Bristol Water Assurance Plan 2016/17

Transcription

1 Assurance Plan 2016/17

2 Assurance Plan 2016 Assurance Plan 2016/ Introduction and Context... 3 Taking into account the views of our customers and stakeholders... 4 Information covered by this Assurance Plan... 8 Our approach to providing information and reporting on performance... 8 Who the assurance will be performed by Proposed assurance activities Timings of the assurance How we propose to move from the prescribed category to targeted assurance Timetable for Assurance Plan and Activities Annex 1 Details of Risk Assessment Annex 2 Customer Survey Results Annex 3 Assurance activities Annex 4 Atkins Assurance Methodology Notice Table of contents Atkins Technical Assurance Team Reporting and Assurance Approach Assurance team

3 Assurance Plan Introduction and Context This document sets out our approach to assurance of the information that we will publish during 2016/17. This document was previously presented in draft form for consultation with our customers and other stakeholders. Assurance of our information is vitally important to and our stakeholders: We consider it important to demonstrate to our customers and other stakeholders that we report information on our performance that is transparent, reliable, relevant, complete and up-to-date. This is part of our commitment to demonstrate that we take ownership of what we report. It is important that customers can find out how we are performing against our targets. We are committed to providing this information on our website and have embraced a more open and accessible approach to customer communications, with a report on performance in our customer magazine Watertalk. Our company annual report, available to everyone on our website, provides data and commentary on our performance that is aimed at a broad audience, and we provide an update on our performance every six months. We present this information to our stakeholders through meetings of the Challenge Panel, 1 which challenges our information and performance. This document is intended to meet the requirements of Ofwat s Company Monitoring Framework, 2. The Company Monitoring Framework, published in June 2015, set out how Ofwat intends to oversee the information that water companies provide to customers. The Framework includes classification of companies as self-assurance, targeted and prescribed. Bristol Water was initially classified as targeted. However, following the conclusion of the PR14 Business Plan process, Ofwat announced in December 2015 that it was placing in the Prescribed category, due to concerns over the quality of the evidence we presented in support of our Business Plan. In common with all other water companies in England and Wales, we were required to carry out a risks, strengths and weaknesses exercise with stakeholders, to highlight the areas of assurance that have the most significance or are of greatest risk to customers. We published a consultation on this exercise on 15th December, and sought the views of our stakeholders and customers. This document incorporates the results of our consultation on this exercise, which concluded in January We are required to incorporate independent external assurance as part of our assurance plans. We have employed external auditors to audit and assure our key financial and non-financial information for many years. We set out in this document the role that both our independent technical assurer, Atkins, and our financial auditors, PwC, will play in assurance of our key submissions. We are required to publish all of our assurance plans on our website ahead of reporting. 1 The Challenge Panel is the successor to the Local Engagement Forum 2 Company Monitoring Framework, Ofwat, June

4 Assurance Plan 2016 Compliance with our plan will be reviewed by Ofwat, our Board and the Challenge Panel. We expect each of these to provide a statement of its opinion on the extent to which we have followed the proposed assurance plan. We will therefore be held to account by these public statements. Ofwat will provide its assessment on our assurance of 2015/16 data in the Autumn of If it considers that we have not met the requirements of our assurance plan it may intervene to prescribe a greater level of assurance to be applied in future. It may also apply other regulatory remedies, including financial penalties if it deems that to be appropriate. 2. Taking into account the views of our customers and stakeholders We have consulted our customers and key stakeholders on our information Risks, Strengths and Weaknesses Statement which we published in December The methodology we used to risk-assess our information and the resulting risk scores were published in this Statement. For reference, the results of our risk assessments are reproduced in Annex 1 of this document. We invited comments through publishing our Risks, Strengths and Weaknesses Statement on our website. We also engaged directly through meetings and telephone calls with our key stakeholders including Ofwat, the Consumer Council for Water (CCWater), the Drinking Water Inspectorate (DWI), the Environment Agency (EA), Natural England (NE) and Atkins, our independent technical information assurer. We also presented our information risk assessment methodology and results to a sub-group of our Customer Challenge Panel, known as the Bristol Water Challenge Panel. The Challenge Panel is comprised of representatives from the Consumer Council for Water, the Environment Agency, Natural England, Citizens Advice Bureau, local councillors, local universities, the Avon Wildlife Trust and independent customer representatives. Figure 1 - Composition of Challenge Panel Education The environment and nature Regulators Health Regional and local government Retailers Others Commerce and industry Stakeholder Panel Customer Service 4

5 Assurance Plan 2016 We invited responses from customers and our stakeholders to the following questions; 1. How would you use the information published by? Would you use it to compare with other water companies, or other utility service providers? 2. Is the information that publishes produced in a useful and easy to understand format, and sufficiently precise for your needs? 3. Is there any information that doesn t currently publish that you consider would be useful? 4. What do you consider to be the most important type of information that provides? This could be information about your bill, the work we are doing in your area, whether we are meeting our customer service targets, our financial performance or other information and data that we publish. 5. Do you have any concerns about the quality of the information that is provided by? Do you consider it to usually be reliable? 6. Are there lessons we could learn from elsewhere to improve the reliability of our information? 7. Are there any other risks, strengths or weaknesses in our information that you think we should address? 2.1. Outcome of Stakeholder Meetings We have highlighted below some of the key feedback that we received from stakeholders: Overall comments o With the exception of some evidence we supplied to Ofwat in support of our Business Plan for the Periodic Review 2014, our stakeholders do not have any material concerns about the quality of the information that we provide to them; o Stakeholders confirmed they intend to continue requesting information from us in the current formats; o Stakeholders welcomed details on our information risk assessment methodology and were interested in reviewing and understanding the resulting risk scores; Ofwat o o Ofwat asked us to consider whether some reporting processes within the Regulatory Accounts may carry higher risks than others, possibly those linked to the Statutory Accounts, to reflect this in our Assurance Plan; Ofwat would welcome early sight of our proposals for improving confidence in our wholesale costs in future; Consumer Council for Water o o CCWater welcomes timely provision of information from us and would like to know in advance of any unforeseen delays to this process and the reasons for them; CCWater requested that we continue to provide clear narratives to explain why performance trends have changed or where unusual circumstances have influenced our performance; 5

6 Assurance Plan 2016 o CCWater asked us to consider whether any further information that we collect but don t publish could be made available to customers in order to build confidence. o CCWater also asked us to review where we refer stakeholders to other organisations information, e.g. on street works and water quality, to see if this process is as effective as it can be; Environment Agency o EA asked us to consider whether the impact of poor quality information associated with compliance with permit and license conditions can be assessed: o EA would like us to investigate the causes of recent instances of minor data gaps and uncertainty of data sources concerning inflow data into reservoirs and to implement remedial measures if necessary; o EA asked that we confirm that we have operational documentation that demonstrates how compliance with environmental permit and license conditions o DWI o is assured; EA requested that we consider extending our information risk assessments and assurance activities to the key elements of the Water Resources Management Plan; DWI data team test data before it is input to databse, and engage directly with companies and advise of any concerns about data as they arise o The DWI annual report provides details of any concerns o No current concerns with BW data Natural England o NE asked us to review our risk assessment for the Biodiversity Index to confirm that it is appropriate and to consider the benefits of obtaining external assurance on Biodiversity Index reporting; o NE would also like us to review our assessment of the impact of misreporting some of our environment-related Performance Commitments in relation to our statutory obligations under the NERC Act and Biodiversity 2020; o NE asked us to consider extending our risk assessment to the reporting its AMP6 deliverables more widely; Atkins o Atkins suggested we might consider risk assessing our information and reporting processes associated with and supporting future market opening at this point in time Results of Customer Survey Our customer survey, published on our website, received four responses. The respondents indicated that they use information provided by to find out about their bill, for water quality and health-related issues, to compare out performance with other companies, to find out about work we are doing and our future business plans. Respondents said that our information was useful, interesting, information, accurate and reliable, and there were no adverse responses provided. Respondents expressed a desire to find out more about our environmental schemes, financial information, billing information and performance information. The full results of our survey are shown in Annex 2. 6

7 Assurance Plan Taking into accounts Stakeholder and Customer feedback We welcome the feedback we ve received from our stakeholders and incorporated these into our draft Assurance Plan, which was published for consultation in February The final version of our Assurance Plan incorporates our own analysis, and is supported by feedback from stakeholders and customers. We acknowledge the concerns Ofwat had regarding the quality of the evidence we presented in support of our business plan. We have commissioned an external review of our approach to the 2014 Periodic Review to help us, amongst other things, identify areas where we could have presented our information to our stakeholders more effectively. We wish to strengthen our processes to prevent a reoccurrence of these issues, and will incorporate this into our assurance plans for our PR19 Business Plan. 7

8 Assurance Plan Information covered by this Assurance Plan This Assurance Plan covers all the key information that reports and publishes. This includes information reported for regulatory purposes, and that produced for the benefit of customers. Specifically, this Assurance Plan covers: i. 2015/16 Annual Performance Report ii. 2015/16 Regulatory Accounts iii. 2017/18 Wholesale and Retail Charges and Charges Scheme iv. Guaranteed Standard Scheme payments for 2015/16 v. Data on performance on New Connections, reported via Water UK, reported monthly vi. Complaints reporting to CCWater, reported quarterly vii. Water quality information provided to the Drinking Water Inspectorate viii. Information provided to the Environment Agency The requirements for the information we will need to provide for the 2016 retail non-household price control are not yet available. We will carry out a separate risk assessment and produce a specific audit plan for this work once the requirements have been issued. 4. Our approach to providing information and reporting on performance We use a thorough system of controls to make sure that the information we report and publish is as accurate as possible. Each piece of information has a specific owner and reviewer, responsible for production and updating the reporting methodology statement. Data owners and reviewers are required to provide signed confirmation that the data has been compiled in accordance with the relevant methodology, and that the data is a true representation of the facts. This form provides the opportunity for the data owner to identify any concerns with the quality of the data, for investigation by senior managers and Directors. A committee of executive Directors reviews key data and information before it is published. Major regulatory submissions, including annual reports, tariffs, accounts and business plans are subject to Board review and approval prior to submission. We also use external expert auditors to review our methods, systems and processes for reporting key data and information. In particular, Atkins provides technical assurance on our regulatory submissions, and PwC audits our key financial data. These auditors provide reports to our Board to provide confidence in the accuracy of the information produced. Our main regulatory submissions are subject to sign off by the Board before we send them to Ofwat. Our PR14 business plan submissions were subject to this detailed level of internal and external assurance 3, and were approved by our Board on the basis of the assurance received. However, we recognise the comments subsequently made by the CMA and Ofwat that the level of supporting detail and evidence to underpin the proposals in our plan could have been greater. We want all parties to have trust and confidence in the information we produce, and we will take this feedback into account in our future provision of regulatory information and business plans. 3 External Assurance for our Business Plan was principally provided by Mott MacDonald 8

9 Assurance Plan 2016 The business plan that we will deliver for is based on a number of outcomes, which were identified through detailed customer engagement, and agreed with our PR14 stakeholder challenge group, the Local Engagement Forum (LEF). To monitor the delivery of those outcomes we set out a specific performance measure for each outcome, and a target level of service, based on our customers views of their willingness to pay for different levels of service. These targets were then reviewed by Ofwat and the CMA, to ensure they reflected customers desired level of service. To make sure our focus is on the delivery of outcomes that customers want, financial incentives have been applied to many of the performance measures. These incentives mean that money will be returned to customers if we don t deliver the required level of service, and in some cases mean that we can charge a little more if we perform well. Other measures do not have financial incentives, but a reputational incentive is created by our reporting of our performance against targets. The table below sets out the customer-facing performance measures against which we report. The internal measures will be included in our annual report as we think it is important for customers and stakeholders to have trust and confidence in our performance on all of our key measures. Further details on our outcomes and performance measures can be found in our PR14 business plan, available on our website at Outcome Performance Measure Incentive Reliable Customer Minutes Lost to unplanned Financial reward and Supply interruptions penalty Reliable Supply Assessment of asset reliability Financial penalty only Resilient Population at risk from asset failure Financial reward and Supply penalty Sufficient Security of Supply Index Reputational Supply Sufficient Supply Hosepipe ban frequency Financial penalty only Safe Drinking Mean Zonal Compliance with water quality Financial penalty only Water regulations Water is Good Negative Water Quality Contacts Financial reward and to Drink penalty Efficient use of Leakage Financial reward and resources by penalty company Efficient use of Meter Penetration Financial reward and resources by penalty customers Sustainable Total carbon emissions Reputational Environmental Impact Sustainable Environmental Impact Raw water quality of sources Reputational 9

10 Assurance Plan 2016 Outcome Performance Measure Incentive Sustainable Biodiversity Index Reputational Environmental Impact Sustainable Environmental Impact Waste Disposal Compliance Reputational Efficient Use Per Capita Consumption Reputational of Resources by Customers Affordable Bills Percentage of customers in water poverty Reputational Satisfied Service Incentive Mechanism Financial reward and Customers penalty Satisfied General satisfaction from surveys Reputational Customers Satisfied Value for Money rating from surveys Reputational Customers Easy to Ease of contact rating from surveys Reputational Contact Bills are Negative billing contacts Reputational accurate and easy to understand 5. Who the assurance will be performed by Atkins has been appointed as our main technical assurer for AMP6, in the role referred to as the Reporter. This role involves assurance of the annual performance report, guaranteed standard scheme payments, new connections data, and will also provide assurance to relevant parts of the Company s PR19 business plan. Details of Atkins s approach are set out in Annex 4. PwC is our financial auditor, responsible for assurance of the Company s Regulatory and Statutory Accounts, and our annual charges calculations. PwC also provide assurance for some financial elements of our business plan, and will review the financial elements of our 2016 retail non-household plan. Mazars is our current internal auditor, responsible for ensuring that we comply with our stated assurance methodology. The assurance plan will provide details of the internal audit process. We are currently tendering our outsourced internal audit contract and therefore the assurance may be performed by a different company within Our submissions and publications are subject to internal review, ranging from peer review of data to challenge to key data and assumptions by Executive Directors and the Board. The assurance plan will set out the different levels of internal assurance and what they involve. 10

11 Assurance Plan Proposed assurance activities Annex 3 illustrates the assurance activities we will undertake on the information listed in Section 4 above. In summary the assurance will comprise: Internal governance and control of all information listed in Annex 3 including peer review of data to challenge of key data and assumptions by Executive Directors and the Board; External assurance of reporting processes and data associated with our 2015/16 Annual Performance Report, our 2015/16 Regulatory Accounts, our 2017/18 Wholesale and Retail Charges and Charges Scheme, our Guaranteed Standard Scheme payments for 2015/16 and our data on performance on new connections. Review and challenge of our performance in 2015/16 against our AMP6 Performance Measures by the BWCP at their meeting in June Our internal audit programme includes review of the governance process, including sign off of data quality assurance forms and compliance with governance and approval methodologies 7. Timings of the assurance Assurance of the Regulatory Annual Performance Report, Regulatory Accounts and GSS payments normally takes place in April May, prior to publication of that information on 15 th July each year. These are subject to Board approval in early July, where the results of the external assurance are presented. Prior to the data audits, Atkins will audit the methodology for each outcome performance measure during March 2016, to ensure that the reporting process is robust. Based on the proposed submission date of the retail non-household plan in June 2016, we would expect that assurance to also take place in May We anticipate that this submission will be subject to Board approval prior to submission. Tariffs calculations are audited in January, prior to the publication of Charges Schemes on 1 st February. Board approval for 2017/18 tariffs will be provided ahead of the deadline for publication of the Board assurance statement in January New connections information is subject to external assurance each month, ahead of submission to Water UK. Other information identified is subject to internal assurance ahead of submission dates. 11

12 Assurance Plan How we propose to move from the prescribed category to targeted assurance The Company Monitoring Framework stipulates that companies classified as prescribed should retain that status for a minimum of 18 months. This effectively means that the earliest point at which could change category would be when Ofwat makes its annual assessment in the Autumn of Ofwat has set out two specific criteria by which it will assess whether a company can move from prescribed to targeted assurance after 18 months: there is no evidence of behaviour that leads to a reduction in the trust and confidence stakeholders can place in it; and there is an absence of significant problems with its audit plans in the previous year. We expect that Ofwat s assessment will take into account companies Annual Performance Reports in 2016 and 2017, as well as Regulatory Accounts and Charges Schemes published in those years, and the information provided for the 2016 Retail Non-Household price control. Our intention is that each of these submissions should be compiled and assured in accordance with the Final Assurance Plan that we will publish in March 2016, subject to any revisions made to that plan in March Our aim is that through continued delivery of our outcomes for customers, providing good quality information and following appropriate assurance processes during this period, we can rebuild Ofwat s trust and confidence in us and move out of the prescribed category. To provide Ofwat with confidence that we have followed our published Assurance Plan, we propose to provide a statement from our Board to confirm that the plan has been followed for production of the Annual Performance Report. This statement would incorporate the views of our external assurance providers on the quality of the data, and confirmation that they are not aware of any material errors in the published data. We will demonstrate our achievement of our AMP6 performance commitments through information reported in our Annual Performance Report and made available on our website. Demonstrating achievement of our commitments should provide additional comfort to stakeholders that the forward-looking statements made in our additional assurance statement were appropriate. 12

13 Assurance Plan Timetable for Assurance Plan and Activities The following table illustrates the timetable for the finalisation and publication of our Assurance Plan and the external reporting and assurance activities we propose to undertake in 2016 and Nov Risks, Strengths and Weaknesses presented to BW Challenge Panel 2015 Dec 11 th Publication of our consultation on Risks, Strengths and Weaknesses Jan 2016 Engagement meetings with stakeholders and customer survey Feb 19 th Publication of draft assurance plan, views invited from stakeholders Mar 1 st Draft Assurance Plan presented to BW Challenge Panel March Methodology Audits of Outcome Performance Measures Mar 31 st Publication of final Assurance Plan for 2015/16 reporting Apr-May Audits of BW Annual Performance Report 15 th Jul BW publishes Annual Performance Report, including statement of compliance with assurance plan Autumn Ofwat publishes review of monitoring framework for Autumn Further stakeholder engagement on risks, strengths and weaknesses 2016 Spring 2017 BW publication of 2017/18 tariffs with Board statement. Engagement with Ofwat and stakeholders on assurance plan for 2016/17 APR July 2017 Publication of APR, including statement of compliance with assurance plan Autumn Ofwat review of monitoring framework potential movement to targeted 2017 status 24 th 13

14 Assurance Plan 2016 Annex 1 Details of Risk Assessment Our risk assessment was set out in our consultation on risks, strengths and weaknesses, published on our website at This exercise calculated for each key data item the probability of mis-reporting, after taking into account the control framework we have in place, and what the impact of mis-reporting would be on customers, our reputation, financial incentives and industry comparisons. Based on those assessments, each item was classified as low, medium, high or critical risk. The categorisation is shown in Figure 2. Figure 2 - results of risk assessment Impact Metric Score Unplanned Customer Minutes Lost Asset Reliability Population at Risk from Asset Failure Security of Supply Index Mean Zonal Compliance Negative Water Quality Contacts Service Incentive Mechanism Negative Billing Contacts Wholesale totex Return on capital Customer tariffs Regulatory Accounts DWI Data EA Data Hosepipe ban frequency Meter Penetration Customer Satisfaction Value for Money Ease of Contact Credit Rating GSS payments Complaints Developer Services Info Staff Satisfaction Pumping Efficiency Per Capita Consumption Leakage Waste Disposal Compliance Customers in Water Poverty Stakeholder survey Total Carbon Emissions None None Raw Water Quality of Sources Biodiversity Index Training Matrix Compliance None None None None None None Key: Probability Metric Score Low Medium High Critical 14

15 Assurance Plan 2016 Annex 2 Customer Survey Results 15

16 Assurance Plan

17 Assurance Plan

18 Assurance Plan 2016 Annex 3 Assurance activities

19 Assurance Plan 2016 Report 2015/16 Annual Performance Report 2015/16 Regulatory Accounts 2017/18 Wholesale and Retail Charges and Charges Scheme Guaranteed Standard Scheme payments for 2015/16 Data on performance on New Connections, reported via Water UK Complaints reporting to CCWater, reported quarterly Water quality information provided to the Drinking Water Inspectorate Information provided to the Environment Agency Internal peer review Executive Management review External Assurance BWCP review Board review 19

20 Assurance Plan 2016 Annex 4 Atkins Assurance Methodology AMP6 Regulatory Reporting Assurance BRISTOL WATER Assurance Methodology 25 November

21 Notice This document and its contents have been prepared and are intended solely for s information and use in relation to Atkins methodology for Regulatory Reporting Assurance services. Atkins Limited assumes no responsibility to any other party in respect of or arising out of or in connection with this document and/or its contents. This document has pages including covers. Document history Job number: Document ref: Revision Purpose description Originated Checked Reviewed Authorised Date V1 For discussion JPA KH KH JPA 25/11/15 Atkins

22 Table of contents Chapter Pages 1. Atkins Technical Assurance Team Reporting and Assurance Background Role and impact of the Company Monitoring Framework Role of the Reporter in the assurance framework Approach Audit/review methodology Contacts Ensuring commitment and managing disputes Quality Assurance System Independence and confidentiality Contingency plans Assurance team Assurance team 34 Appendix A A.1. A.2. A.3. A.4. Jonathan Archer Reporter 38 Kathryn Hickey Project Manager and Lead Reviewer 45 Doug Hunt Specialist Auditor 48 Julian Jacobs Senior Reviewer 51 Atkins

23 1. Atkins Technical Assurance Team Atkins is one of the world's leading design, engineering and project management consultancies with approximately 18,000 employees worldwide. There are currently four divisions in the UK and Europe Aerospace, Defence, Security and Technology; Design and Engineering; Transportation; and Water, Ground and Environment). The structure and size of our company means we have access to specialists from other sectors, which will enable us to put our investigations into a wider context. Atkins has an excellent track-record of working with water companies and regulators alike, giving us the well-rounded and in-depth understanding necessary to deliver technical assurance services. Atkins has been involved in the Reporter and Technical Assurance roles for the water industry since privatisation and has refined its approach to audit work over that period. With the recent changes in assurance requirements and the regulatory landscape, our approach has changed accordingly. We now offer a focused, material risk based approach that we consider provides the type of service that and its stakeholders require. As an AMP5 or current external Assurance Provider for Severn Trent Water, Yorkshire Water, Northumbrian Water, Affinity Water and Portsmouth Water we have a detailed understanding of the evolving regulatory environment and we have first-hand experience of working with Customer Challenge Groups and other stakeholders. Atkins technical assurance teams specialise in regulatory reporting work and have experience within both the water industry in England and Wales, and with other utilities and other countries. This breadth gives us the necessary confidence and ability to form opinions and comment on all aspects of the businesses that we see. Our teams are separated from the mainstream consulting business, ensuring complete confidentiality from other parts of the consultancy. This means that we can offer the strength and backing of a large business without compromising the confidential nature of our relationship. The regulated water industry in England and Wales is undergoing significant change and assurance approaches must evolve accordingly. PR14 saw a step change in the engagement of companies with their customers including through Customer Challenge Groups (CCGs). CCG s had an independent chair and representatives from key stakeholders, such as CCWater, Environment Agency (EA), Drinking Water Inspectorate (DWI), Natural England, Local Government Associations, Citizens Advice Bureau and the independent advisory panels. Key responsibilities relating to PR14 set out in IN12/05 included: testing that has adequately understood and addressed its customers priorities and needs; challenging whether the plan would deliver the right outcomes and levels of service at a price customers are willing to pay; assuring Ofwat on how well the Company had engaged with its customers and highlighting any concerns; and reviewing how well the Company delivers its plan and challenging its response to any service failure. This valuable function has evolved into an ongoing challenge role through AMP6. Our assurance team includes two former Reporters who were intimately involved in the CCG process at a WASC and a WOC. Atkins 23

24 Company business plans were assessed by Ofwat using a risk based review and there were financial and reputational benefits for those assessed as enhanced. Ofwat sign-posted its intentions at an early stage and has subsequently categorised a prescribed within its assurance framework, the most intrusive level of assurance. 2. Reporting and Assurance 2.1. Background Between AMP1 and the start of AMP5, companies were required to submit an annual return to Ofwat (June Return) which included both financial and performance data. For Ofwat replaced the June Return with the requirement for companies to publish: A risk and compliance statement setting out how they have complied with relevant statutory and regulatory obligations; Performance against a range of key indicators; and Annual regulatory accounts setting out their financial performance. For onwards, companies will be required to publish an Annual Performance Report (APR) that will include four sections: Financial; Price Control/Additional Segmental; Performance; and Additional Information. In preparing the APR, companies must follow Ofwat s revised Regulatory Accounting Guidelines (RAGs). In June 2015, Ofwat published the Company Monitoring Framework, which sets out Ofwat s approach to overseeing the quality of information companies provide to customers. Companies have been classified as self-assurance, targeted or prescribed. The actions that Ofwat requires companies to take depend on the classification., are within the prescribed category. As a prescribed company must: carry out a risks, strengths and weaknesses exercise with stakeholders to highlight the areas of assurance that have the most significance or are of greatest risk to customers; for the areas identified, incorporate independent external assurance as part of its assurance plans; publish all of its assurance plans on its website ahead of reporting; and engage with stakeholders before it publishes final assurance plans, so that stakeholders (including Ofwat) can gain confidence and, if necessary, provide comments that the company would need to respond to, before confirming the final plans. Ofwat require the plan to be clear how will undertake the work described above, including how it will embed the results in its business, and engage with its stakeholders. The plan should also make clear what work will do to move out of the 'prescribed' category, and how it will assess its progress. Ofwat s framework suggests the Ofgem Data Assurance Guidance for Electricity and Gas Network Companies (DAG) as a possible approach to assurance plans. This gives guidance on risk assessment and possible data assurance activities proportionate to the risk(s) identified. All of the above has significantly altered the nature and focus of assurance work. It requires a much greater awareness of the potential risks and consequences of each piece of information that is being Atkins 24

25 generated and submitted to Ofwat, and proportionately requires a risk based, focused approach to assurance Role and impact of the Company Monitoring Framework The Ofwat Company Monitoring Framework is just that, a framework that companies will need to flesh out in detail and relate to their own governance, business and stakeholder engagement processes. The Company in developing its response to the Ofwat framework will need to have absolute clarity on its definition and interpretation of the risk management issues, both quantitative and qualitative. This needs to be combined with the business understanding of where its strengths and weaknesses are in relation to managing the differing levels of risk in relation to the reliability and accuracy of data, information processing and performance assessment. In our view one of the key issues is as to whether there is sufficient and consistent business understanding of regulatory performance, the impact and probability of the associated risks and stakeholder expectations, which may vary depending on both business unit and stakeholder interest. There should already be in place within companies detailed business processes related to the monitoring and reporting of regulatory and associated business performance. The existence of a documented process and associated methodology, however, does not in itself guarantee that the risk is being appropriately managed and companies will need to demonstrate and evidence the internal and where appropriate external assurance undertaken within a well-defined governance framework. Apart from the reputational issues related to being placed in one of the three categories, the internal and external assurance required for directors to sign-off, for example compliance with licence conditions and regulatory performance outcomes and commitments should be in place and where there is uncertainty caveated relative to the level of risk associated with that uncertainty. Applying the risk management framework that Ofgem have prescribed will provide a good starting point for assessing current strengths and weaknesses, the relative priority and in identifying plans to address any issues arising. As such there is a requirement at all levels within the business to ensure consistency of definition and interpretation. It needs also to be looked at in the context of the retail/wholesale separation and the future developments in terms of upstream competition thinking. Ultimately the goal is that any assurance plan to meet the Ofwat framework is embedded within and draws upon business-as-usual and that there is clarity in respect of responsibility and accountability within a RACI type matrix. There is an inevitable churn in respect of business roles and the regulatory environment that needs to be reflected in an ongoing training plan. In addition ongoing monitoring and reporting of data issues and performance should, where material, be an integral part of corporate governance risk management and stakeholder engagement. This may be as much a qualitative process as quantitative. Ofwat previously asked companies to grade the reliability and accuracy of data through confidence grades. This specific requirement went with the passing of June Returns, but inherent in the Ofgem risk framework in the understanding of impact and probability is the underpinning data. Whilst the Ofwat refocusing of its regulatory framework on outcomes and associated performance has been welcomed by all stakeholders and the industry itself, the danger is Atkins 25

26 that we perhaps we do not focus sufficiently on the inputs driving the outcomes and performance. Having a fully documented business process and methodology is just a starter, it does not in itself evidence that what is being reported is accurate and reliable. Methodology should not follow data and thus become self-fulfilling in the governance process. The methodology does not in such circumstances lead to the challenge of underpinning assumptions. The onus is now on to build trust and confidence through providing reliable, accurate and complete data and submissions that have been both internally and externally independently challenged. Our approach to assurance auditing seeks to stress test the systems, procedures and data outputs by identifying potential areas where the business is most vulnerable to error or inaccuracy, and then use a series of techniques to identify any issues with processes or failures to implement processes within those areas Role of the Reporter in the assurance framework The role of the Reporter or Independent Assurance Provider is implicit in Ofwat s vision for the water sector in England and Wales as one where customers, the environment and wider society have trust and confidence in vital public water and wastewater services. The Board is accountable for the quality and transparency of information reported. The assurance process is designed to reduce the risk of inaccurate or incomplete reporting, where independent or third party assurance is an integral part of a company s wider assurance framework. The role of the Independent Assurance Provider is to test the methodologies and procedures used for reporting to ensure they are robust and to check that data has been prepared in accordance with the stated approach. The philosophy of an assurance framework is based upon the aim of providing both the company (the Board and others) and external stakeholders confidence that the information presented is reliable, accurate and complete. This should consider the holistic application of processes and procedures by which presents information for both internal management and external publication. A fundamental change during AMP5 was the requirement for water company Boards to signoff regulatory submissions and information published to stakeholders. In our experience, this led most companies to apply the same governance structures for technical assurance that had previously been applied to financial audits with direct reporting to the Audit Committee. In response to changes in the regulatory framework, our approach to assurance has moved from prescribed reporting against detailed Ofwat guidelines to a risk-based approach with focus on areas assessed to be higher risk in agreement with the water company. Linked to the requirement for Board sign-off, our philosophy is based around "no surprises. We achieve this through careful planning and programming, making sure the right people (Atkins and ) are in the right place at the right time and ensuring everyone knows what is expected of them through clear and relevant communication. Overall, we work within the spirit of continuous improvement. We seek to highlight any areas of material concern and to resolve issues at an early stage, whether this is by helping to improve the submission to the necessary standard or by agreeing a form of words and an action plan that provides the comfort that issues have been resolved satisfactorily. Atkins 26

27 Our history of providing independent technical assurance underpins our assurance philosophy, by allowing us to draw upon the lessons learnt from our work across the industry. We can pull together best practice with a good understanding of materiality and the wider industry context. We have defined what we consider to be the philosophy of an assurance framework in six areas as set out below: 1. Purpose: The objectives of any given assurance activity within the wider framework should be clearly defined so that all those involved, both internal and external, are working towards the same goal. For example, an objective may be to move Bristol Water from Ofwat s prescribed category to the self-assurance category. 2. Risk based: The framework should be based around risk and be fit for purpose in striking an appropriate balance between activity and benefit. The assessment of risk should consider both probability and impact and also the effect of any mitigation on this. Assurance activity should then be targeted based on the assessment. 3. Continuous improvement: Continuous improvement should be a key part of the assurance framework. For example, through cataloguing lessons learned to both address any issues that arise and share best practice. 4. Value adding: The assurance framework should deliver benefit. Rather than being reactive and compliance-driven, the framework should be proactive and be used to improve performance. 5. Holistic: The framework should deliver a programme of integrated activity that considers the end-to-end processes. This needs to link different assurance activities. For example, co-ordinating audits carried out by different third parties (technical and financial auditors) and linking internal and external activities. 6. Communication: Clear, relevant communication is an essential element of an assurance framework; both written and verbal communication. This includes, for example, audit plans with clearly defined roles and responsibilities. 3. Approach 3.1. Audit/review methodology Our overall audit approach is outlined in the diagram below: Atkins 27

28 Audit programme and plans: Overall, we consider the assurance requirements as a programme rather than discrete submissions. In planning this, we will draw upon lessons learned from previous submissions and schedule activities to align with key milestones in the assurance process, for example Board sign-off and publication dates. Each submission would be supported by an audit plan including details of team members and auditees and the location, duration and dates of each audit meeting. We anticipate this would be shared with with a summary made available for the CCG and other stakeholders as required, for example in the form of a dashboard indicating the assessment of risk. We will hold an opening meeting for each submission to confirm agreement to the audit plan and introduce the audit team. The team will be selected depending on the scope of the submission for review. We will draw on experts from the wider Atkins business as required for any potential ad-hoc submissions. Audit methodology: Our overall approach is based around two stage audits where: 1. Stage 1 Methodology review: assessing whether the Company s methodology aligns with appropriate guidance, reporting requirements, licence conditions or industry practice and whether appropriate checks, controls and explanatory documents exist. 2. Stage 2 Data review: considering whether processes/procedures are applied as indicated, carrying out data trailing to source documents and to ensure alignment/ consistency with the reported number. This stage also involves data sampling to confirm rigour of process application, checks and controls and appropriateness of confidence grades assigned to reported information. We will use both types of audit depending on the scope of the review. For example, Stage 1 (Methodology) audits for the annual performance report may be undertaken at the same time as the data review. However, we have found that for PR assurance it is useful to separate Atkins 28

29 out the process and data reviews early engagement on the process elements helps to build confidence in the business plan teams that the approach being taken is robust. We would seek to tailor our approach to other specific regulatory submissions, on a case by case basis and in full agreement with ; however, in all cases the approach outlined below will form the basis of the review process. Audit/review notification, records and reports: Prior to each audit/review we will provide the reviewee with a Notification of Review (NoR) at least 10 days prior to the agreed meeting date. In this we will set out the purpose of the review, the specific objectives, the information we will seek to cover and information we would anticipate being provided prior to the meeting. The agenda for each audit is explicitly linked back to the audit plan and the risks and issues that were identified at that stage. We will conclude each audit by summarising issues and agreed follow-up actions. We will confirm these by issued within one working day. We record findings from each audit meeting in a Summary of Review document (SoR), which includes actions, issues and recommendations. SoRs are issued to the company within 5-10 days (to be agreed) and form the basis of the audit report issued to. We anticipate the style and content will be stipulated by and tailored depending on the audience/stakeholder requirements, with a focus on: compliance with reporting requirements/guidance; our opinion on the accuracy and reliability of data; adequacy of procedures and methodology; and material areas of concern. From the report year onwards, companies will produce an Annual Performance Report that will include details on AMP6 Performance Commitments. We recognise that our audit report on the Outcome Delivery Incentives may therefore be provided to Ofwat. We will reflect this in the style and language we will use. As Reporter, Jonathan Archer will attend the audit sub-committee and executive committee meetings to present the audit reports supported by other team members as required. This will focus on material areas of concern. We will collate details of issues raised in an Issues Log, differentiated as: compliance query; compliance action; and recommendation and categorised as Red, Amber or Green. We will maintain this in conjunction with. Compliance issues will be reported as part of the audit report. Our final output will be a separate assurance report aimed at the Board to enable them to be aware of any material issues uncovered and ultimately sign-off the submission understanding that any material issues have been disclosed to them. The final contents of each Assurance Reports would be agreed with the company regulation team to ensure that it meets the specific needs of Board. We aim to be in a position, after undertaking the audits, to be able to conclude in an assurance statement that for the areas we assured: at a component level the various teams compiling the documents and information had an understanding of and were meeting their obligations; the Company has sufficient processes and internal systems of control to fully meet its obligations; Atkins 29

30 the Company s explanations of where and why it cannot fulfil its obligations are soundly based; the Company has sufficient processes and internal systems in place to identify, manage and review its risks; and the Company s explanations of how it will manage and/or mitigate material or potentially material risks are soundly based. We have a tried and tested format to our assurance reports and we envisage the contents to be similar to the following for each assurance report: i. Assurance Statement aimed at the Board we would produce a succinct statement summarising our approach, findings and overall view of the company submission ii. Introduction to report iii. Summary of high level findings iv. Comment on overall approach and key process issues v. Comment by Reporting Area including relevant ODIs Reporting Processes vi. Comment by Reporting Area including relevant ODIs Data As indicated the detailed structure of the reports would be agreed with and will clearly be a function of the scope of the assurance being provided (i.e. annual performance review, PR19 etc.). The supporting evidence is key to the assurance process; we will document the methods used in our analysis of the data (e.g. sampling, statistical analysis) and base our procedures on robust methods that have been developed over the years. We are currently assurance providers for a number of other companies, as such, we have opportunity to examine approaches taken by other companies which will enable cross-comparison thereby ensuring that our approach at is consistent with that in other companies Contacts The primary contacts between the Reporter team and will be: Contact in respect of contractual issues, disputes, reporting to the Board and CCG etc Name: Jonathan Archer Position: Regulation Director, Business Analysis Reporter Address: Atkins Limited, Woodcote Grove, Ashley Road, Epsom, Surrey. KT18 5BW Tel: +44 (0) E Mail: jonathan.archer@atkinsglobal.com Contact in respect of organisation of audit programme and overall day-to-day Project Management Name: Kathryn Hickey Position: Principal Consultant Lead Reviewer and Project Manager Address: The Hub, 500 Park Avenue, Aztec West, Almondsbury, Bristol BS32 4RZ Tel: +44 (0) E Mail: kathryn.hickey@atkinsglobal.com Atkins 30

31 3.3. Ensuring commitment and managing disputes Ensuring commitment We consider that our audit planning approach will encourage commitment from Bristol Water; this will be achieved by agreeing timetables and milestones which both sides will work to meeting in order to ensure no surprises. This no surprises philosophy is reflected in the detailed audit planning approach which we have developed and refined over many years which: Clearly sets out the agenda for each audit meeting, including which subjects we expect to cover, our expectations in terms information and data availability, and the anticipated duration of the meeting. Provides rapid feedback over key findings and outstanding data/evidence from the audit. Takes account of the materiality of issues. Provides an early sighting of the likely assurance statement and reports, which ensures there are no surprises when time is short nearer to submission. Our Project Manager, Kathryn Hickey, will work in close collaboration with the counterpart to make the process of organising the audit programme as efficient and painless as possible. Our desire to add value where appropriate/possible is important; the dialogue that this creates can only be positive and we have found that this builds confidence and buy-in to the assurance process. That said, our role is to provide the Board with confidence in the company s reported performance and robust challenge must always be at the heart of all that we do. Whilst we consider that our approach encourages commitment it is also incumbent on Bristol Water to ensure that their staff are appropriately briefed on the importance of the assurance process. Assurance should not be seen by staff as a chore or a tick box exercise, but a mechanism whereby the company is able to understand how it is performing and, in doing so, build trust and confidence in its operations in customers, regulators, shareholders and other stakeholders Dispute management The type of issues which we may have differences of opinion with could for example cover data quality and availability or how the Company has interpreted the Reporting Requirements or Final Determination definition or where there are times when we consider that the Company has not provided sufficient evidence to support its approach for reporting. Where they arise, we would in the first case aim for the auditor to resolve the issue directly with the relevant auditee(s) through further discussion. The objective of the 24hr and SAF are to raise any material issues early in the process such that additional discussions, where required, can be undertaken. If the reviewer/reviewee reach an impasse, we would expect our reviewer to inform the Reporter who would then seek to discuss the matter with the Regulation Team or the Director of Regulation or appropriate contact at Atkins 31

32 in order to resolve the differences, depending on the materiality of the issue. In our experience, many differences of opinion are quickly resolved through this method as they are rarely showstoppers. It is not surprising (and should be encouraged) that an individual reviewer and/or reviewee takes their area of responsibility very seriously but often these differences of opinion are not significant or material in the context of the entire annual submission and can be resolved by more senior parties who are not so close to the detail and can take more of an overview. Where differences of opinion cannot be resolved and/or may be considered material, we would expect to agree to a form of words in our reports that all parties find acceptable. We have often stated our opinion in our assurance commentaries and, where the Company desires, have included their comments directly below, verbatim, to ensure that an appropriate right of reply can be given and documented. Our role is to expose and challenge to ensure that the company and Board are aware of any material issues that may affect the submission Quality Assurance System Atkins operates a mature fully integrated risk-based Business Management System (BMS) which incorporates Quality, Safety and Environmental systems. The BMS is compliant with the following Standards: ISO 9001: 2008 Quality Management; ISO 14001: 2004 Environmental Management; OHSAS 18001: 1999 Occupational H&S Management; and The TickIT Guide Issue 5. A quarterly Management Review ensures commitment to the BMS and management awareness of legal and contractual compliance issues, audit results, trends, nonconformance and progress against set objectives Independence and confidentiality We will maintain independence from by ensuring that none of our team undertakes any other consultancy work for throughout the length of the contract. The regulatory assurance team will operate within a Chinese Wall principle and will maintain complete independence from any other parts of Atkins that may be undertaking other services for. Confidentiality is one of the six principles of auditing set out in ISO19011:2011, which states: Auditors should exercise discretion in the use and protection of information acquired in the course of their duties. Audit information should not be used inappropriately for personal gain by the auditor or the audit client, or in a manner detrimental to the legitimate interests of the auditee. This concept includes the proper handling of sensitive or confidential information. Atkins 32

33 All team members are required to work in accordance with confidentiality procedures. The processes and procedures in place to ensure confidentiality of data is achieved are detailed below: Confidentiality agreements: All team members will be required to sign confidentiality agreements, specific to this engagement. These require that Atkins employees, external bodies and individuals receiving confidential information in whatever form keep such information strictly confidential. Such information will not be disclosed to a third party, without written consent unless this is required by law. When Atkins is required by law or authorised by contractual commitments to release confidential information, the client will be notified of the information provided. Furthermore information about the client obtained from sources other than the client will be treated as confidential. Documents and records: All documentation is stored electronically on the Atkins system so that it is backed up and retrievable. All records are treated confidentially and are stored on a secure server with controlled access. Paper records are stored in locked filing cabinets and disposed of as confidential waste if required. Information assurance: All staff are required to comply with the requirements of Atkins Group policies, directives, procedures and guidance on Information Assurance. This covers confidentiality, integrity and availability of information: Confidentiality - Information is accessible only to those authorised to have access. Integrity - The accuracy and completeness of information and processing methods is safeguarded. Access - Information and associated assets is provided to authorised users in accordance with agreed service levels, and risks to availability are assessed and managed. Authenticity - Records identifying the genuine source of information need to be preserved in such a way so that any later claim of not being the correct originator cannot be denied (nonrepudiation). Information Assurance Responsibilities for Staff: Staff must not store, extract, communicate or copy information in a way that may compromise the confidentiality, integrity, availability or intellectual property of the information. Project Managers ensure that records are stored and disposed of in accordance with relevant legal, contractual and operational requirements. Business Conduct Policy: This states that employees have a duty to treat all information about Atkins, its clients, business partners and suppliers as confidential, unless it is in the public domain. Pronet: We will make use of Atkins secure corporate file sharing website, Pronet, which the Project Manager can grant access on an individual level. Controls can be applied at workspace, folder and individual document level to control access for each member of the workspace to ensure confidentiality of data. The system keeps a full history for each item stored, detailing when it was created, modified, read and deleted to provide a robust audit trail. Atkins 33

34 3.6. Contingency plans Our team is led by individuals that have had long careers with Atkins in part due to our commitment to retaining high quality and motivated people. Staff continuity is a high priority for Atkins both internally and within projects. Our approach to project management is designed to mitigate the risk of staff being unavailable for specific work. We will ensure that staff have the availability to complete the project before they are assigned the work. Our core team providing the majority of audits and assurance will manage their work load to ensure availability. We are experienced at responding to the uneven workloads and occasional short notice of regulatory reporting regimes and company needs. One example of where we have done this is where companies have been on quarterly reporting to Ofwat, which we have audited at some stage for most of our companies. Our project management-led approach ensures that: we have a reliable and effective planning tool from where we can see at a glance everyone s commitments and can quickly identify availability/make changes to the programme if needed; we plan for the unexpected: - we do not overload any individual auditor, which gives additional flexibility if needed whilst also ensuring that we maintain the quality of our output; - generally we do not programme audits or commitments for Mondays and Fridays. This eases travel and leaves time to write up the audits. But, this also means there is some spare capacity to take account of unexpected extra audits or meetings; - our proposed team has been selected to map to their areas of significant experience however the team are also able to cover other audit areas outside of their core experience should one auditor s availability change at short notice; - we are able to bring in additional resources outside of the stated core team if required and our within our additional pool of resources means at two individuals can cover nearly every technical area; - in the unlikely event that no members of the wider audit team are available, our Reporter, Jonathan Archer, is capable of stepping in and auditing almost any area; - should our Reporter be unavailable to report to the audit sub-committee or Executive Team, either Doug Hunt (currently Reporter for Affinity Water) or the proposed Project Manager and Lead Reviewer Kathryn Hickey are well experienced in performing this role. Where none of the above prove appropriate (which is very rare) and the time before submission is getting very tight, we have previously carried out audits or meetings remotely, based on electronic copies of supporting information and telephone or video conferencing discussions with the client. Our preference if for face to face reviews but in certain circumstances technology does allow for effective remote audits. In summary, our structure and approach lends itself to responding to resource needs at short notice, providing a call-off service and working to regulatory timescales. 4. Assurance team 4.1. Assurance team We have a small, focussed and highly experienced assurance team with Jonathan Archer in the Reporter role. Kathryn Hickey is the Lead Reviewer and Atkins Project Manager. We Atkins 34

35 have provided pen portraits and detailed CVs (Appendix A) for the annual assurance team. We have indicated in the figure below those staff that we anticipate will be required to meet our understanding of the likely requirements. Atkins has a wide resource pool from which it can select additional experts as and when required. Jonathan Archer Reporter Jonathan has 38 years of professional experience in water utility operations management, project execution and regulatory reporting. He has been Lead Technical Assurance Provider for Severn Trent Water for the reporter/assurance audits at ten UK water companies. Applying his training in management and strategic planning, he has been involved in asset management planning and in preparation of and reporting on business plans and annual returns since privatisation of the water industry in England and Wales. As Regulation Director with Atkins, he is able to provide pragmatic input, based upon a balance of both sharp end operational and consulting experience. He has applied this experience to a range of projects such as a study on serviceability indicators for Ofwat and the DWI, regulatory advice for Railtrack, membership of an UKWIR steering group and technical due diligence projects. Kathryn Hickey Project Manager and Lead Reviewer Kathryn has more than 16 years of water industry experience including environmental and economic regulation; asset management, process engineering and innovation. She has an in Atkins 35

36 depth understanding of the water industry regulatory framework acquired through her experience of preparing and auditing regulatory submissions including the Ofwat annual return (2005 onwards) and the water industry price reviews of 2004, 2009 and Since joining Atkins in 2010, Kathryn has undertaken Reporter/assurance audits (annual return and periodic review) at both Severn Trent and South West Water. Kathryn s recent experience in addition to audit includes project co-ordinator for the UKWIR Chemicals Investigation Programme (ongoing) and technical expert for the UKWIR project Can totex be reduced by optimising maintenance procedures. She is a PRINCE2 Practitioner with a proven track record in delivering projects for a range of clients. Doug Hunt Specialist Reviewer Doug is a Chartered Engineer with over 16 years post doctorate experience in regulation, engineering, asset management and environmental assessment in the water and environment sector. His particular technical specialisms cover infrastructure planning, capital maintenance, water management and water resources/water balance. He has experience of developing asset management plans within both the water and rail industry, which includes optimisation modelling, statistical/empirical evaluation of deterioration models and management of large asset data sets. He has extensive experience of regulation in the U.K. water industry, which includes an appointment as a named Reporter to the economic regulator, and lead technical Assurance provider to the Boards of three water companies. Doug also has experience with due diligence processes and expert witness work. Doug is proficient in a wide range of numerical tools, which includes statistical modelling as well as numerous types of water management and process modelling methods. Julian Jacobs Specialist Reviewer Julian is a billing and customer management specialist with over 15 years experience in the private and not for profit sector. He is also an accomplished project manager and auditor. Julian joined Atkins following completion of his MSc in Water Management at Cranfield University. As a consultant, he has managed more than 20 UK and international regulatory and audit projects and worked on due diligence assignments. His skills and experience cover many aspects relating to the management of water utilities, including customer services, IT investments, marketing, economic regulation, internal governance, procurement and value for money assessments. Atkins 36

37 Appendix A. CVs OF ANNUAL ASSURANCE TEAM Atkins 37

38 A.1. Jonathan Archer Reporter Jonathan Archer Regulation Director Profile Key Skills Profession Jonathan Archer has 38 years of professional experience in water utility operations management, execution of projects, technical assurance provision and regulatory reporting. Applying his training in management and strategic planning, Jonathan has been involved in asset management planning and in both the preparation of and reporting on and auditing business plans and annual returns since privatisation of the England and Wales water industry in With the change to assurance from Reporting, Jonathan adapted his audit approach to reflect the governance requirements of Audit Committees and Customer Challenge Groups and aligned with IIA approaches. He is currently Lead Assurance Provider for Severn Trent Water and carries our assurance reviews for Yorkshire, Affinity and Portsmouth Water. As Regulation Director in Atkins Water, Ground and Environment, he is able to provide clients with pragmatic input, based upon a balance of both sharp end operational and consulting experience. He also provides training and guidance to Atkins staff working with water industry clients in the nuances of the shift towards outcomes and risk based, customer centric imperatives of the Final Determinations for AMP6. Experience with Atkins March Present Lead Technical Assurance Provider for Severn Trent Water (and CCG) - auditing and reporting on annual and periodic performance reviews to Ofwat Senior operations management of water supply companies, reporting and presenting to and advising Board of Directors, as well as day to day management of all planning, engineering and operations functions. Technical Due Diligence on acquisition/refinancing water companies; transforming complex technical information into digestible and unambiguous reports and presentations Review of wide ranging technical documentation to ensure robustness and fitness for purpose. Adviser to Railtrack in the preparation for new regulatory audit scrutiny Benchmarking of international capital maintenance best practice for a multinational water operator Liaison with water industry regulators (Ofwat, DWI, EA) Asset management plan preparation in England and Northern Ireland Budget preparation and control in a 100 million turnover company Water distribution management, rehabilitation, strategic planning and design Water resources, treatment, distribution, sewerage, river engineering Leader of multi-disciplined/national teams in Sri Lanka and Latvia Liaison with funding agencies, clients and customer s representatives Civil Engineer Joined Atkins March 2000 Nationality British Qualifications BSc (Hons) Civil Engineering (University of Newcastle upon Tyne) 1977 Diploma in Management Studies (Trent Polytechnic, Nottingham) 1987 Professional Associations Member of Institution of Civil Engineers 1981 Member of Chartered Institution of Water & Environmental Management 1987 Atkins 38

39 2011-Present ASSURANCE PROVIDER: SEVERN TRENT WATER: Assurance provider responsible for reporting to the Severn Trent Water Audit Committee (and Customer Challenge Group for PR14) on Severn Trent Water s annual return reporting and business plan submissions. Reviewing and identifying areas of risk associated with company performance against the 2009 Business Plan and Final Determination, transfer pricing returns, access pricing and principal statement submissions. With the evolution of the regulatory process, this work focused on the governance and assurance of the Company s submission to its regulators REPORTER: SEVERN TRENT WATER: Named Reporter responsible for reporting to the economic regulator of the UK water industry, Ofwat, on Severn Trent Water s annual return reporting of performance against the 2004 and 2009 Business (Asset Management) Plan and Final Determination, for the PR09 Business Plan Submission, Asset Management Plan, transfer pricing returns, access pricing and principal statement submissions. With the evolution of the regulatory process, this work focused on the governance and assurance of the Company s submission to its regulators Present SEMD CERTIFIER: SEVERN TRENT WATER: Security and Emergencies Direction Certifier responsible for annual reporting to Defra regarding the water and sewerage company s performance and assets against the Direction Present REVIEWER: AFFINITY WATER: Project Director and technical and quality review of the Reporter s (Assurer s) report concerning the Affinity Water s business plan and annual return submissions to Ofwat. REVIEWER: YORKSHIRE WATER: Project Director and technical and quality review of the Reporter s (or assurance provider s) report concerning the Yorkshire Water annual return Present REVIEWER: PORTSMOUTH WATER: Project Director and technical and quality review of the Reporter s (Assurer s) report concerning the Portsmouth Water s business plan and annual return submissions to Ofwat Present TECHNICAL ADVISER: SUTTON AND EAST SURREY WATER: Adviser to the executive management team at Sutton and East Surrey water on the preparation of the PR14 business plan submission to Ofwat. ASSURANCE PROVIDER: NORTHUMBRIAN WATER: Responsible for reporting through an Assurance Coordinator to the Northumbrian Water Audit Committee (and Customer Challenge Group for PR14) on technical aspects of Northumbrian Water s annual business plan submissions CORPORATE ASSURANCE PROVIDER: eight2o (THAMES WATER): Internal review and challenge of risk management, incentivisation and efficiency elements of partnership contractual arrangements. PROJECT DIRECTOR/REVIEWER: NORTHERN IRELAND WATER: Reviewer of advice provided to the NIW Board on how to response the NI Utility Regulator s Draft Determination for the PC13 submission. TECHNICAL ADVISER: NORTHERN IRELAND WATER: Assisting NIW in preparing its response documentation on implementation plans and timeframes to the NI Utility Regulator s response to the capital maintenance elements of the NIW PC13 submission PROJECT DIRECTOR: REGULATION SUPERVISORY BUREAU, ABU DHABI: Project Director and technical audit responsibilities on an assignment to determine the capital efficiency of the implementation of the asset management plans of water supply utilities of Abu Dhabi SEMD CERTIFIER: VEOLIA WATER CENTRAL: Security and Emergencies Direction Certifier responsible for annual reporting to Defra regarding the water company s performance and assets against the Direction PROJECT DIRECTOR: ESCOSA, SOUTH AUSTRALIA: Review of capital and operating efficiency of South Australia Water on behalf of the economic regulator, considering the robustness of forecast expenditure in the context of previous and Atkins 39

40 current levels of expenditure and performance. PROJECT DIRECTOR: ENVIRONMENT AGENCY: Review of Head Quarters Flood and Coastal Risk Management functions for readiness to go for accreditation to PAS55. Reporting to EA management on the strength and weaknesses of existing FCRM asset management systems and providing an indication of the journey needed to achieve ISO55000 compliance. PROJECT DIRECTOR: UKWIR: Project Director and reviewer on assignment for UKWIR researching the potential way forward for Ofwat s Service Incentive Mechanism (SIM) covering literature searches and interviews with representatives of other sectors and the development of options that satisfied the diverse requirements of the regulator and the water companies REVIEWER: CONFIDENTIAL CLIENT, UK: Review of processes and methodologies applied by major UK water and sewerage service provider in reporting on progress and performance on fulfilling its regulatory contract with Ofwat and asset management plans under the 2004 Final Determination during the AMP4 period. The review developed into a review of the governance and assurance processes surrounding the reporting of performance to the economic regulator. PROJECT MANAGER: SUTTON AND EAST SURREY WATER: Reviewed and updated the Company s access pricing documentation in line with the current regulatory requirement. PROJECT DIRECTOR: IPART (NSW WATER REGULATOR), AUSTRALIA: Capital and operational efficiency review of Sydney Water on behalf of the water regulator. PROJECT DIRECTOR: INDEPENDENT PRICING AND REGULATORY TRIBUNAL, AUSTRALIA: Project Director and review of technical audit assignment to determine the capital efficiency of the implementation of the asset management plans of water supply utilities of New South Wales. TECHNICAL ADVISER: SUTTON AND EAST SURREY WATER: Drafting of Access Code documentation to align with revised legislation. PROJECT DIRECTOR: CONFIDENTIAL CLIENT, USA: Project Director and review of a technical due diligence project on a water utility in west coast USA on behalf of deal financier and in conjunction with the private water company endeavoring to take the water concession, reviewing the asset management and associated risks. REVIEWER: YORKSHIRE WATER: Technical and quality review of the Reporter s report to Ofwat concerning the Yorkshire Water June Return submission. PROJECT DIRECTOR: OFWAT: Project Director and overall technical review of a horizontal audit and data gathering exercise for the economic regulator of the England and Wales water industry, Ofwat. The project considered the approaches taken by the ten water and sewerage companies to asset management through drainage area planning PROJECT DIRECTOR: CONFIDENTIAL CLIENT, UK: Project Director and review of technical due diligence project on water only company in the southeast of England. REVIEWER: CONFIDENTIAL CLIENT, UK: Review of processes and methodologies applied by major UK water and sewerage service provider in reporting on progress and performance on fulfilling its regulatory contract with Ofwat under the 2004 Final Determination during the AMP4 period. REVIEWER: CONFIDENTIAL CLIENT, UK: Confidential review of water and sewerage company s approach to the PR09 Business Plan (asset management plan) submission. Providing the company Board with an independent perspective and lessons learnt report TECHNICAL ADVISER, OMAN: Technical adviser assessing tender documentation and assisting in the interview of shortlisted co-management contractors for water and sewerage utility services in the Sultanate of Oman. REVIEWER: CONFIDENTIAL CLIENT, UK: Confidential review of water and sewerage company s approach to the PR09 Business Plan (asset management plan) submission. Providing the company Board with an independent perspective and lessons learnt report PROJECT DIRECTOR: INDEPENDENT PRICING AND REGULATORY TRIBUNAL NSW AUSTRALIA, STRATEGIC MANAGEMENT OVERVIEW AND REVIEW OF OPERATING AND CAPITAL EXPENDITURE OF STATE WATER CORPORATION 2009: Project Director and review of operational and capital expenditure activity associated with Atkins 40

41 environmental drivers PROJECT DIRECTOR: CONFIDENTIAL CLIENT, UK: Review of documentation associated with potential misreporting of customer service information included in the annual return to the regulator. PROJECT DIRECTOR: CONFIDENTIAL CLIENT, EXPERT SERVICES RELATING TO REGULATION OF DG6, BILLING CONTACTS: Provided expert advice, reviewed and audited a re-categorisation exercise undertaken by a Company on its DG6 contacts. PROJECT DIRECTOR: CONFIDENTIAL CLIENT, UK: Review of a Water Only Company s draft Business Plan (asset management plan) to ensure that it followed and addressed all regulatory requirements of the Business Plan PROJECT MANAGER: NORTHUMBRIAN WATER: Internal and external asset management benchmarking study of Northumbrian Water and Suez business units in USA, France, Spain and Germany, considering asset life modeling and probability of failure as well as data for investment planning and network renewal. SENIOR AUDITOR: BRISTOL WATER: Audit of supply demand balance and associated submissions of water only company AUDITOR: ACCESS PRICING AND ACCESS CODES: Responsible for auditing the indicative access prices and access codes for Anglian Water and Three Valleys Water, and the Access Code for Severn Trent Water as part of the Water Industry s move to competition in the large user market. PROJECT MANAGER: CONFIDENTIAL CLIENTS, UK: Project Manager and Principal Consultant on four separate confidential assignments providing Technical Due Diligence on the potential purchase and/or restructuring of two major UK water and sewerage companies and a water only company (on three occasions). Specific responsibilities for capital expenditure, operations and asset management as well as general regulatory issues and overall project management. LEAD AUDITOR FOR THE PERIODIC REVIEW (PR04) SUBMISSION OF ANGLIAN WATER: Part of the Reporter s Team reporting on the PR04 asset management plan submission of Anglian Water. Had responsibility for the overall coordination, auditing and reporting of Anglian Water s submissions for the Periodic Review. Particular inputs were on the supply demand balance and serviceability/capital maintenance in the main submission (draft and final) as well as the ancillary submissions of capital maintenance method statement, special factors and the early start programme. SENIOR AUDITOR FOR THE PERIODIC REVIEW (PR04) SUBMISSION OF THAMES WATER: Part of the Reporter s Team reporting on the PR04 submission of Thames Water. Particular inputs were on the water supply aspects of the quality section of the main submission (draft and final) and the logging up/logging down items. TECHNICAL ADVISER: UNITED WATER, USA: Technical Advisor, translating the application of experiences in the UK water industry regarding levels of service indicators to drive capital programming. LEAD AUDITOR FOR THE ANNUAL RETURNS TO THE UK ECONOMIC REGULATOR (OFWAT) FROM ANGLIAN WATER: Part of the Reporter s team reporting on the company s annual returns to Ofwat during most of the AMP3 period (2001 to date). Had responsibility for the overall coordination, auditing and reporting on Anglian Water s submissions. Particular inputs were returns concerning leakage and the supply demand balance. Based upon the understanding gained of all of the pertinent issues, services were also provided to the senior management of the company in providing an independent assessment of progress being made on achieving target leakage levels. Other inputs included auditing and reporting on operating costs, activity levels, metering and activity costing analysis. TECHNICAL AUDITOR FOR THE ANNUAL REPORT TO THE UK ECONOMIC REGULATOR (OFWAT) ON THE PERFORMANCE OF ANGLIAN WATER WITH RESPECT TO TRANSFER PRICING ISSUES: As part of the Reporter s function, we provided support to the company s auditors in preparing a report on the transfer pricing issues in compliance with Regulatory Accounting Guideline 5.03 and reported to Ofwat. Over the period 2001 to date, this work involved commenting upon the content and application of existing procedures and any significant new procedures introduced by the company for the allocation or award of process engineering work. A list of the transactions entered into during the year was assessed to confirm consistency with the regulatory accounts. A sample of the more significant transactions were selected for detailed testing of the relevant documentation to ensure compliance with RAG 5.03 and the company s stated procedures. Atkins 41

42 TECHNICAL AUDITOR FOR THE ANGLIAN WATER PRINCIPAL STATEMENT TO THE UK ECONOMIC REGULATOR (OFWAT): Over the period 2001 to date, as part of the Reporter s function, we audited the population and volume data submitted by the company in its Principal Statement which sets out the schedule of tariffs for the following financial year. This involved reconciliation with information from the previous June Return submissions, Final Determinations (where applicable) and assessing the robustness of any changes made due to changed circumstances or the availability of further information. AUDITOR FOR THE ANGLIAN WATER PROCUREMENT PLAN, REPORTING TO THE UK ECONOMIC REGULATOR (OFWAT): In response to its financial restructuring in 2002, Ofwat imposed operating license changes and required Anglian Water to submit a Procurement Plan. As part of the Reporter s function, we scrutinised and gave opinions on the Plan contents. Particular outputs were to confirm the completeness of the Plan, ensuring that it satisfied the requirements of the revised operating license requirements and to confirm that the Plan is workable, applicable and comprehensive. We scrutinized, described and gave our opinion of the procedures, systems, documentation and record keeping used for the procurement of services and monitoring the delivery of those services. We confirmed that the company s procurement process complied with the law as described in its operating license, ensure that no existing contractor had any competitive advantage over other prospective contractors and facilitated the development of a fully competitive market. We investigated whether the contractual arrangements already in place or to be made ensure that the company retains full control of all its assets and its ability to discharge its functions and set out the requirement that the contractor must supply to Anglian Water Services the information required by the company. The update of this review has been ongoing from 2003 to date. AUDITOR FOR THE ANNUAL RETURNS TO THE UK ECONOMIC REGULATOR (OFWAT) FROM THAMES WATER: Responsible for auditing and reporting on part of Thames Water s submissions. Particular inputs were returns concerning customer service performance, water service activity, operating expenditure and capital investment including depreciation charges and the addition of fixed assets. LEAD AUDITOR FOR THE ANNUAL RETURNS TO THE UK ECONOMIC REGULATOR (OFWAT) FROM THREE VALLEYS WATER: Took over this role in 2004 following a change in the named Reporter. Since then have been involved in the Ofwat query process as part of the JR04 and PR04 processes, draft determination representation and principal statement. TECHNICAL ADVISER: YORKSHIRE ELECTRICITY: Technical Adviser to Scottish water industry representatives on technical audit prior to the implementation of a regulatory regime in Scotland. PROJECT MANAGER: DRINKING WATER INSPECTORATE: Project Management and expert input on a review of drinking water quality aspects of serviceability, relating to infrastructure and non infrastructure assets. This was the precursor to the Capital Maintenance Common Framework. PROJECT MANAGER: RAILTRACK: Project Manager and Senior Auditor on assignment to advise staff at Railtrack in the preparation of robust definitions, procedures, audit trails and presentation of information to the Reporter acting on behalf of the Office of Rail Regulation. SENIOR AUDITOR: MID KENT WATER: Senior Auditor, responsible for auditing and reporting on Mid Kent s June Return submissions to Ofwat on capital and operating expenditure, investment and depreciation on asset additions. SENIOR AUDITOR: THREE VALLEYS WATER: Senior Auditor, responsible for auditing and reporting on aspects of Three Valleys Water s water service performance submissions in their June Returns to Ofwat. Experience Prior to current work at Atkins SAUR UK Group SENIOR CONSULTANT: DYNAMCO LIMITED: Providing expert input and direction of Project Managers on a range of asset management, water supply, distribution, resources and related projects. Strategic asset management planning for Bristol Water, including the preparation of narrative and tabular input to the capital expenditure components of the Business Plan Interpretation of financial and engineering information to determine the potential for development of the water business through private sector involvement with existing public sector operations. Recruitment, training and development of staff HEAD OF DEVELOPMENT: DYNAMCO LIMITED: Dual role of reviewing and optimising the 35 million capital investment Atkins 42

43 plan for, as well as the development of the group consultancy to provide a commercially efficient service to its group client base while expanding business both in the UK and overseas HEAD OF OPERATIONS: MID SOUTHERN WATER: Managing over 200 operations staff to produce and supply drinking water to customers, ensuring quality levels and standards of supply/distribution meet criteria set down by the regulatory authorities. Specific responsibility for Capital Investment, asset management, mains rehabilitation Mechanical and Electrical, Transport, Water Quality, Leakage and for Area Managers covering distribution, supply and Customer Service functions. Managed responses to water quality incidents resulting from failures of water treatment and distribution assets and organised investigations and planned remedial measures to avoid recurrence. Reporting to both Managing Director and the Board of Directors. Represented the Company with director responsibilities on the Council of the Water Companies Association, as well as serving on the WCA Technical Committee. Liaison with regulatory authorities, MP s, local councils and pressure groups. Media contact in response to high profile operational incidents RESIDENT PROJECT MANAGER: LATVIA: Resident Project Manager for the Daugavpils Water Supply and sewerage Feasibility Study in Latvia. Data collection, investigations, studies and recommendations about the asset management planning of water supply and sewerage systems for a city of 130,000 population as well as environmental, organisational and funding issues. The study, financed by EC Phare, led into a project financed by the World Bank (IBRD) and donor countries, and much of the management role involved direct liaison to ensure the credibility of the project INVESTMENT MANAGER: BRISTOL WATER: Responsible for planning and control of the 28m capital programme. The department dealt with infrastructure renewal, extension and rehabilitation, minor works and consultant liaison. Established standardised project cost estimation, monitoring and control procedures. Worked on Strategic Business Plan (AMP2) involving capital planning, the development of asset databases and upgrading of the GIS facility WS ATKINS CONSULTANTS SENIOR WATER ENGINEER: NORTHERN IRELAND: Advised the Department of the Environment, Northern Ireland, based in Belfast, working on the preparation of the Asset Management Plan (NIAMP1) and the associated Asset Valuation Study. Dealt with the planning and coordination of the submission as a whole, as well as the water supply service in particular. Preparing the methodology and procedures for the collection, manipulation and interpretation for data required to produce a robust Asset Management Plan. Specific technical inputs were to distribution extension, reinforcement and rehabilitation components. Assisted in setting up a regional office in Belfast, with particular responsibility for Quality Assurance ENGINEERING ADVISER: SRI LANKA: Engineering Adviser to the Urban Development Authority of Sri Lanka. Coordinating and advising Client, Resident Engineers and Contractors on the management and implementation of a major erage scheme in the centre of Colombo. Also staffed and supervised a local team for the design of subsequent drainage schemes PROJECT MANAGER: YORKSHIRE WATER: For the reassessment of resource design yield for Yorkshire Water. Led a team updating the hydrological database, from which design yields and system operating rules are calculated. PROJECT MANAGER: THAMES WATER: For Oxford/Didcot Water Trunk Main network analysis, reservoir storage and planning study to investigate the most appropriate means of supplying water from the Cleeve source works to the Didcot, Oxford and Banbury areas. Identification of feasible options, carrying out financial appraisal using both capital and operating costs and studying integration of proposed works into existing distribution systems PROJECT MANAGER: NORTH WEST WATER: Zone studies involving network analysis and water quality surveys of Crewe and north-west Cheshire. Part of a rehabilitation investment strategy study of the North West Water Distribution Zonal Planning Project. PROJECT MANAGER: NORTH WEST WATER: Hydraulic analysis of supply system to heavily industrialised Widnes area Atkins 43

44 for North West Water. GROUP ENGINEER: EASTBOURNE WATER: Technical inputs to management study levels of service indicator reporting for Eastbourne Water ASSISTANT PROJECT MANAGER: EAST ANGLIAN, MID SUSSEX AND WEST KENT WATER: Assisting the Project Manager in overall co-ordination, preparation of methodology and subsequent documentation for East Anglian, Mid Sussex and West Kent Water Companies Asset Management Plans. Specific responsibility for analysis of underground assets (trunk mains, distribution systems and communication pipes) for Mid Sussex and West Kent, assessing the capital costs of achieving target levels of service SEVERN TRENT WATER AUTHORITY ASSISTANT SYSTEM ENGINEER: STRATEGIC PLANNING: Responsible for creation of distribution system model for strategic planning of water supply to Nottingham and surrounding area. Identified specific operational management information needs and created PC based management information systems ASSISTANT ENGINEER: NETWORK ANALYSIS: Detailed distribution network analysis and system optimisation of operational water supply zones and pumping stations ASSISTANT ENGINEER: RIVER ENGINEERING: Feasibility study, design and supervision of land drainage and flood protection schemes, pumping installations and bridges, including financial appraisal and hydraulic analysis. Preparation of compensation claims against the National Coal Board. Liaison with conservancy organisations, MAFF, local councils and other utilities TAYLOR WOODROW CONTRACTORS ENGINEER: CONSTRUCTION SETTING-OUT: Site work on major water reclamation works on Tyneside NORTHUMBRIAN WATER AUTHORITY ASSISTANT RESIDENT ENGINEER: CONSTRUCTION SUPERVISION: Site work for Tees Division and Tyne Division on the construction of water supply trunk mains and interceptor er tunnel. Atkins 44

45 A.2. Kathryn Hickey Project Manager and Lead Reviewer Kathryn Hickey Senior Consultant Profile Key Experience Profession Kathryn has more than 16 years of water industry experience including environmental and economic regulation; asset management, process engineering and innovation. She has an in depth understanding of the water industry regulatory framework acquired through her experience of preparing and auditing water industry regulatory submissions including Ofwat annual returns and business plans submitted as part of the 2004, 2009 and 2014 price reviews. Combining her technical and regulatory knowledge, Kathryn has provided expertise on a range of projects including for water companies, regulators and UKWIR. She is also a PRINCE2 Practitioner with a proven track record in delivering projects for a range of clients. Audit and assurance Economic and environmental regulation Due Diligence Asset Management Regulatory submissions Project management Quality Management Systems (QMS) Water and waste water treatment processes Sewer flooding Experience with Atkins (January present) Senior Consultant Joined Atkins January 2010 Nationality British Qualifications MRes Innovative Manufacturing, Cranfield University BSc (Hons) Environmental Science, University of Stirling (2i) Internal Quality Auditor (ISO9001) Certificate in Management PRINCE2 Practitioner Professional Associations MCIWEM application in progress Audit and Assurance Annual Regulatory Return 2015, Severn Trent Water External audit and assurance of company methodology and data for AMP5 KPIs and AMP6 Performance Commitments including wastewater serviceability, sewer flooding, sludge disposal and Guaranteed Standards Scheme (GSS) Annual Regulatory Return 2014, Severn Trent Water External audit and assurance of key performance indicators for sewerage serviceability, sewer flooding; Guaranteed Standards Scheme (GSS) events; capital programme delivery and Water Industry Act 1991 compliance 2014 Periodic Review, Severn Trent Water External audit and assurance of company submissions to Ofwat including August submission and Final Business Plan 2011 June Return, Severn Trent Water Auditor on Reporter team responsible for reviewing low pressure (DG2), interruptions to supply (DG3) and sewer flooding (DG5) elements of the Company s 2011 June Return and associated Guaranteed Standards Scheme (GSS) events 2010 June Return, South West Water Responsible for auditing sewer flooding, wastewater serviceability and customer Atkins 45

46 service elements of the return 2010 June Return, Severn Trent Water Audited the sewer flooding elements of the Company s 2010 June Return including Guaranteed Standards Scheme (GSS) events Technical expertise Chemical Investigations Programme, UKWIR Project manager on project to provide logistical support and co-ordination of the delivery phase of the industry wide Chemical Investigations Programme for Can totex be reduced by optimising maintenance procedures, UKWIR Technical expert on study to evaluate the options for reducing total expenditure by optimising maintenance procedures using the example of wastewater pumps. Review of 2014 Annual Return data, Confidential Client Technical expert for review of sewer flooding data at a UK water and sewerage company Review of PR14, Confidential Client Project manager and technical expert for a review of the processes for managing the PR14 Business Plan at a large UK water and sewerage company. Update of framework for wastewater planning, UKWIR Technical expert on project to deliver of guidance for implementation of the Drainage Strategy Framework by water and sewerage companies during AMP6 and a review and update of the wastewater supply demand methodology (based on the 2007 UKWIR report Long Term Least Cost Planning for Wastewater Supply Demand ). Regulatory review, Confidential Client Reviewed the processes and methodologies applied by a major UK water and sewerage service provider in reporting on progress and performance on fulfilling its regulatory contract with Ofwat under the 2004 Final Determination. The review incorporated the governance and assurance processes surrounding the reporting of performance to Ofwat. Sewer flooding review, Confidential Client Analysis of evidence to support information reported on the sewer flooding register at a UK water and sewerage company A risk based approach to sewer flooding, UKWIR Project managed the development of methodology to put in place a riskbased approach for investment prioritisation to alleviate the risk of flooding from the sewerage system Review of sewerage planning and drainage are plans, Ofwat Technical expert on review of how the water companies in England and Wales carry out sewerage planning and develop drainage area plans (DAPs). Included development of a stylised industry process and identification of good practice. Valuation of Environment Agency operational assets for flood risk management, Environment Agency Responsible for project to deliver methodology and tools for valuation of Environment Agency flood risk management assets Review of PR09, Confidential Client Review of approach to the PR09 Business Plan submission by a major UK water and sewerage service provider. Provided the company Board with an independent perspective and lessons learnt report. Due Diligence Project Hudson Technical Due Diligence, Confidential Client Project managed the delivery of a technical due diligence for a potential investor in a major UK water and sewerage company Project Blake Technical Due Diligence, Confidential Client Reviewed the customer service aspects of a UK water company as part of a due diligence carried out on behalf of a potential investor. Experience with Anglian Water (October 1998 December 2009) Senior Economic Regulation Analyst PR09 Business Plan Project managed company sewer flooding submission for PR09 business plan. Led work on scenario modelling using cost benefit assessment to define strategy for both internal and external flooding. Prepared submissions for external audit and Board sign off. Assessed compliance with Ofwat requirements and consistency of submissions with company key messages. June Return Project managed annual June Return submissions to Ofwat for 2005 to Developed the system for managing the submission for certification under the ISO9001 standard for quality management. Used the ISO9001 framework to drive continuous improvement by implementing performance monitoring; providing training where required;; defining clear roles and responsibilities and introducing a formal lessons learned and review stage to the process. Internal audit Internal auditor for regulatory data and cross business processes to ensure compliance with legal and regulatory standards. Audited both financial and non-financial elements of the June Return and monitored delivery of improvements required. Technical Expert Provided technical expertise on the economic regulation framework including delivery of company-wide training programme on regulation, competition and company strategy. Atkins 46

47 Senior Process Engineer Designed and commissioned water and wastewater treatment plants for a range of sites within the Anglian Water region. Projects involved a range of applications including packaged treatment plants for first time sewerage schemes and chemical phosphorus removal. Strategic Environmental Scientist Negotiated and costed the wastewater quality submission for the 2004 Periodic Review. Project managed the water quality elements of the submission. Liaised with environmental regulators (Environment Agency and Natural England) to agree consent standards and validated proposed standards using environmental modelling. Innovation Technologist Project managed pilot trials of novel water and wastewater treatment technologies. Developed proposals and assessed benefits of competing technologies. Projects included testing of membranes to generate boiler feed water from sewage treatment works effluent, use of membrane bioreactors for secondary wastewater treatment, novel technologies for the removal of iron and manganese from groundwater; enhancing biological nutrient removal and optimising odour control. Selected Other Experience MRes Thesis Evaluation of the effectiveness of novel filter media for the removal of disinfection by products from swimming pool water. Awarded best student prize. Atkins 47

48 A.3. Doug Hunt Specialist Auditor Doug Hunt Principal Engineer Strategy, Assessment and Management Profile Key Experience Profession Doug is a Chartered Engineer with over 16 years post doctorate experience in regulation, engineering, asset management and environmental assessment in the water and environment sector. His particular technical specialisms cover infrastructure planning, capital maintenance, water management and water resources/water balance. He has experience of developing asset management plans within both the water and rail industry, which includes optimisation modelling, statistical/empirical evaluation of deterioration models and management of large asset data sets. He has extensive experience of regulation in the U.K. water industry, which includes an appointment as a named Reporter to the economic regulator, and lead technical Assurance provider to the Boards of three water companies. Doug also has experience with due diligence processes and expert witness work. Doug is proficient in a wide range of numerical tools, which includes statistical modelling as well as numerous types of water management and process modelling methods. Strategic assessment and business planning for the water industry Engineering asset management planning (water and rail infrastructure) Environmental assessment associated with water bodies (surface and groundwater) Economic analysis of water related issues. Water management and engineering (surface and groundwater) Impact assessment and water supply evaluation Environmental Engineer Joined Atkins 1998 Nationality British Qualifications PhD Rock Mechanics, Hydrology and Hydrogeology (University Of Nottingham) BEng (Hons) Environmental Engineering (University Of Nottingham) Chartered Engineer Professional Associations Member of the Chartered Institution of Water and Environmental Management Member of the International Association of Hydrogeologists Countries worked in Sierra Leone, Nigeria, Liberia, Sri Lanka, Australia and UK Selected Experience Atkins 48

49 RISK BASED PLANNING AND DECISION MAKING TOOLS FOR WATER RESOURCES PLANNING (UKWIR). Project manager and technical lead for two projects that will be used as the basis for the new water resources planning guidelines in WRMP19. These will introduce new risk based methods and the ability to use more complex investment decision making tools to the industry, and will provide the framework that replaced the current Economics of Balancing Supply and demand. NAMED ASSURANCE REPORTER (AFFINITY AND PORTSMOUTH WATER). Assurance lead (and named Reporter) responsible for the provision of assurance to the Board, Audit Committee and Customer Challenge Group on regulatory submissions to the U.K. economic regulator (Ofwat) for all aspects of regulatory reporting by two water companies, including the U.K. s largest water only company. This includes annual data returns (June Returns) and 5 year Business Plans. THAMES WATER BUSINESS PLAN PROCESS REVIEW Reporting to Strategy and Regulation on the effectiveness of and potential improvements to the management and governance processes used in the delivery of the PR14 Business Plan. NI WATER BUSINESS PLANNING EXTERNAL REVIEWER Advisor to the Board and regulation team on the effectiveness of the business systems and evaluation processes being used to develop the PC15 Business Plan, covering costs, programme development and efficiency proposals. REVIEWER AND ADVISOR FOR CAPITAL MAINTENANCE AND CAPITAL PROGRAMME DEVELOPMENT, SEVERN TRENT AND BRISTOL WATER. Technical reviewer and advisor to the Board on the asset management systems and capital maintenance modelling systems developed for the 2014 Business Plan submission. This included making recommendations on data management, information and modelling systems, as well as forecasting and business as usual application to asset management and investment. SOUTHERN WATER AMP 5 WATER RESOURCE MANAGEMENT WORK PACK. Technical lead for the overall development of the new system of water resource management for Southern Water within its AMP5 programme, with links to asset management, operations and drought planning. This included new approaches to investment optimisation, stochastic water resource modelling and integration of water resource management and drought planning processes. STATISTICAL AND MODELLING LEAD; VARIOUS WATER INDUSTRY OPERATIONAL AND REGULATORY MODELS. Technical lead for a number of projects involving the monitoring, modelling and application of various aspects of asset performance and customer behaviour, from demand forecasting to water balance/night use assessment and forecasting of infrastructure performance. THAMES WATER COUNTERS CREEK SURFACE WATER MANAGEMENT STUDY. Technical specialist evaluating the potential sustainable surface water management measures that could be used to alleviate sewer flooding within the Counters Creek catchment. TECHINCAL DUE DILLIGENCE FOR THE PURCHASE OF A WATER COMPANY. Project manager for the technical due diligence acting on behalf of the purchases of a large Water only Company in England, primarily reviewing the strength of capital programme and efficiency commitments. DEVELOPMENT OF ASSET PERFORMANCE REPORTING SYSTEMS, NETWORK RAIL. Lead assessor and manager of follow on development work to improve the reporting systems used by Network Rail to monitor and report on the condition and performance of its assets. This covered written procedures, systems and training of staff. UK WATER INDUSTRY RESEARCH; A RISK BASED APPROACH TO SEWER FLOODING Specialist risk and regulatory advisor developing a consistent, water industry wide, risk based approach to the evaluation and regulatory management of the flooding of properties from sewers. SPECIALIST AUDITOR, PR09 BUSINESS PLANS. Provided specialist regulatory audit skills for the 5th Periodic Review in the U.K. water industry, concentrating on company proposals for asset management and water resource planning. PROGRAMME MANAGER SOUTHERN WATER RESOURCE INVESTIGATION PROGRAMME. Programme manager for a number of large water resource and Habitats Directive, projects for Southern Water. The programme covered 9 Atkins 49

50 projects with approximately 6m worth of fees. SOUTHERN WATER MAJOR RESOURCE DEVELOPMENT - CENTRAL AREA. Project Manager for a 1.5m investigation and design project that resulted in the successful EIA and promotion of a 20Ml/d run of river abstraction source and storage reservoir within a proposed National Park area. This major multi-disciplinary investigation project covered all relevant outline design, water resource assessments, supply and demand evaluations and options appraisal for all potential water resource schemes in the Central (Sussex) area. INSTITUTIONAL REFORM IN THE WATER SECTOR, ANAMBRA STATE, NIGERIA. This project involved evaluation and institutional reform of both the state and private water sector within Anambra state, concerting on reform of the overall framework, rather than just organisational reform of one single entity. DEVELOPMENT OF AN INFRASTUCTURE CHARGING METHODOLOGY FOR NI RIVERS AGENCY. Carried out an international review potential developer charging methods and acted as the main author of the methodology that is now used for charging developers for their impact on downstream drainage systems within Northern Ireland. PROJECT MANAGER DEVELOPING A RISK BASED APPROACH TO ANGLIAN WATER S SUPPLY DEMAND SUBMISSION. Led a team working with AW staff to develop a new approach to assessing the balance between the supply and demand of water based on integrated, Monte-Carlo based risk and uncertainty. SPECIALIST AUDITOR AMP4 WATER RESOURCES PLAN AND AMP4 BUSINESS PLANS. Provided specialist inputs to the Reporter teams for two companies to audit the water resource plans and supply/demand balance assessments for the AMP4 submissions. QUARTERLY RESOURCES SCHEME DEVELOPMENT REVIEW FOR THAMES WATER. Carried out technical reviews of Thames Water s programme to implement new water supply schemes in order to meet its water supply planning requirements in London over the course of 3 years. REVIEW AND CERTIFICATION OF WATER COMPANIES EMERGENCY PLANNING PROCESSES (SEMD). Acted as the main assessor and co-ordinator working in conjunction with a risk assessment specialist in order to review the state of readiness for large-scale emergencies in three water companies. AMP4 ASSET MANAGEMENT AND WATER RESOURCE SUPPORT (VARIOUS). Carried out a number of projects developing asset management systems for U.K. water companies, covering a number of aspects of capital programme development and most aspects of water resource planning during the PR04 planning cycle. TECHNICAL DUE DILLIGANCE BRITISH ENERGY. Worked on behalf of the investors to review the capital programme and outputs proposed in British Energy s re-listing case business plan. T STATISTICAL MODELLER FOR PRIVATE SEWER SYSTEMS. Provided statistical modelling to a high profile project for DEFRA (reporting to the Minister) to investigate the extent and condition of private sewer systems across the U.K. TECHNICAL DUE DILIGENCE FOR THE TAKEOVER OF A WATER AND SEWERAGE COMPANY. Acted as the principal investigator and assessor of the capital works programme in terms of cost, engineering requirements and regulatory obligations for the buyer of a water and sewerage company (WASC). AUDITOR, WATER COMPANY ANNUAL PERFORMANCE REVIEWS. Audited aspects of water companies information returns to the Water Regulator (Ofwat) over a number of years, covering all aspects of the June Return, from leakage and population estimates through to key customer service tables and financial returns relating to allocation of operational and capital expenditure. AUDITOR, AMP3 PERIODIC REVIEW. Carried out technical audits of the bases and assumptions used by three U.K. water companies to calculate the capital programme investment needs over the period Atkins 50

51 A.4. Julian Jacobs Senior Reviewer Julian JACOBS Associate Strategic Advisory Services Profile Key Experience Profession Julian is a billing and customer management specialist with over 15 years experience in the private and not for profit sector. He is also an accomplished project manager and auditor. Julian joined Atkins following completion of his MSc in Water Management at Cranfield University. As a consultant, he has managed more than 20 UK and international regulatory and audit projects and worked on due diligence assignments. His skills and experience cover many aspects relating to the management of water utilities, including customer services, IT investments, marketing, economic regulation, internal governance, procurement and value for money assessments. Julian is also a fluent French and Spanish speaker. Billing and customer management processes and systems Regulation and audit of water utilities Procurement performance and assessment of value for money Institutional and organisational strengthening Project management Cross company water utility comparisons Commercial and technical due diligence International experience in Australia, United Arab Emirates, France, Bolivia, Kenya and Tanzania. Project Manager Joined Atkins 2007 Nationality British Qualifications Prince2 Foundation (Project management qualification) Monitoring & Audit of Procurement Performance, Crown Agents, 2011 Essential Auditing Skills, Institute of Internal Auditors, 2008 MSc Water Management, Cranfield University, UK, 2007 Marketing and Resources Certificate, Open University, 2000 Professional Associations MCIWEM Experience with Atkins YORKSHIRE REPORTER/ASSURANCE TEAM: From 2011 to 2015, Senior Auditor responsible for reviewing the Company s performance and promoting improvements. Audit areas cover customer services, metering, water efficiency, properties and population data. As part of the Company s Business Plan submission, reviewed and challenged the Company s Management & General submission including IT Business Plan, Customer Services, Business Continuity, Health & Safety and Facilities investment in excess of 170m. SEVERN TRENT WATER REPORTER/ASSURANCE TEAM: From 2007 to 2015, Senior Auditor challenging the Company s regulatory data and submissions to Ofwat, the UK water regulator. Review of IT and Customer Services investment plans for 2010 and 2015 and auditing annual reporting, cost benefit analysis and customer research. NORTHUMBRIAN WATER EXTERNAL ASSURANCE TEAM: Senior Auditor responsible for reviewing the Company s Atkins 51