the insight we have They are positive about reliability and the constant supply of water, but they do not perceive that water will run out we are grey and green, a wet country We know accept that temporary use bans are necessary on occasion. There is a common misconception around droughts heavy rainfall outside the winter period does not replenish groundwater sources. Ambitions for our next plan We will make appropriate use of temporary use bans (what used to be known as hosepipe bans) and drought orders, which allow us to impose restrictions on water use in the event of a serious drought. Improving drought resilience will reduce the likelihood of having to use these restrictions. We aim to reduce the likelihood of us having to take water from sources we would not normally use. This could include us building new infrastructure such as reservoirs and sharing more water with other water companies. We ve developed two options when planning for the long-term, reflecting our preferred and alternative draft Water Resources Management Plan: 1) Moving from a 2.5% (1 in 40) chance of severe drought measures every year to a 1.7% (1 in 60) chance. 2) Moving from a 2.5% (1 in 40) chance of severe drought measures every year to a 0.5% (1 in 200) chance. 12

13 Environmental projects We propose to build on our existing approach to deliver projects to support the local environment, working in partnership with local communities. These projects would be pilots, at first in small areas, with the potential to then roll-out on a wider scale. Our current performance Currently, we work closely with schools and other partners to deliver water-savings messages and initiatives. What have told us and the insight we have They value the environment and think that we have a role to protect it, but it is generally less of an emotive issue than leakage Unprompted don t immediately make the connection between their water use and the environment but they do when time is spent discussing the issue Most visit rivers but only occasionally When asked directly, a majority of think it s important to save water for the benefit of the environment. Ambitions for our next plan We would like to test new ideas and approaches in our communities, by running projects in collaboration with partner organisations. This is different to what we would normally do. It will allow us to test new approaches to project delivery and community engagement, raise awareness of the local aquatic environment, the link to water consumption and water use behaviours. This will help shape future approaches at a larger scale. We ve developed two options below: 1) Investing 2 million to fund environmental projects in local communities. 2) Investing 6 million to fund environmental projects in local communities. 13

14 Reliability of water pressure Low or variable water pressure can be caused by one off operational incidents, high demand or the configuration of our network. Low or variable water pressure is one of the most common customer complaints. What have told us and the insight we have Complaints about low pressure are the second most common reason for contacting us We understand that are looking for further information about the causes of low and variable pressure and the possible solutions to it In low water pressure areas, are resigned to this. Ambitions for our next plan Our current performance on low pressure is estimated to be 13 hours per property per year. We will prioritise pressure improvement schemes to target those properties which currently receive the most frequent drops in pressure. We ve developed two options to improve pressure received by below: 1) Reducing periods of low pressure for properties that currently receive the most frequent drop in mains pressure, to an average of 6.5 hours per year. 2) Reducing periods of low pressure for properties that currently receive the most frequent drops in mains pressure, to an average of 8.7 hours per year. 14

15 Supporting in vulnerable circumstances giving extra support when you need it We understand life can be stressful when paying bills is a struggle and recognise that any one of us could find ourselves in financial difficulty. We will offer support without judgement, creating trusting relationships to find solutions to meet your financial needs. For example, we: offer discounted tariff schemes encourage saving water supporting you to reduce the amount of water you use through advice, fitting a water meter and free water saving products designed to help you save water, energy and money have flexible payment options there are many ways you can pay your water bill. Our skilled customer advisors can help you select the arrangement that best suits you work in partnership with charitable organisations who can give free independent debt advice we are part of a major new initiative by the water and energy sectors to improve the process for to sign up to the Priority Services Register. Any customer who finds themselves in a vulnerable situation will be able to choose to register once to get help, rather than having to give details multiple times to different utility companies. Our current performance Our current Social Tariff caps the water bill for households with an income below 16,105 per year. Currently, 48,180 have capped water bills, about 3.5% of all. This scheme is supported by 3.00 from each household bill being allocated to the scheme each year. Since 2015, we have increased the number of benefiting from our Social Tariff scheme by over 27,300. Customers on our Social Tariff 60,000 50,000 40,000 30,000 20,000 10, ,873 38,649 44,101 48,180 Mar 15 Mar 16 Mar 17 Feb 18 Some of the money owed in bills to us will never be repaid this is known as bad debt. By offering discounted tariffs, flexible payment options and reaching out to using best practice debt management tools, we strive to keep bad debt as low as possible. We estimate the cost passed onto is around 6.43 a year per household. What have told us and the insight we have There is little customer understanding on who would be perceived as vulnerable and what support they can access Fewer than in 2015 are worried about being able to afford their water bill. However, this may still increase we ve seen over the past two years a distinct seasonal pattern where worries about bills peak just after Christmas They support an increase in their bill to assist those who are in a vulnerable financial position. The results showed that support is stronger than when we ran the same survey five years previously Customers feel that water is affordable, especially for smaller households with a fixed income. But for larger households, particularly for in vulnerable circumstances with young children or medical conditions, usage is difficult to control and water is less affordable as income or usage fluctuates Customers in vulnerable circumstances are actively trying to manage household bills and have a sense of pride in paying. 15

16 Supporting in vulnerable circumstances giving extra support when you need it Extra assistance available to you We know within our communities we have who need extra support to meet their individual circumstances, whether they have a physical disability, a mental health or medical condition, or speak a different language. We have services and trained specialists to help. To help us meet these needs, we operate a Priority Services Register to ensure we are there when you need us. We are currently supporting 24,825 through our register. Number of on the Priority Sevices Register 321 Dialysis Unable to fetch Large print 74 Braille 55 Audio Password We are working closely with many organisations to increase awareness of our Priority Service Register. Using trusted partners such as local Citizens Advice Bureaux, helps us reach more. We are creating specialist Advance Care Champions who receive additional training to fully understand, identify and support needs. We are committed to becoming a dementia-friendly business as we know that dementia is one of the greatest challenges faced in society today. Mental health Elderly Hearing impaired Mobility Total Ambitions for our next plan We will continue to expand our Social Tariff by increasing the number of receiving the discounted tariff by 2025, giving access to financial support for those in financial difficulties. To grow our Priority Service Scheme to meet the needs of, by increasing the number of registered to 100,000 by We will be actively involved in community events to reach more and share information about our services. Our ambition for supporting in vulnerable circumstances remains the same under all three proposals. 16

17 Plan A Here is our first set of proposals. The information below outlines our proposals for 2020 to 2025, as well as the forecast impact they would have on the average household water bill (excluding waste/sewerage). Fixing leaks 11% reduction in current leakage levels Risk of interruptions Reducing the likelihood of supply interruptions longer than 3 hours to a 1.5% chance in any year (1 in 65 chance) Environmental projects 2 million to fund environmental projects in local communities Sourcing water more sustainably Taking 10 million litres per day less from the environment Severe drought restrictions Reducing the chance of needing to impose these from a 2.5% to 1.7% chance in any year (1 in 60 chance) Reliability of water pressure Reducing periods of low pressure for some to on average 8.7 hours per year Reducing personal water use From 160 litres per person per day to 129 litres per person per day Under this plan, the average household yearly bill is forecast to be 170 in 2019/20, and 158 in 2024/25 Figures are in 2018 prices and do not include inflation 17

18 Plan B Here is our second set of proposals. The information below outlines our proposals from 2020 to 2025, as well as the forecast impact they would have on the average household water bill (excluding waste/sewerage). Fixing leaks 11% reduction in current leakage levels Risk of interruptions Reducing the likelihood of supply interruptions longer than 3 hours to a 0.8% chance in any year (1 in 130 chance) Environmental projects 6 million to fund environmental projects in local communities Sourcing water more sustainably Taking 10 million litres per day less from the environment Severe drought restrictions Reducing the chance of needing to impose these from a 2.5% to 1.7% chance in any year (1 in 60 chance) Reliability of water pressure Reducing periods of low pressure for some to on average 6.5 hours per year Reducing personal water use From 160 litres per person per day to 129 litres per person per day Under this plan, the average household yearly bill is forecast to be 170 in 2019/20, and 161 in 2024/25 Environmental projects Figures are in 2018 prices and do not include inflation 18

19 Plan C Here is our third set of proposals. The information below outlines our proposals from 2020 to 2025, as well as the forecast impact they would have on the average household water bill (excluding waste/sewerage). Fixing leaks 15% reduction in current leakage levels Risk of interruptions Reducing the likelihood of supply interruptions longer than 3 hours to a 1.5% chance in any year (1 in 65 chance) Environmental projects 2 million to fund environmental projects in local communities Sourcing water more sustainably Taking 39 million litres per day less from the environment Severe drought restrictions Reducing the chance of needing to impose these from a 2.5% to 0.5% chance in any year (1 in 200 chance) Reliability of water pressure Reducing periods of low pressure for some to on average 8.7 hours per year Reducing personal water use From 160 litres per person per day to 124 litres per person per day Under this plan, the average household yearly bill is forecast to be 170 in 2019/20, and 168 in 2024/25 Figures are in 2018 prices and do not include inflation 19

20 Comparison of all three proposals The table below compares all three proposals. Fixing leaks Sourcing water more sustainably Reducing personal water use Risk of interruptions Severe drought restrictions Environmental projects Reliability of water pressure Future forecast bill Plan A: Plan B: Plan C: 11% reduction in leakage 11% reduction in leakage 15% reduction in leakage 10 million litres less water taken from the environment 10 million litres less water taken from the environment 39 million litres less water taken from the environment To 129 litres per person per day To 129 litres per person per day To 124 litres per person per day Reducing to a 1.5% (1 in 65) chance in any year Reducing to a 0.8% (1 in 130) chance in any year Reducing to a 1.5% (1 in 65) chance in any year Reducing to a 1.7% chance (1 in 60) chance in any year Reducing to a 1.7% chance (1 in 60) chance in any year Reducing to a 0.5% chance (1 in 200) chance in any year 2 million to fund new schemes 6 million to fund new schemes 2 million to fund new schemes Reducing average hours of low pressure per property per year to 8.7 hours Reducing average hours of low pressure per property per year to 6.5 hours Reducing average hours of low pressure per property per year to 8.7 hours 170 per year in 2019/ per year in 2024/ per year in 2019/ per year in 2024/ per year in 2019/ per year in 2024/25 Figures are in 2018 prices and do not include inflation 20

21 How are we with and stakeholders? Consultation questions Taking the different options in each of the three proposals into account we would like to know which proposal you prefer. Please take a few moments to share your views on our proposals so that we can ensure that we achieve the right balance and provide you with the service you expect and need. Are you: A customer A stakeholder 1. I support Plan A Please give reasons for your choice: If stakeholder, please name your organisation: 2. I support Plan B Please give reasons for your choice: If you would like us to provide you with feedback and to enter the competition for a chance to win an Apple ipad (standard size 9.7 inch, Wi-Fi 32GB), please provide us with your contact details: Name 3. I support Plan C Please give reasons for your choice: Postcode address 4. I do not support any of the three plans Please give reasons for your choice: We may use your contact details to contact you about your consultation response. We will not use your contact details for any other purpose and will not share them with any third party. We will keep your information secure and will retain it until our final business plan has been submitted to Ofwat. (please continue your answers on Page 22 if necessary) 21

22 Consultation questions continuation page Please include any extra comments on this consultation: 22

23 At the end of the consultation period, we will consider all the comments made and produce our final Business Plan. By 3 September 2018, we will submit our final Business Plan to our regulator, Ofwat. In this plan, we will propose the level of investment we will make for the period 2020 to 2025, along with our associated performance commitments. are focused on achieving the right balance between the service you receive, the price you pay and the amount of investment. How to give your views We really want to hear your views on our proposals and use these to inform our final plan. Our consultation runs from 26 April to 25 May 2018 and is open to and stakeholders. Giving your views is easy and doesn t take long to do. You can give your views in four ways: Complete the consultation document online 1 3 at Write to us at Business Plan Consultation, Affinity Water, Tamblin Way, Hatfield, AL10 9EZ Send us your views via to 2 4 haveyoursay@affinitywater.co.uk Attend one of our stakeholder forums please haveyoursay@affinitywater.co.uk for further details Water Resources Management Plan Consultation We are also currently on our Water Resources Management Plan which informs our Business Plan. This consultation runs until 23 May Further information is available at 23

24 Saffron Walden Stevenage Harwich Luton Clacton-on-Sea Hemel Hempstead Rickmansworth St Albans Watford Harlow To receive this leaflet in large print, audio or Braille, please call Hard copies of this document are available from our offices in Hatfield. Wembley London How to get in touch Woking Guildford Post: Affinity Water Limited, Tamblin Way, Hatfield, Hertfordshire AL10 9EZ Dover Folkestone Telephone: (main switchboard) Youtube.com/AffinityWater