Portsmouth Water’s Customer Challenge Group has described the current metering take-up of 30% in the region as disappointing and has urged the company to redouble its efforts in this area.

The comments form part of Portsmouth Water’s newly-published Outcome Delivery Incentives report which covers the first year of the AMP6 2015-20 investment programme.

To increase meter penetration, in 2016/17 the company is now planning a number of intiatives, including:-

• Promote metering over the phone to those customers that would benefit financially
• Send out leaflets via email to unmeasured customers promoting metering
• Put metering messages on contractor vans
• Update the back of Portsmouth Water envelopes to promote metering
• Promote metering at events in the local area.

Portsmouth Water has the following 13 associated performance commitments in place that identify the company’s committed level of performance under each outcome:

Wholesale ODIs

• Number of bursts
• Mean Zonal Compliance (MZC)
• Water quality contacts
• Temporary Usage Bans (TUB)
• Leakage
• Total Interruptions to supply
• Biodiversity
• Water Framework Directive
• Carbon commitment
• RoSPA Accreditation

Retail ODIs

• Service Incentive Mechanism (SIM)
• Per capita consumption (pcc)
• Developer Survey

For 9 of the commitments the company could incur a penalty for performance below its commitments, but for some can earn a reward for performance. Portsmouth Water is now in a position to quantify the financial impact on customer bills in terms of rewards and penalties - the adjustments to bills will apply as of 1 April 2020.

While the company has met its targets for 6 of the 8 Outcome Delivery Incentive (ODI) measures, it has failed to achieve targets on 2 of them, namely
Water Quality Standards, as measured by Mean Zonal Compliance and Water Quality Contacts.

Water Quality ODI failure incurs £319k financial penality

The ODI failure on Water Quality KPI “Mean Zonal Compliance” of 99.95% by a margin of 0.01% has resulted in a financial penalty for Portsmouth. As a result allowed revenue will be reduced by £319,420 over the next price review period (2020-2025). Penalties apply annually for any year that performance is below 99.95%. This will mean a reduction of customer bills of £0.21 per annum from 2020.

The mean zonal compliance (MZC), is the representation of overall drinking water quality in customers’ properties is reported to the Drinking Water Inspectorate (DWI) on an annual (calendar) basis. The industry average for 2015 was 99.96%. During 2015 calendar year the company carried out a total of 15,190 determinations in samples taken at customer taps; four of these failed to meet the relevant standard (1 taste, 1 odour & 2 lead). In each case the issue identified was related to pipework owned by the customer, and not for the inherent quality of the water supplied.

According to Portsmouth Water, the results were “disappointingly impacted” by failures to meet the lead standards - an issue flagged up in this week’s annual report by the Drinking Water Inspectorate. The DWI report says that of those which do fail, nearly a third are due to problems in people’s own homes and that poor plumbing practices and sub-standard fittings are among the main causes of a deterioration in the quality of drinking water.

In one case the failure was the result of a lead solder joint in a customer’s internal pipework in an area that otherwise had no lead pipes supplying the property. This one failure brought the overall results down from just under 99.97% to 99.94%.

Ongoing Water Quality contacts failure could lead to £1.7m penalty in 2019 Price Review

On the Water Quality contacts failure, while Portsmouth achieved a significant improvement in the reduction in the number of contacts from customers relating to water quality, it still remained above the target the company had set itself. However, at 0.57, the utility’s performance remains significantly better than the industry average of 1.6 contacts per 1000 population.

As part of the Ofwat ODI scheme, the related rewards and penalties apply at the end of the current period and to the average contact rate over the five year period. If contacts remained at this level over the remaining four years of the current period until 2020 a financial penalty would be incurred and as a result allowed revenue would be reduced by £1.7million over the next price review period (2020- 2025). This would mean a reduction of customer bills of £1.14 per annum from 2020.

The report also includes details of the rewards and penalties Portsmouth Water could expect to incur if it continues to meet - or instead fail on its other ODI performance commitments. It also includes useful information on the company’s strategy to meet its ODIs in a number of key areas.

For example, on carbon, a reputational ODI with no financial incentives, the report says Portsmouth Water will continue to investigate the feasibility of sustainable wind and solar energy projects and other renewable technologies where cost effective - it already operates solar arrays at 5 of its water treatment works. The report says the company is also continuing to work towards further reductions in power consumption including:

• Enhancing telemetry controls monitoring power consumption
• Targeting investment to optimise pump operation, reduce base level power requirement and through life monitoring of pump efficiency.

This is the first year the firm has also participated in National Grid’s Demand Side Balancing Reserve (DSBR) where pumps are switched off during times of peak demand, to assist the Grid in balancing supply and demand in the UK.

Third party assurance on Portsmouth Water’s ODIs and other KPIs has been provided by the company's reporter WS Atkins on an entirely independent basis.

Click here to download Portsmouth Water Outcome Delivery Incentives 2015-2020 July 2016