Protecting consumers, promoting value, safeguarding the future

1
Future regulation and the water sector SBWWI 4
November 2009
Protecting consumers, promoting value,
safeguarding the future
2
What has been achieved so far
Leakage has fallen by 35 since peak in 1994-95
80 billion has been invested. Companies are more
efficient bills are 30 lower than they would
have been
Water and environmental quality has improved 71
Blue Flag beaches and fish in the Thames again
Network is functioning better more companies
have stable serviceability than ever before
Customer service is significantly better than 17
years ago only 4,825 properties (0.02) are now
at risk of low water pressure, compared with
344,259 (1.6) properties in 1990-91
Protecting consumers, promoting value,
safeguarding the future
3
The future challenge sustainability
Need resilient infrastructure network is
335,000 km long, much of which is ageing
Changing climate could bring more droughts and
floods
Building on flood plains increases burden on
drainage systems
Growing UK population predicted to reach 71
million by 2031
Rise in single households, which use more water.
Need to be more water efficient
Water is the new oil Goldman Sachs
Protecting consumers, promoting value,
safeguarding the future
4
Our strategy
Keeping consumers at the heart of what we do
Keeping companies accountable
Enforcing compliance
Introducing competition where it benefits
consumers
Taking a long-term view of sustainability
Shaping the regulatory agenda at national andEU
level




































Regulating effectively
Protecting consumers, promoting value,
safeguarding the future
5
Climate change risks
Protecting consumers, promoting value,
safeguarding the future
6
Sustainable water
Everyone needs to play their part Need action at
every stage of the water cycle Sustainable
services Sustainable consumption
Protecting consumers, promoting value,
safeguarding the future
7
Our strategy
Innovation can deliver tangible benefits to
consumers Ie. improving levels of service Service
dividend
Innovation can provide the answer to the
long-term challenges Sustainability dividend
Innovation can drive costs down and improve
efficiency Cost dividend
Ofwat Protecting consumers, promoting value and
safeguarding the future
8
Setting price limits for bills in 2010-15
Protecting consumers, promoting value,
safeguarding the future
9
Capital expenditure since privatisation
Protecting consumers, promoting value,
safeguarding the future
10
Pitt review lessons learnt from the 2007 floods
Reducing disruption to essential
services Understanding the level of risk that is
tolerable Delivering greater resilience in
critical infrastructure Minimising the loss of
services Better planning through information
sharing and engagement Effective management of
dams and reservoirs
Protecting consumers, promoting value,
safeguarding the future
11
Cave review competition and innovation in water
markets
Threshold for competition Abstraction Special
mergers Innovation New water company
appointments Upstream competition
Protecting consumers, promoting value,
safeguarding the future
12
Walker review charging for household water and
sewerage services
The value of water Current charging
systems Metering and future charging
systems Fairness and affordability Prevention,
management and recovery of bad debt Water
efficiency Customer involvement and understanding
Protecting consumers, promoting value,
safeguarding the future
13
Towards an innovation platform for the water
sector
Good case to focus on driving more innovation
Innovation platform to provide support for
business in developing solutions to key
challenges Competitive, business focused
approach Working with Technology Strategy Board
and stakeholders to understand the case the
governmental and regulatory drivers the societal
challenges in the sector Expect progress in 2010
Ofwat Protecting consumers, promoting value and
safeguarding the future
14
We need to change the way we regulate
Protecting consumers, promoting value,
safeguarding the future