Our draft five-year plan 2015 – 2020 2 | Our draft five-year plan 2015 - 2020 Introduction This document provides a summary of the work we believe is required between 2015 and 2020 to ensure we continue to provide high-quality water and sewerage services across London and the Thames Valley. In early December we will, like all water companies, present our business plan to the economic regulator, Ofwat. They will examine our plan to ensure it reflects the needs of customers, and then set limits for the bills we will charge in that five-year period. Before we finalise and submit that plan we want to know what you think. So whether you are a domestic or business customer, whether you are replying individually or on behalf of an organisation, we hope you will read this document and let us have your comments. The last year has provided ample reminders of the range of challenges we can face in maintaining high-quality services. After the driest two-year period on record there was a real threat of drought in spring 2012, with the need to impose restrictions on water use. This was followed immediately by many months of particularly heavy rain, with last year ending up as one of the wettest years ever in our region and leading to instances of sewer flooding. We set out to provide the best possible service to our customers, and to protect the environment, regardless of the weather. To do that, with appropriate allowance for population growth, we have a number of key tasks. They include maintaining and extending our existing pipe networks and treatment plants, planning carefully to store and conserve water, encouraging customers to use water wisely, and ensuring our sewers can cope as well as possible with heavy rainfall. In drawing up our plans for the next five years, we have been acutely aware of the need for our bills to be affordable. We know, of course, that the economic downturn continues to impact household budgets. On top of this, our sewerage charges will rise to fund the building of the Thames Tideway Tunnel. This is a huge sewer project that has to be delivered. Without it, our region’s biggest river will carry on being polluted at frequent intervals, which is why the Government has included the tunnel in the National Infrastructure Plan. To see how our plans could affect your bill, please see pages 28 and 29. The requirement to fund the building of the Thames Tideway Tunnel has given extra emphasis to the need to keep down the costs of everything else we do. This has included getting the best possible performance out of our existing equipment, while maintaining at least the current levels of service. But we have also challenged ourselves to think differently about how we approach our work. By making efficiencies and through innovation, we have found less expensive ways to maintain or improve some of our services. This has included exploring new solutions like sustainable drainage and maximising the energy we generate from sewage. Through these and other measures we can maintain our overall performance, and improve it where necessary, while keeping bills as low as possible. We intend to continue to take that approach in delivering the five-year plan outlined in the following pages. This document begins by outlining some of the main things customers have told us in our recent discussions, and how we have developed these into our long-term objectives. We go on to outline our proposals in eight main areas of our work. In each case, we give more detail on feedback we have received, challenges we face and our recent performance. We then describe our five-year plan in more detail, indicating the potential cost impact on an average bill. Our draft five-year plan 2015 - 2020 | 3 The final section focuses on how much our proposals could cost in total – we currently estimate an average bill of £370 by 2019/2020. See pages 28 and 29 for the additional impact of the Thames Tideway Tunnel. (Please note that if you receive only sewerage services from us, then only our wastewater plans will affect your bill. The total will depend on your water supply company’s spending plans.) Although this document concentrates on the 2015 to 2020 period covered by our business plan, we also need to show you how that fits into our long-term thinking. Pages 30 and 31 give an overview of our strategy for the next 25 years. You can find more details on this, and on the separate consultation we are running on how we ensure we have enough water over this longer period, at www. thameswater.co.uk/consultations. If you would like a paper copy of either document, please call 0808 178 9055. We will publish our final plan – informed by the views you give us in this consultation – near the end of the year, when we present it to Ofwat. Thank you for your interest in our proposals. Page 32 describes a variety of ways by which you can let us know your views. Martin Baggs Chief Executive Officer Our plan for 2015 to 2020 includes the following key targets: • Reduce leakage from around 665 million litres per day to 620. • Install 500,000 water meters, increasing the proportion of homes with a meter from 30 per cent to 56 per cent. • Strive to achieve 100 per cent compliance with stringent UK and European drinking water quality standards. • Encourage and assist customers to use water wisely, reducing the average amount each person uses per day from 161 to 153 litres. • Meet all project milestones for the Thames Tideway Tunnel, due for completion in 2023. • Aim for treated effluent to be 100 per cent compliance with licence conditions at our sewage works. • Remove 2,100 homes from the risk of sewer flooding. • Aim to meet government targets to reduce carbon emissions to 34 per cent below our 1990 level. • Introduce a social tariff to help households who most struggle to pay. • Improve our IT systems to enable online account management. 4 | Our draft five-year plan 2015 - 2020 Our research so far Since forming our last five-year plan, we have carried out a wide range of research to find out what customers really value about our service and what they think we should focus on. Among our studies, we have held focus groups, online and telephone surveys and in-depth interviews. In total, we have spoken to more than 10,000 customers, plus stakeholders and business customers. In putting together the current document, we have been sharing our proposals with an independent Customer Challenge Group. Members include regulators and representatives from business, local government and such organisations as Age UK and the Consumer Council for Water. Their role is to ensure that the views of our customers have been properly considered by scrutinising our plans and how we have formed them. We’ve spoken to thousands of people to find out their views. Here are some of the things they’ve told us: The group hold regular meetings to check the detail of our proposals – including our long-term strategy – and that we are testing these against customers’ views. We are the UK’s largest water and sewerage company. As part of our work we: 2.6 billion litres • of drinking water per day to 9 million Treat and supply people. Its quality is among the best in the UK. For each of the last five years, at least 99.97 per cent of samples have met stringent UK and European standards. • • Transport and treat of sewage per day for 14 million people. Maintain a pipe network that, if laid end to end, would stretch more than three times round the world. • Create enough during the sewage treatment process to meet about 12 per cent of our own power needs. • Answer 4 billion litres renewable energy 4 million calls and 575,000 written enquiries per year. Water is an essential service, and the resource must be treated with care to safeguard both people and the environment. Bicester Swindon Customers are at the sharp end and know what they are talking about. Swindon Our draft five-year plan 2015 - 2020 | 5 You need to inspire your customers to work with you to reduce water use. Install more meters, because no one will save water if they pay a flat rate. Wallingford People want to be able to contact Thames Water effortlessly. Amersham Banbury Islington Creating renewable energy is important for the future. Stevenage Hackney Oxford Slough LONDON Dartford Reading Newbury We cannot be pumping raw sewage into the Thames … every time there is a downpour. Brentford Basingstoke Reigate Leakage is the only thing you really need to focus on. Slough Godalming Reducing leaks and responding quickly when they are reported … will help to alleviate future water shortages. The elephant in the room … [is] the critical influence of a growing population. Newbury Reading Thames Water provides water and sewerage services in this area Thames Water provides sewerage but not water services in this area 6 | Our draft five-year plan 2015 - 2020 Our performance against our current five-year plan (2010-2015) Target Maintain our pipes, pumping stations and treatment works On track to Progress by 31 March 2013 deliver target by 31 March 2015? Balance water use with available supply Maintain leakage at a cost-effective level We have invested heavily to maintain the condition of our pipes and equipment. We have invested in new sources of water, reduced leakage and promoted the wise use of water by our customers. We have met our leakage target for seven years running. Promote the wise use of water by our customers We are on track to achieve our water efficiency target of 22 million litres per day, and our target to save 6 million litres per day through metering. Maintain excellent levels of water quality The quality of the water we supply remains among the best in the industry. Maintain our sewers, pumping stations and sewage treatment works ? The performance of our sewers has temporarily declined, resulting in more homes being flooded by our sewers. We are working hard to resolve this problem. Provide additional treatment capacity to cope with an additional 146,000 people So far we made improvements to our sewage works to enable them to treat sewage from an extra 100,000 people. Reduce the number of properties on the ‘high risk’ flooding register by 497 We have reduced the overall size of the register by 200 properties and have plans in place to make the remaining net reduction of 300 properties. Reduce odour from nine sewage works So far we have made improvements at six works. Original targets have since been superseded by a new Ofwat measure that focuses on improving customer satisfaction. We have reduced written complaints and abandoned calls in 2012/13. We have also redesigned our bills to make them easier to understand and introduced a new system that captures customer feedback on our service. Our draft five-year plan 2015 - 2020 | 7 Our long-term priorities In starting to form our plans for the five years to 2020 and beyond, we need to define the outcomes we will deliver. These are the basic long-term services and benefits we aim to provide for our customers and they form the basis of the measurable objectives in our five-year plan. We will provide a safe and reliable water and sewerage service that complies with all necessary standards and is available when our customers require it. In line with the general feedback from customers in recent months, we are proposing five outcomes: We will demonstrate to our customers and stakeholders that they can trust us, that we are easy to do business with and that we care. We will provide the level of service our customers require, in the most economic and efficient manner, to ensure their bills are no more than necessary. We will limit our impact on the environment, to achieve a socially responsible and sustainable business for future generations. We will seek to offer our customers choices as to what services they use, how and when – such as how to get in touch, how we bill them and how they pay. How far do you agree or disagree that these outcomes are the ones we should focus on? 8 | Our draft five-year plan 2015 - 2020 The Thames Tideway Tunnel The Thames Tideway Tunnel will help tackle the growing problem of pollution affecting the tidal River Thames. Any balanced appraisal of our plan has to start with an explanation of the Thames Tideway Tunnel. This is an immense project that forms part of the Government’s National Infrastructure Plan and has to be delivered. The preferred delivery mechanism will see much of the work undertaken by a separate company, set up specifically for that purpose and with its own licence from Ofwat. However, under current plans, all of the necessary costs will be borne by wastewater customers in the Thames Water area. It is therefore essential that we take into account the full impact of the project in our planning. The tunnel is required because London has outgrown its sewer system. After as little as two millimetres of rainfall the sewers overflow into the tidal River Thames. These discharges have been getting steadily worse and now happen on average once a week. Every year, many millions of tonnes of sewage pollute the river in London, causing an environmental and public health hazard. The Thames Tideway Tunnel will capture the vast majority of these discharges and transfer the sewage to our Beckton works in east London. There the sewage will be treated in the normal way, with renewable energy generated from the solid matter and clean water returned to the river. Together with other projects already under way, the Thames Tideway Tunnel will tackle the problem of sewer overflows to the tidal Thames for at least the next 100 years, and enable the UK to meet European environmental standards. The estimated cost of building the Thames Tideway Tunnel is £4.1 billion (excluding inflation). The exact impact on bills is not yet known, but will increase as the work progresses. The project is estimated to add a maximum of £70 to £80 to the average annual wastewater bill paid by our customers by the early 2020s. These figures are all at 2011 prices. The Government and our economic regulator, Ofwat, will continue to scrutinise all the costs of the project to ensure these are kept as low as possible. We have already discussed the Thames Tideway Tunnel and how it is built with a wide range of customers and stakeholders. For more details, visit www.thameswater. co.uk/londontidewayimprovements. Our Our draft draft five-year five year plan 2015 - 2020 | 9 This work could cost a maximum of £70 to £80 per year (excluding inflation) in an average annual household wastewater bill by the early 2020s. For more details, see pages 28 and 29. 10 | Our draft five-year plan 2015 - 2020 Our plans for this part of our business link to the above outcomes (see page 7). There when you need us It’s our job to ensure you can contact us in the way you want and, if things go wrong, that you don’t need to get in touch more than once. We aim to provide a top-level service whether you call us, write to us or use the range of services on our website. What you’ve told us The main themes from your feedback, including research and comments to our call centres, are: • You want us to get it right first time, so you don’t have to contact us more than once about an issue. • We should keep our promises – for example, by keeping to agreed times. • We need to keep you up to date when we are dealing with issues you have raised. • You want us to resolve your issues more promptly. Challenges • Customers are in general broadly content with the service we provide, but some of those who needed to contact us in 2012 did not receive a satisfactory level of service. Action is being taken to improve this situation. • Expectations are changing, particularly when it comes to the use of online technology for quick and convenient communications. Progress so far • We have launched a new feedback system, which gives customers a simple way to rate our service, and enables us to respond swiftly if needed. About 100,000 customers have so far given a rating. • We have introduced SMS texting to update people on major service issues. • We have redesigned our bills to make them easier to understand. They include a better explanation of our calculations, plus simpler details on ways to pay and get in touch, and have been well received by customers. • We have increased levels of spend on operational activities and customer service centres, and are seeing improvements in the level of service, but there is more that needs to be done. New telephone systems, from 2014, are expected to enable further significant improvements. What we’re planning Our focus in the coming years will be on ensuring we provide the basics of customer service excellently and get things right first time, so you only need to call us once. We want you to be able to contact us easily, in the way you prefer. We will make it simpler to access and use our services, offering a variety of ways to get in touch. While we recognise there are many people who still want to communicate with us by phone or letter, many increasingly expect to deal with us online. We plan to make big improvements to our IT systems, so that it is easier for you to update us. This will mean you will be able to log in to your account and view all your details in one place, accessing your bill and telling us about anything from updated bank details to a new home address. If you have a meter, you will also be able to see how much water you have used. Our staff will have a full overview of this information, so they can help you more easily and quickly. We also aim to make continuous improvements, through monitoring the quality of our work and routinely asking for feedback, so that we learn from mistakes and can coach our staff to improve performance. We recently began inviting customers to text us a rating of how happy they were with our service. This helps us assess our performance and call back if someone is dissatisfied. We intend to continue asking for feedback in this way. If things go wrong, we want to make sure we fix them in a timely way. That’s why we are proposing improvements to our target times for addressing typical problems, shown on the opposite page. Our draft five-year plan 2015 - 2020 | 11 Our plans to install ‘smart’ water meters, which we can read remotely, will improve the accuracy of bills by reducing the number of estimates and help you to monitor your own water use. We will continue providing extra services to help vulnerable customers and those with special needs. These include coloured background bills for dyslexic customers and email bills for blind customers who use screen reading software. We also have a special mobile telephone number which deaf customers can text in an emergency. We have asked customers’ views on our current service and their priorities for improvement. As part of this ongoing research, we are asking people if they agree with the following proposed changes: • Investigate leaks we are told about within two working days and fix them within five, as opposed to the current level of three and 15 working days respectively. • Respond to letters or emails about water or sewerage services within five working days, instead of the current maximum of 10. • Provide appointment slots for visits on weekday evenings and on Saturdays. • Give people a two-hour appointment slot, instead of saying we will attend in either the morning or afternoon. • Attend within two hours, instead of four, to tackle severe sewer blockages which are affecting toilets, sinks or showers. • Offer a discount – not currently available – for customers using our live online account management service, who also opt for online paperless billing and pay by Direct Debit. £20 This work could cost per year (excluding inflation) in an average household bill in 2019/20. For more details, see pages 28 and 29. How far do you believe our plans will improve the service received by customers? 12 | Our draft five-year plan 2015 - 2020 Our plans for this part of our business link to the above outcomes (see page 7). Affordable bills Meeting the challenges we face will put an upward pressure on the cost of our services. We need to ensure bills remain affordable, at a time when household budgets are already under stress. What you’ve told us • You want us to keep bills affordable. • Many of you point out that the economic downturn means that paying bills, including water bills, is already a struggle. • Many of you would accept a small rise in your bill to help those in genuine difficulties. Challenges • We have to balance the affordability of our bills in the short term against the risk of deferring essential work that could cost more in the long run. • The Thames Tideway Tunnel will add to the wastewater bill paid by our customers. • The failure of some household customers to pay their bills adds £11 to the average water bill. This problem has been getting worse over the last three years and shows no sign of improvement, despite strenuous efforts to recover debts. Progress so far • Our current average bill is one of the lowest in the UK – £354 per year, or 97p per day. This is the second lowest of the major water and sewerage companies in England and Wales. • Our Customer Assistance Fund made donations totalling £2.1 million in 2012/13. • More than 29,000 households opted to have a free water meter fitted in 2012/13. This can help to budget and save money. This significant increase, which is both essential and inescapable, means we need to keep charges to fund other parts of our work as low as we possibly can, without damaging the service we provide, or building up problems for the future. What we’re planning The state of the UK economy has put pressure on many customers’ ability to pay water bills at the current level. We know that any increase will make this problem worse. We will continue to offer the statutory WaterSure tariff, which caps the bill of qualifying metered customers at our average charge.* However, fewer than 6,000 customers pay in this way, and we will better promote the scheme to increase take-up. The Thames Tideway Tunnel will become a significant additional cost for our wastewater customers, although the bill impact for each year is not yet known. It is estimated to add a maximum of £70 to £80 to the average annual wastewater bill (at 2011 prices) by the early 2020s. We plan to keep bills as affordable as possible by working efficiently, helping those customers who genuinely struggle to pay their bills, and doing more to ensure that all of those who can afford to pay us do so. We propose to introduce a social tariff from 2015. This will use a small increase in bills for the majority of customers to reduce charges for those who most struggle to pay. At the time of writing, we are exploring a range of options for this change, which we expect will assist a relatively small number of customers. *This tariff is available to households where someone receives a state benefit and has three or more children, or a medical condition requiring extra water use. Our draft five year plan 2015 - 2020 | 13 We will continue to make donations towards qualifying customers’ arrears through our Customer Assistance Fund, to help them better manage their future payments. We will also maintain the Thames Water Trust Fund, run by a board of independent trustees. This makes annual donations to support debt advisors in organisations such as local Citizens Advice Bureaux, and provides special payments to customers in extreme hardship. Our plans also include helping customers reduce their bills by providing free watersaving devices and advice. This will be available to all our customers, but particularly targeted at people on low incomes and those households included in our metering programme. A small but growing proportion of household customers could pay us but fail to do so, which adds £11 to everyone else’s bill. We need to work harder to tackle this. One way we will do so is by understanding more about the types of customer who don’t pay. This will help us take the right actions to encourage them to settle their bills. £11 Bad debt could cost per year (excluding inflation) in an average household bill in 2019/20. For more details, see pages 28 and 29. How far do you agree or disagree that the plans we have considered are the correct ones that we should follow? 14 | Our draft five-year plan 2015 - 2020 Our plans for this part of our business link to the above outcomes (see page 7). Making sure there’s enough water to go round A growing population and the effects of climate change will increase the amount of water we need to ensure sufficient supplies for everyone’s needs. It’s vital that we work hard to ensure water isn’t wasted, which includes finding and fixing leaks. What you’ve told us • You see investing to reduce leaks as a high priority. It is also your top concern in ensuring there are sufficient supplies for everyone. • You look to us to set an example in using water responsibly. • You want information on how to use water wisely. Progress so far • We have reduced leakage year on year, beating our last seven annual targets. Leakage is now 26 per cent lower than in 2005. • In 2010 we opened the UK’s first large-scale desalination plant. In times of drought, we can now take supplies from the tidal Thames and remove the salt to create up to 150 million litres of drinking water per day. • We are working in partnership with other organisations to run the UK’s first single-town water conservation campaign, Save Water Swindon. It aims to cut usage by one million litres per day by 2014. Challenges • Forecasts suggest the number of people we supply will increase from 9 million today to 10.4 million by 2040. • Climate change is predicted to reduce summer rainfall. As part of this, the frequency and severity of droughts could increase. • Environmental requirements could reduce the amount we can take from rivers by 250 million litres per day – nearly 10 per cent less than today. • People in our region each use on average 161 litres per day – about 10 litres above the UK average. What we’re planning The prompt repair of leaks is understandably one of the things customers feel most strongly about. We have reduced leakage to its lowest-ever level, but know we have much more work to do. The vast majority of leaks are hidden underground, so aren’t visible on the surface. Finding and fixing some of them can therefore be difficult. About a quarter of all leaks are from customer-owned supply pipes, which link our water mains to individual properties. We previously provided a subsidised repair service for customers’ pipes, but are now relaying pipes and fixing leaks for no We are also seeking views on our 25-year Water Resources Management Plan. For more details, visit www.thameswater.co.uk/haveyoursay additional charge. This aims to encourage householders to agree to the work, so that we can reduce leakage. We aim to continue to reduce leakage. We anticipate our leakage level will be around 665 million litres per day by 2015, and aim to reduce this to 620 million litres per day by 2020. We will do this partly by replacing water mains and improving the way we run our supply network. We will also reduce the amount of water we use as part of the treatment process, to cool or clean equipment. Both approaches will help limit how much we need to take from rivers and other sources. Another way we will make improvements is by better targeting leaks. This will be helped by our plans to start progressively metering all domestic and business properties, with the ultimate aim that nearly all will have a meter. Metering is an important part of our plans to help control demand for water and target leakage more effectively, as it will help people become more aware of how much they use. Fitting a meter tends to reduce the amount our customers consume by on average 12 per cent. This is because they pay for exactly what they use and because we can better detect leaks from customers’ pipework. Our draft five-year plan 2015 - 2020 | 15 In conjunction with our metering programme, we also intend to offer to fit water-saving equipment in newlymetered homes. We will help businesses by continuing to provide water efficiency ‘audits’, in which we advise them how they could make changes to their premises to save water. Meters also help pinpoint leaks from our own pipes, as they show where unexpectedly high volumes of water are passing through the supply network. We will install 500,000 meters by 2020, increasing the proportion of households with a meter from the current level of about 30 per cent to 56 per cent by 2020. There are some properties where current technology is unable to isolate individual supplies. We expect therefore to be able to meter 78 per cent of properties by 2040. However, we aim to meter nearly all buildings thanks to bulk meters, which measure the total volume entering the premises. In one case in central London, a bulk meter showed 100,000 litres per day was being wasted through corroded joints. To help households who might see their bill rise once they have a meter, we will wait two years before we start billing them on the basis of their meter reading. In the meantime, we will show them what their bill would have been if they paid in this way. Households will be able to switch to metered payments immediately if they wish. The meters we install will be new ‘smart’ models, which give customers more ways to monitor how much they are using. Fitting meters will also enable us to trial new price bands, which could help reduce demand for water. One system could vary the price depending on the season, making water more expensive in the summer, when there is typically less available. Another could introduce usage bands, where people would pay a higher unit price if they used more than a certain volume of water. We plan to pilot both types of price band, to test customer reactions before deciding whether we should introduce them beyond 2020. It will also be important to continue to show customers how they can help conserve supplies. We will continue to promote simple tips and water-saving devices and develop new water efficiency partnerships with other organisations. Our aim will be to reduce the average amount customers in our region use per day from 161 to 153 litres. We have to plan for the long term, to ensure there is enough water for our region in years to come. (See footnote on page 14 for our separate water resources consultation.) Long-term predictions suggest we will need a major new source of water by the late 2020s, and that this is an issue which also affects the wider SouthEast area. Potential solutions will take a long time to plan and implement. We therefore need to work with stakeholders, regulators and other water companies over the next five years to agree on the best course of action. One possibility is ‘wastewater recycling’. This process is already common practice in many parts of the world. It involves putting treated effluent from a sewage works through a further process which would allow the water to be returned to a river at higher than usual quality and pumped out again downstream. It can then be treated to drinking water standards and put back into supply, rather than lost to the sea. We need to carry out further research into this approach, and will be doing so over the next five years. Other potential solutions which we will be examining closely include a new storage reservoir and transfer schemes to bring water from other parts of the country. £26 This work could cost per year (excluding inflation) in an average household bill in 2019/20. For more details, see pages 28 and 29. How far do you agree or disagree that our plans to manage the demand and supply of water are the right ones to follow? 16 | Our draft five-year plan 2015 - 2020 Getting good-quality water to your tap Our plans for this part of our business link to the above outcomes (see page 7). We need to invest to ensure our water mains are in good shape and provide a reliable supply for the 9 million people we serve. And we want to ensure the quality of our water remains among the best in the UK. What you’ve told us • The safety, quality and reliability of water supplies are a priority. • You see long interruptions to supply as the worst failure in our service. • Supply interruptions are the most common water-related reasons for customers contacting us. Progress so far • For each of the last five years, between 99.97 and 99.99 per cent of our tap water samples met stringent UK and European quality standards – among the best in the UK. • We have replaced more than 2,200 kilometres (1,400 miles) of old and leaky mains since our leakage level was at its peak in 2004. • We have been working with local farmers to find ways to reduce pesticide run-off from fields into rivers. This reduces the cost of treating the water to drinking water standards. Challenges • Some of our equipment is still working well but reaching the end of its life, so costs more to maintain. • Energy costs are rising steeply. The cost of electricity could be 40 per cent higher in real terms by 2030. • London’s growing population means we must ensure our treatment works consistently operate to optimum capacity. To do this, we must carry out improvements, while maintaining highquality supplies. What we’re planning We will improve the reliability of supplies by replacing at least 600 kilometres (372 miles) of mains with a significant history of bursts, leaks and knock-on effects to supplies. Most of this is likely to be in London, particularly the north-west of the capital, where the problems are worst. To ensure we get the maximum benefit from this investment, we will improve our targeting techniques, rather than automatically replacing whole areas of mains. In line with the findings of an independent review, we will fit meters in local properties and pipework before replacing pipes. This will enable us to check whether high demand for water in an area is caused by leaks or by genuine usage. We will better monitor our ‘trunk mains’. These large pipes, which form the arteries of our supply network and operate at high pressure, cause major disruption when they occasionally burst. We aim to better predict when they start to leak, so we can step in and repair them. We will also improve monitoring of our water treatment processes so we can better judge when and where we need to make improvements. Our plans include continuing with work to control the fluctuations in pressure that can, in some areas, cause leaks and bursts. We realise the difficulties low pressure can cause, and will also work to reduce this problem. We are very aware that our repair work can disrupt supplies while we temporarily close sections of pipe. We are increasingly aiming to use new tools and techniques to isolate shorter sections of mains we are working on. Instead of shutting off hundreds of homes, this can decrease the number to a handful, or none at all. New regulations to be introduced later this year will further reduce the already very low level of lead permitted in water supplies. We will expand our programme of lead protection to more treatment works outside London. This process coats the inside of lead pipes with a protective layer, stopping lead from leaching into the water. We will continue to replace lead pipes in areas where this remains an issue and which are at highest risk of exceeding the new limit. Our draft five year plan 2015 - 2020 | 17 Our overall aim remains the achievement of 100 per cent compliance with the stringent UK and European drinking water quality standards. The quality of supplies is strongly linked to the purity of the sources from which we take untreated water. Pesticides are sometimes present in rivers and boreholes. They are expensive and difficult to remove at a treatment works, and we have been working to find ways to stop them entering water sources in the first place. This approach, called ‘catchment management’, involves a range of approaches to prevent pollution at source, reducing the likelihood of contaminants running into watercourses. These may include introducing landscaping features, such as drainage, or giving guidance on the use of potentially problematic substances – for example, by advising farmers on the application of pesticides. We will widen this work in the next five years, having identified the best parts of our region on which to focus our efforts. We may eventually have to work with manufacturers to encourage more environmentally friendly products. £86 This work could cost per year (excluding inflation) in an average household bill in 2019/20. For more details, see pages 28 and 29. How far do you agree or disagree that our plans to supply customers with good-quality water are the right ones to follow? 18 | Our draft five-year plan 2015 - 2020 Our plans for this part of our business link to the above outcomes (see page 7). Running a reliable sewerage service Our huge sewer network drains an area in which 14 million people live and work. We need to ensure it provides the service required, and that we minimise blockages and sewer flooding. What you’ve told us • You see preventing sewer flooding in properties as a priority. • When you contact us about a sewagerelated issue, nearly 50 per cent of telephone calls and about 20 per cent of written complaints are about blockages. Challenges • Climate change could increase the intensity of rainfall. As a significant proportion of our sewers are combined – taking foul waste and rainfall – this increases the risk of sewer flooding. • The concreting over of green spaces, particularly in London, means increasingly that rainfall cannot drain away naturally. It runs into our sewers, which can fill them to capacity. • New legislation means that by October 2016 we will take responsibility for an estimated 5,000 sewage pumping stations which are currently privately owned. We also need to better understand the condition of nearly 25,000 miles of privately-owned sewers which we were required to take over in 2011. • In some areas, our service is affected when groundwater finds its way into our sewers following prolonged rainfall. *This is a storm that would be expected to occur, on average, once in any 30-year period. Progress so far • Since 2010 we have increased the capacity of sewers to prevent sewer flooding after heavy rain at 277 homes. • In the same period, we have replaced 70 kilometres (44 miles) of worn-out sewer. • Each year we clear about 55,000 blockages from our sewers to try to prevent flooding, and complete over 1,000 repairs. What we’re planning We will continue working to reduce the number of homes at risk of sewer flooding, which is a horrible experience and something we want to reduce to the absolute minimum. We are changing the criteria we have traditionally used to decide where we should carry out engineering work to reduce this risk. In the past, we have considered factors such as rainfall patterns. From now on, we will instead be guided by the frequency and severity of past flooding cases, ensuring we tackle the most urgent cases first. We plan to solve this problem for 400 households at risk of internal flooding, protecting them from a one-in-30-year storm*. External flooding can be very distressing too. In the worst cases, flood water containing sewage can entirely surround a property. Again, we will look to solve the most urgent cases first. Our plans include better analysing where high groundwater levels, caused by prolonged rainfall, could infiltrate our sewers, so that we can work to prevent this. Our biggest project to reduce sewer flooding will be in the boroughs of Kensington & Chelsea and Hammersmith & Fulham. Over the years, a loss of natural watercourses and green spaces has increased the risk of flooding to local homes. Our plan includes an engineering scheme to reduce this problem for around 1,700 properties. The more rainfall runs into our sewers, the quicker they fill to capacity, which can lead to flooding problems. This is a particular issue in areas where the system is combined, allowing foul sewage to mix with rainwater. Heavy rain can also overwhelm sewage works. When this happens, the sites are sometimes forced to discharge diluted, but untreated, sewage to a local river or stream, potentially causing environmental damage. Our draft five-year plan 2015 - 2020 | 19 Where properties flood because of operational issues, we will aim to make sure that we fix problems first time. For example, when we are asked to clear a blockage, we will repair any minor structural damage that could lead to the blockage happening again. Wastewater is carried through many of our sewers by gravity, but we still need ‘sewage pumping stations’ in many places to move it on its way. By October 2016, legislation will require us to take responsibility for an estimated 5,000 of these, currently in private ownership. This will treble the number we already own and maintain. That’s why we want to make sure that, as much as possible, sewers are used only for foul sewage. We aim to significantly reduce the amount of rainwater entering them, or prolong the time it takes. To help tackle this, we will work in partnership with the Environment Agency and local authorities to promote and install sustainable drainage systems (SuDS). These encourage rain to soak into the soil, rather than run into our sewers – examples include grassed roofs and porous paving. This is much more difficult to achieve in densely developed urban areas, such as central London. Three streets in west London have already been identified for a pilot scheme we are funding in partnership with the Greater London Authority. We intend to continue working with developers to encourage them to include sustainable drainage wherever possible, and with local authorities to incorporate this approach within existing drainage systems for buildings and highways. We also plan to investigate the sort of incentives needed to encourage private landowners to change their drainage in this way. We have had encouraging results from a trial in Bexley, where we highlighted to residents how they could help prevent existing problems with blocked sewers. But we need to find ways to do this across a wider area, and that keep the issue in people’s minds for the long term. We will target places where there is likely to be a problem, such as those with a high proportion of fast food outlets. We also need to extend and improve our communications with customers about the problems caused by disposing of unsuitable items down the drain. Wet wipes, fat, oil and sanitary items often form blockages and cause flooding. We need to warn people about this, and encourage them to put these materials in the bin, not down the sink or toilet. We know a number of these private pumping stations are in a poor state of repair, and are therefore planning work to bring the sites up to a safe and serviceable standard. This will ensure they provide a reliable service and pose no safety risk to our staff or local residents. £82 This work could cost per year (excluding inflation) in an average household bill in 2019/20. For more details, see pages 28 and 29. How far do you agree or disagree that our plans to ensure a reliable sewerage service are the right ones to follow? 20 | Our draft five-year plan 2015 - 2020 Our plans for this part of our business link to the above outcomes (see page 7). Maintaining our services Much of what we spend is aimed at ensuring we continue to provide the same high level of service. This includes water and sewage treatment, monitoring equipment to check how well it’s working, and replacing it before it affects the service we provide. What you’ve told us • You are broadly happy with our service and the provision of good-quality, reliable drinking water. • Neither domestic nor business customers would be willing to accept a reduction in service, even if it would reduce bills. • You care about your community and the environment and expect us to do the same in delivering our services. Challenges • Much of our equipment is still working well but some is reaching the end of its life, so costs more to maintain. • We need to improve our day-to-day awareness of how our equipment is performing, through better monitoring and control mechanisms. • Population growth, the effects of climate change, rising energy costs and changing environmental legislation all mean, in many cases, that we have to take action in order to prevent our level of service deteriorating. Progress so far • We have checked and, where necessary, improved the level of flood protection at eight of our sites, and plan to add another nine by 2015. • We have installed monitors at 1,500 locations throughout our pipes, pumping stations and treatment works so we can better understand and manage the performance of our water and sewage systems. • Major upgrade work is nearing completion at our five largest sewage works, to ensure the quality of treated effluent we discharge to the tidal River Thames. What we’re planning It is important that our water treatment works provide a safe and reliable supply, especially in the face of pressure from population growth and climate change. We will focus on improving a number of our key London works, such as Ashford Common and Walton, in west London. The largest of these will be our treatment works in Walthamstow, where our work will include major upgrades to filters. This will ensure we continue to provide safe and reliable supplies in all situations. Some of our planned work will better protect supplies if things go wrong or when repairs are needed. One example is in Oxfordshire, where we plan to build a second main to transport water north to Banbury. This will ensure we can continue to provide a safe and reliable supply if the existing pipeline bursts. One of the biggest projects we must carry out to maintain our standards is a major upgrade to Deephams sewage works in Edmonton, north-east London. We need to do this to keep pace with local population growth, update ageing plant and ensure we can treat sewage to new standards set by the Environment Agency for river water quality. At our two largest sewage works, in east London, recycling the treated sewage sludge on farmers’ fields – as we do elsewhere – would require numerous lorry journeys through built-up areas. We therefore burn this solid residue in a process that also generates renewable energy to use on site. The incineration equipment will reach the end of its life by 2020, so we plan to refit both sites. We plan ultimately to install a new process at both sites beyond 2030, but need to first test this to ensure we can run it at the scale required. We will continue to protect our most critical sites from the effects of flooding, and have assessed almost 7,000 locations and pieces of equipment. The sites where we currently propose making improvements include our water treatment works in Hornsey and Walthamstow and our sewage works in Camberley and Marlow. In each case, we will put in place measures to protect them from a one-in-200 year storm – for example, by improving drainage or raising flood-sensitive equipment above ground level. Our draft five year plan 2015 - 2020 | 21 The recent wet weather has meant our sewage works have needed to treat much higher volumes of wastewater than usual, and our plans include renewing key equipment, such as plant that handles heavy rainfall. We aim to improve the way we maintain our equipment, using the latest computer ‘modelling’ techniques to help determine when and where to make changes. This includes making improvements to our monitoring and control systems. In addition, we will fit monitors at many of our discharge points. These are places where sewers or treatment works are designed to occasionally overflow to local watercourses once their capacity has been exceeded following heavy rain. The locations we have chosen are all upstream of sensitive areas such as sites used for recreation. Monitoring the overflows will give us better information on when they operate and the volumes they discharge, which will help us better target improvements. We aim to carry out more proactive maintenance work, rather than having to repair equipment when it breaks. Better maintenance will help reduce costs in the long term, easing pressure on customers’ bills. We will concentrate on the most important pieces of equipment. These include inlet screens, which remove large items like wet wipes and nappies from the sewage, and aerators, which disperse oxygen through the sewage as part of the treatment process. We are already updating this, using new technology. By 2015, we will have installed new equipment at 6,700 locations throughout our pipes, pumping stations and treatment works, and a further 1,800 will be added by 2020. We will then have monitors in place at all our treatment sites, allowing us to remotely check them from other locations. We will also be able to remotely control water treatment works covering 80 per cent of the population we supply and, at sewage works, 75 per cent of our population. The new monitors in many of our water mains and sewers will help warn when a burst main is likely to occur, or when rising sewage levels could cause flooding. This will help us respond quicker or, in some cases, allow us to prevent things going wrong in the first place. *This is a storm that would be expected to occur, on average, once in any 200-year period. £108 This work could cost per year (excluding inflation) in an average household bill in 2019/20. For more details, see pages 28 and 29. How far do you agree or disagree with our plans to maintain our services? 22 | Our draft five-year plan 2015 - 2020 Protecting the environment Our plans for this part of our business link to the above outcomes (see page 7). Treated effluent from our 350 sewage works can affect the health of local rivers and streams to which we recycle it. We invest to ensure these discharges are of the required high standards. And we are increasingly generating electricity from sewage sludge, to reduce our costs and carbon emissions. What you’ve told us • You care about the environment and see protecting rivers as a high priority. • You try to take steps to protect the environment, and expect us to do the same. Challenges • Estimates suggest there are still around 63,000 properties in our region where the drains are wrongly connected, causing pollution to rivers and streams. • Rising energy costs increase the need for us to generate renewable energy from the treatment of sewage sludge. • New legislation will impose additional demands on how we operate. Progress so far • We generate about 12 per cent of our own energy needs by sourcing power from sewage sludge as part of the treatment process. • We are installing technology at six of our sewage works to ‘pressure cook’ sewage sludge, allowing us to generate enough renewable energy to run a town the size of Woking. • More than 99 per cent of the Sites of Special Scientific Interest we directly manage are in the two highest status categories awarded by Natural England. What we’re planning We have to recognise that our business, in taking water from the environment and recycling treated wastewater to it, will inevitably have environmental impacts, not just in the aquatic environment but in our use of energy and chemicals, and through land use. A significant proportion of our work is aimed at improving the environment or limiting our impact on it. We will also do this at our works near Rickmansworth, where new equipment will allow us to treat sludge from works in Harpenden and Marlow, two sites that cannot generate power. These changes are together likely to make the Rickmansworth works our first to be completely self-sufficient in power terms – in other words, to generate as much as it uses. One of the main areas where we intend to improve things further is in increasing our energy efficiency and generating more of our own renewable electricity from sewage, where this is economic. This helps combat rising power cost, easing pressure on customers’ bills. It also helps work towards the government target of reducing our carbon emissions to 34 per cent below our 1990 level. We also propose to stop treating sludge with lime at our works in Guildford, Farnham, Fleet and Newbury. The liming process does not produce energy and the treated sludge is smelly, which can upset neighbours when we recycle it on farm land. Instead, we will ‘pressure cook’ the sludge using new equipment at our Basingstoke works. This will again increase our power output, while reducing our greenhouse gas emissions. At many larger sewage works we generate renewable energy for use on site from the methane gas given off during treatment, or by burning sewage sludge in a special incinerator. We plan to replace some of the equipment used in this process with more efficient technology. As a result, we will get more power from the same amount of sludge, at works in Bracknell, Slough, Swindon, Edmonton and Twickenham. As a result of these changes, by 2020 we will be generating energy from virtually all of the sewage we treat. Most of the renewable power we generate comes from sewage sludge. However, we are also planning to expand the amount we generate from solar power, wind turbines, hydroelectric schemes and heat recovery on our sites. Overall, we plan to increase the total proportion of renewable electricity we generate from about 20 per cent of our own power needs in 2015 to around 30 per cent by 2020. Our draft five year plan 2015 - 2020 | 23 We also work with the Environment Agency to locate properties where plumbing from kitchens and toilets has been wrongly connected. Foul waste enters pipes meant only to carry rainwater and discharges directly into rivers and streams, causing pollution. Our work has been increasing in recent years, often prompted by pollution spotted by members of the public. Our sewage works release treated wastewater into local rivers or streams at the end of the process. We monitor the cleanliness of these discharges, ensuring they meet standards set by the Environment Agency to safeguard the natural environment. Local development increases the amount of sewage our works must treat, and a lot of our work is aimed at maintaining or improving the quality of sewage effluent discharge. Between 2015 and 2020, we anticipate making improvements of this sort at sites such as Arborfield, Chesham, Faringdon, Oxford, Upper Heyford and our works in Kingston. In addition to this, the creation of the Thames Tideway Tunnel (see page 8) will make a major improvement to the quality of water in the tidal River Thames. The condition of local rivers will also be boosted by the Water Framework Directive – one of the most ambitious pieces of environmental law ever conceived. We will have a large part to play in addressing its aim of restoring rivers to ‘good’ ecological status. We are currently working with the Environment Agency to understand and identify specific improvements required by the Directive. We have provisionally included a significant amount of funding in our business plan to cover the work needed. Among other laws affecting us are regulations requiring us to install screens to protect eels, a species whose numbers have declined by 90 per cent in recent years. The screens will prevent eels being drawn into our reservoirs at the locations where we take water from rivers. Any pollution incident is a cause for concern. We recognise the impact that pollution from sewers or treatment works can have on the environment and will continue to work hard to significantly reduce the number of incidents. We have been working on 189 projects to trace and rectify these problems in the current five-year period and plan to increase this to 200 between 2015 and 2020. Our work is region-wide, but much will be in London, to tackle pollution of rivers including the Brent, Crane, Colne, Wandle and Lee. It is also vital we take a responsible attitude to the land we own. This often provides undisturbed havens for wildlife, especially in towns and cities. For example, orchids can be found at nearly 50 of our sites. We will continue to protect and enhance biodiversity in our work, including grounds maintenance and nature reserve management. Among our activities, we will help address the declining number of pollinating insects. We will continue to work with the Bumblebee Conservation Trust to change the way we manage our sites, such as providing bee-friendly plants and maximising the flowering period. We will continue an initiative – now in its third year – to spread awareness of the important role our sites play in conservation, to both staff and local residents. £34 This work could cost per year (excluding inflation) in an average household bill in 2019/20. For more details, see pages 28 and 29. How far do you agree or disagree that our plans to protect the environment are the right ones to follow? 24 | Our draft five-year plan 2015 - 2020 Our plans for this part of our business link to the above outcomes (see page 7). Playing our part in the community We recognise that our operations can have a significant impact on people living or working near our sites. As a major local company, our responsibilities also include educating the customers of the future and, where possible, providing access to the land we own. What you’ve told us • You regard education about water and wastewater as important. • You want more information when we are carrying out disruptive maintenance work. • Some people living near sewage works complain that they can’t enjoy their homes and gardens if odour problems occur. Challenges • A number of our sewage works, originally built in undeveloped areas, now have homes near them. This increases the potential for odour issues for local residents. • We carry out the most roadworks of any company in London, with the potential to cause delays and disruption for drivers. • We must make sure the many engineering projects we undertake don’t harm protected species or damage historical sites. Progress so far • We have achieved ‘platinum plus’ status – the highest possible – in Business in the Community’s Corporate Responsibility Index. • We have opened classrooms for school visits at several of our sites and an angling academy for young people at Walthamstow Reservoirs. • We expect contractors and others working on our behalf to behave in a socially responsible way – for example, by recycling waste. What we’re planning We have around 5,000 sites across our region, and some of our activities, such as roadworks, are inevitably disruptive. We aim to minimise the impact of our work on local communities, for instance by using a range of less disruptive methods to replace water mains. We plan to reinforce the strong working relationships and partnerships we have with a range of local organisations. For example, along with local councils and the Environment Agency, we are members of the Oxford Area Flooding Partnership, which oversees and manages work to reduce flooding across the city. We also meet regularly with many local authorities, including Westminster City Council. One result of this close working is that, when a large main burst beneath Regent Street in March, the council was able to bring forward planned work to install a pedestrian island during the repairs. These relationships also cover local environmental organisations, as in Reading, where we have worked with partners including the Environment Agency and the Thames Rivers Trust to enhance a wetland area close to our water treatment works. There is a continuing and pressing need to educate people about water, including how they can help conserve supplies and protect sewers from blockages. We are opening classrooms for young visitors at several of our sites. These are places where we can discuss with school children more about their important role in the water cycle and provide site tours. We plan to open two more classrooms at our sewage works in Bexley and Barking, so they are spread right across our region. Our draft five year plan 2015 - 2020 | 25 We will continue our existing education work. This includes giving presentations in schools, running science workshops and attending careers fairs. Our current target is to talk to 14,000 students each year and we aim to increase this to 19,000 by 2020. Operating issues at our sites can occasionally cause smells which affect local residents. Our plans include reducing the risk of this happening at some of our larger works where issues of this sort have occurred. We will also tackle similar issues when we upgrade our Deephams works in Edmonton, north-east London (see page 20). In total, we aim to reduce the risk of odour for 5,000 properties. Improvements of this sort typically involve covering tanks where sewage is held during the treatment process, but we also consider other options. In addition, we have plans to monitor other sites so that we can quickly detect potential odour issues and step in to solve them. We provide access to 111 of our sites. Our activities to improve these will include upgrading access to nature reserves we run at our water treatment works in Kempton and our sewage works in Bexley. Work will include improving signage and providing wheelchair access. One of our biggest sites is the 200-hectare Walthamstow Wetlands, which includes 10 reservoirs. We are turning this into a new urban wetland and nature reserve, in a partnership with organisations including local authorities and the Heritage Lottery Fund. This initiative, which should be completed by 2019, requires no further funding as part of our five-year plan. London residents have fewer opportunities to access green spaces than people in other parts of our region. We will work with the London Borough of Newham to improve the Greenway, a footpath that runs along the top of our biggest sewer in north London. We will also do the same for the Ridgeway, its counterpart south of the Thames, working with the London Borough of Bexley. We aim to enhance these footpaths’ value as ‘green corridors’ for bees and bugs. We will continue to employ people with the right skills and capabilities, and to encourage their development. This includes maintaining our programmes to take on new apprentices and graduates, and working with the Government on existing and new initiatives. £3 This work could cost per year (excluding inflation) in an average household bill in 2019/20. For more details, see pages 28 and 29. How far do you agree or disagree that our plans for working with communities are the right ones for us to follow? 26 | Our draft five-year plan 2015 - 2020 Innovative thinking: How we aim to keep down costs At a time when household budgets are tight, it’s more important than ever that we find the most cost-effective ways of delivering our services. What you’ve told us • You want to see higher standards of service at a reduced cost, which requires us to think innovatively about how we provide services. Challenges • The economic downturn increases the need to ensure customers’ bills remain affordable. • Rising power costs make it more important to save energy and generate renewable electricity from sewage. • UK carbon reduction targets emphasise the need to reduce our carbon footprint. We naturally aim to be as efficient as possible in what we do, but increasingly we are trying to find new ways to get the same, or better, results at a lower cost. Innovation can bring many benefits, including saving time, lessening our impact on the environment and promoting safer ways of working. In many cases, it also reduces what we need to spend, easing pressure on bills. Our economic regulator, Ofwat, expects that innovation will play an increasingly prominent role in the work we plan for the future, and we agree. Here are some of the ways in which we are getting the most for your money. Generating energy from sewage Electricity already costs us around £100 million a year, and power prices are forecast to rise faster than inflation. So we are naturally looking at ways of generating as much of our own energy as possible. This starts with seeking to maximise the energy we can extract from sewage, which we utilise on site. We are using new ways to treat sewage sludge. As mentioned on page 20, we are already employing a new process to ‘pressure cook’ sludge. This releases up to 30 per cent more gas than conventional processes, which we can then turn into renewable electricity. We are also using presses developed for the cider industry to extract juice from apples, and are instead using them to squeeze water from sewage sludge. This reduces the volume of sludge we recycle on farm land, which cuts the number of lorry journeys needed, helping the environment and saving money. A trial at Oxford sewage works has been so successful that we are set to install these presses at four of our major sewage works. Our draft five year plan 2015 - 2020 | 27 At Farmoor, near Oxford, we have been growing long-rooted plants like reeds and sedge at the outlet of one of our reservoirs. Daphnia – commonly known as the water flea – flourish around the roots, and the hope is that they will eat the algae in sufficient quantities to reduce the problem. The approach would also minimise our use of chemicals, and could be used at other sites if successful. Cutting the costs of sewage treatment Another way to improve efficiency is by focusing on the aeration process, where we bubble air through wastewater to encourage the natural breakdown of sewage. This is an energy-intensive part of the process and we aim to cut the power costs by up to half though a range of methods. Among these, we are trialling a more advanced control system at our sewage works in Marlow, so we only pump in as much air as necessary. At rural sites, we aim to increase our use of low-technology, environmentally-friendly solutions such as lagoons and reed beds, which introduce air without the need for pumping. An innovative process is being pioneered at Slough sewage works, where we are extracting phosphorus from sewage. We then form it into crystalline pellets which can be sold as high-value fertiliser for crops, lawns and gardens. Removing the phosphorus also avoids the build-up of the compound struvite, which forms a scale inside pipes and valves and sometimes blocks them completely. Preventing this saves on pumping, maintenance and the chemical dosing we normally use to tackle the problem. Focussing on problem areas We are looking at how to better analyse records and updates of problems with our sewers, such as blockages and collapsed sections of pipe. The aim is that we will be able to identify ‘hotspots’ where issues are likely to recur, so that we can improve the way we target improvements. These include laying new sections of sewer or installing equipment that releases bacteria and enzymes to try to prevent fat forming blockages inside the pipe. We are using the same technique to predict the most likely areas where groundwater could infiltrate our sewers. This includes analysing data on soil types, local geology and the proximity of rivers. Getting to the root of capacity issues The natural formation of algae in our reservoirs at certain times of the year can reduce capacity at water treatment works. The problems occur when the algae block the filters which form an important early stage in the treatment process. One potential low-cost solution involves growing certain plants in reservoirs, to encourage populations of a tiny crustacean which consumes algae. Working smarter with our partners We work hard to find savings in our engineering projects, without compromising standards. For example, from this year we are forming an ‘alliance’ with several contractors to complete much of our major work over the 2015-20 period. By planning early and working as a collaborative joint team, we can focus on new ways of doing things and achieving the best value for money in a safe and sustainable manner. We will also save money from a process we intend to use in engineering projects right across our region. This involves making items in a factory, rather than constructing them on the site where they are needed. Tanks, manholes and other objects can be built elsewhere and then delivered to the relevant location. The benefits also include less time spent on site, meaning less disruption for residents, and improved safety – for example, by avoiding work in confined spaces. 28 | Our draft five-year plan 2015 - 2020 How this could affect your bill The proposals set out in this plan are a summary of the business plan we currently intend to submit to Ofwat at the end of the year. Next year’s price review will then determine the level of bills for the years 2015 to 2020. £350 £340 £369 £371 £370 £358 2017 - 2018 £360 £367 2019 - 2020 £370 2018 - 2019 £380 2016 - 2017 We are putting a case to our regulator to recover a proportion of these costs, which have so far not been included in customers’ bills, and asking if they could be recovered over more than one year. This would avoid bills rising to £377 for one year and then reducing again. The Thames Tideway Tunnel will become a significant additional cost for our wastewater customers during this period. The bill impact for each year is not yet known. See text on this page and page 7 for details. 2015 - 2016 Our current average water and sewerage bill is £354. Next year, bills could be affected by costs we have incurred which could not have been accurately predicted when bills were last set in 2009. These cover: • Maintaining sewers which were previously privately owned, and which new legislation required us to adopt • A shortfall in funding from the growing number of customers who fail to pay us • The purchase of land needed to build the Thames Tideway Tunnel £330 £300 £0 If the five-year plan described earlier in this document is accepted, its costs would add just £13 to your bill by 2019/2020. However, on top of this, the costs of building the Thames Tideway Tunnel will also start to be paid by our wastewater customers during this period. The initial impact on bills will be small but will increase as the work is carried out. Figures for each year are not yet known, but the maximum impact of up to £70-80 (at 2011 prices) is likely to be reached in the early 2020s. Financial assumptions Our figures do not include the cost of inflation, as this cannot be accurately predicted. The prices we have included are therefore based on 2013/14 prices, with the exception of the expected cost of the Thames Tideway Tunnel, which is based on 2011 prices. Inflation would be added to any price limits set by Ofwat, each year, at the level of the Retail Price Index. Our draft five year plan 2015 - 2020 | 29 Please note that we propose introducing a social tariff from 2015. For more details, see page 12. Here we show what an average bill of £370 (excluding the Thames Tideway Tunnel and inflation) could pay for in 2019/20. Each ‘layer’ in the glass corresponds to one of the eight main sections of this document. Customer service (£20) Includes the costs of running our call centres, dealing with enquiries and managing accounts. Maintaining our services (£108) Pays for maintaining the same level of service, including water and sewage treatment, and monitoring. Protecting the environment (£34) Includes improving sewage works to protect rivers, and technology to generate power from sludge. Bad debt (£11) The costs of customers who fail to pay for the services they receive are added to everyone else’s bill. Getting good-quality water to your tap (£86) The cost of delivering water to your tap. Running a reliable sewerage service (£82) Funds the removal of sewage and work to tackle blockages and flooding. Playing our part in the community (£3) Covers odour reduction from sewage works, customer education and access to sites. The money we invest to maintain and improve our service is not all collected through customers’ bills in the year in which we spend it. It funds our day-to-day operations, but does not cover all of the large sums needed to build new assets, from treatment processes to new sewers. These will last for a number of years – in some cases decades – so we don’t pass on the total cost through bills in the space of just one year. Making sure there’s enough water to go round (£26) Pays for sourcing water, fixing leaks and other work to control demand. Instead, we spread it over a longer period of time, and we borrow money to fill the gap, either via borrowing from banks (debt) or through investment from shareholders (equity). These investors expect a reasonable rate of return, paid either as interest on debt or in the form of shareholder dividends. At every five-year price review, Ofwat sets a rate of return it believes will be necessary in order for water companies to attract investment. It does this by taking into account both the cost of debt and the cost of equity. To establish the impact on bills of our plan, we have made some assumptions. For example, we have assumed a rate of return of 4 per cent (after tax, excluding inflation). This means that for every £1 we invest, we would charge customers a total of 4 pence on their annual bill to cover the cost of raising this capital. This is included in the costs set out above, spread proportionally between the areas shown. How far do you agree or disagree that our plans will provide value for money for our customers? 30 | Our draft five-year plan 2015 - 2020 Our long-term strategy: a summary Our draft company strategy looks to address the challenges we will face in the 25 years to 2040. We anticipate that our role will always be to provide our customers with reliable supplies of clean, safe drinking water and to recycle their wastewater safely to the environment. In doing so we will deliver standards of service that meet customer expectations and are affordable, we will comply with all the applicable regulations and we will regard the health, safety and wellbeing of our staff as an absolute priority. The other main elements of our strategy are set out below, with further detail and explanation in our long-term strategy. Customer service strategy overview We have a vigorous strategy to make year-on-year improvements to our service level, and are investing significantly in a range of activities. Most of our customers only need to make contact with us to pay their bills. We will save time, cost and confusion by making our bills easier to understand, and easier to pay, with simple and secure online account management. When customers do need to contact us, for instance to report a problem with their water supply, we will place a higher priority on getting things right first time and communicating effectively at every opportunity. We will continue to invest in staff training and new technology, both of which will improve satisfaction and reduce complaints. achieve a comprehensive understanding of how our network is operating. This is essential in order to target leakage and pressure management activities efficiently. Affordability will be as high a priority for us as it is for our customers. We will introduce a means-tested social tariff and continue with other tried and tested ways to help our most disadvantaged customers. We will play a full part in identifying the best long-term package of measures to supply the South East of England, including potential new inter-connections between companies. The costs of non-payment of bills are ultimately borne by the customers who do pay. To minimise this burden on our customers, we will pilot new ways to ensure that those who can pay, do pay. We will continue to study three main options for a major new water resource, likely to be needed in the late 2020s: a new reservoir, wastewater recycling in London, and long-distance water transfers. Each has advantages and disadvantages and we need to examine them carefully. We will offer business customers a wider range of services appropriate to their specific needs. Water supply strategy overview In meeting the need for water our priority will always be to manage demand through reducing leakage, metering supplies and actively encouraging the wise use of water. If and when this approach is either insufficient or does not represent best overall value, we will develop new resources. We will become a fully metered business, using ‘smart’ meters. By 2030 at the latest, all business and residential buildings will be metered. Where it is not practical to fit meters to individual households we will fit a bulk meter to each building, in order to We will improve the capacity and reliability of our major water treatment works and continue to aim for 100 per cent compliance with drinking water quality. We have an integrated network of large mains, operating under high pressure, that form the main arteries of our system. Any burst causes major disruption and water loss. From 2020 we will undertake a structured programme of monitoring and, where necessary, repairing and/or replacing them. Our draft five-year plan 2015 - 2020 | 31 Wastewater treatment strategy overview We will play our full part in ensuring the delivery of the Thames Tideway Tunnel, meeting all project milestones. This will prevent virtually all of the discharges from London’s overloaded sewer system to the tidal River Thames, significantly reducing pollution from about 2023. We will continue to give priority to reducing sewer flooding and maintaining river water quality, in line with customer expectations. In managing our sewer network we will look for innovative and cost-effective ways to limit the volumes of rain water entering the sewers. This will help reduce the risk of sewer flooding of homes and gardens, and of discharges to rivers and streams from combined sewer overflows. Sustainable drainage must be built in to new developments and given careful consideration as a retro-fit option elsewhere. We will continue to increase our use of real-time control and monitoring systems. This will improve our management of the network and the speed and effectiveness of our response to potential operational problems. We will continue to target full environmental compliance at all our sewage treatment works and zero pollution incidents from our network. This will include continuing to work with the Environment Agency to identify pollution from households and businesses with misconnected drains. We will work towards generating renewable energy from virtually all of the sewage sludge produced at our works and steadily improve the efficiency of generation, through the use of thermal hydrolysis. This will improve our carbon footprint. Innovation will continue to play a major part here, as it will in reducing the amount of energy required in the energy-intensive parts of our treatment processes. How far do you agree or disagree that our long-term strategy focuses on the right areas? Tell us what you think We’d like to know what you think about our business plan for 2015-2020. Online We want to make sure our plan is based on your needs and priorities, so that we can deliver the service you expect. Feedback form We are running an eight-week consultation on our proposals, from 1 May until 25 June 2013, and you can tell us what you think in the following ways: Visit www.thameswater.co.uk/haveyoursay and fill in our online questionnaire You can pick up a copy of our business plan and a feedback form at a consultation event in your area or request them by calling our Freephone number, 0808 178 9055. Our lines are open from Monday to Friday, 9am to 5pm and closed at weekends and on bank holidays. Email Send us your feedback by email to [email protected] Letter Write to us at: Thames Water Business Plan Consultation Facts International Ltd, FREEPOST HS464, Ashford TN24 8BR Phone If you are unable to take part online or in writing, you can also tell us what you think by calling our Freephone number, 0808 178 9055, and we will help you to complete the feedback form over the phone. Our lines are open from Monday to Friday, 9am to 5pm, and closed at weekends and on bank holidays. If you need a telephone language interpreter, please call us on 0845 9200 800. We are open 24 hours a day. This leaflet can be supplied in large print, braille, or audio format upon request. 12303 04/13 Is there anything else that we should consider when planning for the next five years, or do you have any other comments?
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