A new report published by the Water Industry Commission for Scotland (WICS) highlights a remarkable transformation since Scottish Water was created in 2002.
Benefits to customers include:
• substantial improvements in the level of customer service – the regulator said Scottish Water had consistently beaten its challenging targets;
• substantial reductions in Scottish Water’s operating costs, which are now around 35% lower;
• higher quality drinking water and a better water environment – as a result of more than £2 billion of investment in these areas; and
• much lower leakage, which is now around 36% lower than the level of five years ago.
The Scottish Regulator says the improvements are all the more welcome in light of the fact that over the same period the water industry in England and Wales has seen its operating costs increase by 13%, while figures for customer service levels have remained stable.
The Performance Report examines Scottish Water’s progress in improving customer service, becoming more efficient, controlling costs and delivering investment outputs.
Alan Sutherland, Chief Executive of WICS said:
“Scottish Water has not only delivered the challenging savings and performance improvements that we required but has managed to go further, by a significant margin. For example, it is providing better levels of service than were funded through bills and has beaten its leakage targets. This outperformance means that customers are getting more for their money.”
At the price reviews in 2001 and 2005 WICS challenged Scottish Water to deliver ministerial objectives for the industry at £2.5 billion less than the company originally proposed in its Business Plans. The regulator said that as a result, average household bills are around £105 a year lower than they would otherwise have been. On top of these savings, Scottish Water has also outperformed in a number of areas. WICS estimates that Scottish Water’s greater efficiency and additional benefits to customers now equate to around £12 per average household a year.
The regulatory framework in place in Scotland comprises a number of elements that combine to create the same impetus that is experienced by companies subject to capital market pressures. WICS said that setting challenging performance targets and cash limits, aligned with appropriate managerial incentives to outperform, played a key role.
Mr Sutherland added:
“Our regulatory objectives, combined with a determination on the part of Scottish Water’s management to rise to the challenges we set, have delivered significant benefits to customers and the environment. Scottish Water has provided efficiencies and additional benefits to customers to the value of around £175 million in 2006-10.”
The reporting year 2009-10 marks the final year of the regulatory control period 2006-10. WICS published its final determination for the next regulatory control period, 2010-15, in November 2009.
Download the Performance Report in full here.