Establishing a national water utility company

- The Scottish Experience

BLP Water Forum 25th June

Craig Lawson

15 mins

Agenda for the Presentation

1. Context

2. The Scottish Water Journey from the perspective of:• Employees

• Regulation

• Supply Chain

3. Why has it been worth it so far

Irish/Scottish Water - Differences

Differences

• Scotland’s Water & Drainage service provider:

• Pre 1996 - 38 Municipalities ran water and drainage

• 1996 - combined into 3 regional water authorities

• 2002 -Scottish Water created by merger of 3 regional authorities

• Transfer of People

• Customers in Scotland have always paid for their water and sewerage

Irish/Scottish Water - Similarities

Similarities

• Implied Inefficiencies & Poor Customer Service

• EU Directives – Large scale investment required

• Public sector

• Geographical & Population size similarities

SW High Level Deliverables

Targets

2002 – 2006

• 40% OPEX reduction

• £2.3 Billion Capital programme for £1.8B (£0.5 Billion saving)

• Improve customer service

2. Scottish Water Journey from the perspectives of:

• Employees

• Regulators

• Supply Chain

Scottish Water : A burning platform

Employees2002 – 2006: “Do less for less”• Disbelief, some denial of situation, survival mode

• Transformation driven by ‘others’ – everything changing

• Lots of people leaving

2006 – 2010: “Do the same for less• Some respect for achieving 02 – 06 targets

• Our own people now more involved in Transformation projects

• Roles profiles, T&C, business processes, tools, reports converging towards consistency

2010 – 2015: “Do more for less”• Transformation delivered by our own people – more planned

• Engagement Very High

• Performance related pay, bonus, employee performance measured, coaching/mentoring leadership

• New recruits joining the business

Regulators2002 – 2006

• Imposing a ‘contract’ on us

• Each regulator wanting their priorities 1st

2006 – 2010

• Beginning to work in partnership with regulators

• Stakeholder management structure in place

2010 – 2015

• We now lead the development of the investment programme in a collaborative manner

• Regulators trust that we know our business and our customer’s needs best

• Working together

“Scottish Water has outperformed itsprojections in the areas of investmentin the 2010-15 programme, levelsof service to customers, leakagereduction, investment costs andfinancial strength.”WICS 2012

Supply Chain2002 – 2006

• High number of small suppliers

• Very aggressive cost challenge on OPEX spend

• Knowledge brought in from England & Wales through JV

• New Jobs created in £450M per year Capital Programme

2006 – 2010

• Reducing number of suppliers – frameworks deployed

• Some outsourced opportunities

• Working to ‘Break the Cycle’

2010 – 2015

• Small number of suppliers – Alliances (11 years)/Frameworks

• Focus on value and outputs

• Long term security of work

3. Why has it been worth it so far….

• Average Household bill would have been approx. £110 higher than our current £324

• We have delivered our statutory objectives at £2.5 billion less than we had proposed in our Business Plans (BP’s from 2001 & then 2005)

• Performance OPA up from 132 points to 368 points

• Helps enable inward investment in Scotland

• Competition gave our 130,000 Business Customers a choice of retailers

OPA in Customer ‘speak’Measure 06 - 07 11 - 12

Inadequate Water Pressure 7,772 902 properties

No of Properties supply restored > 6 hours

35,415 21,803 properties

Leakage 1003.8 629 ML/d

Water Quality (Customer Taps) 99.66 (577 fails)

99.84%

Wastewater Pollution Incidents (Cat1 & 2)

931 499 incidents

Sewer Flooding Properties at Risk 772 267 properties

Customer Experience Transactional Score

58% 90% (today)