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Media Centre Latest News Unique not-for-profit model brings £32 million boost for Welsh Water’s customers

Unique not-for-profit model brings £32 million boost for Welsh Water’s customers

08/06/2016

Dŵr Cymru Welsh Water, has today announced that £32 million – the equivalent to dividends paid to shareholders in other companies – will be used to:

  • provide additional financial support for those customers struggling to pay their bills;
  • invest in renewable energy generation schemes to cut carbon emissions and to help keep down future customer bills;
  • target improvements for areas suffering repeat problems with their water supply; and
  • part-fund a new visitor centre at the Llys y Frân reservoir in Pembrokeshire.

This £32 million is in addition to the previously announced £1 million-a-day capital investment programme (totalling £1.7 billion between 2015 and 2020) and commitment to keep the average household water and sewerage bill below the rate of inflation in every year until 2020. The company also announced its best overall performance and that it will consult its customers over the summer on how any future financial surpluses could be used.

Robert Ayling, Welsh Water Chairman, said: "I am glad and proud to report that after 15 years of our ownership, Welsh Water is in very good shape both operationally and financially. Our sole purpose is to achieve the highest standards for customers at the lowest possible cost. We have shown that our non-shareholder model of ownership can deliver that."

Welsh Water’s Chief Executive, Chris Jones said: “Our unique ownership model allows us to use, for the benefit of our customers, money that in other companies would be paid to shareholders. This will help cut our costs – and therefore customers’ bills - by generating more energy on our own sites; by improving the service in areas where we’re having repeat problems; providing additional support for customers struggling to pay; and to help build a new environmental visitor attraction in Pembrokeshire.”

“Customers have indicated that they want to see us strike the right balance between keeping bills low today, improving performance where it isn’t to the standard they expect, and investing now to cut the cost for future customers. The additional £32 million of funding announced today will help us strike that balance and our research shows that customers support this package by four to one.

“We also believe it is important that customers have a voice in how the value generated by our not-for-profit model is used in the future. We will shortly launch a consultation over the summer months inviting our customers to have their say on this most vital of public services.”

Notes to Editors:

Benefits of the additional £32 million will include:

  • Providing financial assistance through the funding of social tariffs for customers who are truly struggling to pay their water bill (with a target of helping 100,000 customers by 2020)
  • Additional renewable energy generation and efficiency projects (including hydro, solar, and small-scale wind) in order to reduce energy costs, environmental impact and keep customer’s bills lower in the long term
  • Improvements to the water supply network in the Rhondda Valley, including the renewal of 33 km of water main improving water supplies to almost 20,000 properties
  • Improvements to the water supply network in north Pembrokeshire, including the renewal of 7 km of water mains and other significant works in the surrounding area to improve water supplies to over 11,000 properties
  • £2 million to part-fund the building of a new Visitor Centre and tourist attraction at Llys y Frân reservoir in Pembrokeshire.

Preliminary Financial Results:

  • The company’s Preliminary Financial Results show strong overall performance.
  • For the seventh year running, the company has kept bill increases below the rate of RPI inflation – keeping it on course to be the only water company to deliver a decade of below RPI price increases by 2020
  • Welsh Water, which contributes around £1 billion a year to the Welsh economy, also reports its best ever environmental performance. Its investment in this area is reflected in the increase of Blue Flags seen in Wales to 47 in 2016 – which is around a third of those awarded across the UK despite only having 15% of the coastline
  • The company also secured second place in industry regulator Ofwat’s Customer Satisfaction Survey league table for 2015-16 compared with other water and sewerage companies in Wales and England. According to independent benchmarking research conducted by Water UK, Welsh Water also continues to lead the industry in supporting housing development, securing first place for the year as a whole, for both water and sewerage services
  • The company is on course to deliver a record £1.7 billion investment programme by 2020 with examples of investment projects including:
  • increasing resilience of drinking water for 100,000 customers near Conwy in north Wales through a £31 million investment at Bryn Cowlyd Water Treatment Works
  • safeguarding water quality issues in Hereford by investing £5.7 million to replace more than 42 km of old cast iron main which can cause discoloured water
  • reducing the risk of local sewer flooding which could adversely impact its customers and the environment by starting work on a further £25 million investment programme in its innovative RainScape programme in Llanelli and Gowerton over the next five years. This follows a £15 million investment in recent years and is aimed at removing more surface water from its combined sewer network
  • £2.7 million to increase capacity on the wastewater network in Mumbles which will benefit local bathing water quality
  • £1.1 million to replace almost 10 km of water main in Raglan to reduce the risk of discoloured water to customers

Financial Results

  • Bill increase remains below the rate of inflation for seventh year running. After deducting the effect of RPI inflation, Welsh Water’s average household bill is now lower than it was in the year before Glas Cymru took over the ownership of Welsh Water in 2001
  • Operating costs of £297 million were £2 million higher than in the previous year (2015: £295 million)
  • Underlying profit of £18 million retained for the benefit of customers (2015: £77 million)
  • Gearing – total net borrowings as a percentage of regulatory asset value – down to 57% from 93% in 2001 (2015 – 60%)
  • Glas Cymru has the highest credit rating in the UK utilities sector
  • Capital investment of £279 million (2015: £379 million), which is part of a £1.7 billion investment plan between 2015 and 2020
  • Over £150 million of value has been returned to customers over the five years to 2015 through funding accelerated investment, by providing our current unique range of social tariffs, and absorbing the costs of operating private sewers (which transferred to Welsh Water’s ownership in October 2011)
  • Governance structure changed to create new holding company for the Group – Glas Cymru Holdings Cyf - to enable the business to provide additional water-related services to its customers.

Operational Performance

  • 99.8% compliance with drinking water standards measured through over 300,000 tests
  • No restrictions on customer water use and leakage is below target at 180 mld (2014: 180 mld)
  • Good overall wastewater treatment works performance: 99% of works fully comply with discharge permits in 2015 (compared to 99% in 2014)
  • 112 pollution incidents (2 serious pollution incidents) compared to 122 in 2014 (4 serious pollution incidents)
  • 222 internal sewer flooding incidents (2014: 265)
  • A record 44 Blue Flags were awarded to bathing waters and 3 to marinas in in Wales (42 in total in 2015)
  • Improvements were made in the customer acceptability (taste, odour and appearance) of drinking water and in water supply interruptions but more investment planned to deliver the further necessary improvements

Customer Service

  • Ranked second in Ofwat league table on customer satisfaction; reported by Institute of Customer Service (July 2015) as best water and sewerage company in England and Wales in terms of customer satisfaction and trust
  • HelpU tariff launched to help up to 100,000 of our most disadvantaged customers
  • Around 55,000 household customers already benefit from one of our sector leading social tariffs and our Customer Assistance Fund - more than any other company in the sector
  • Written complains increased in the year to 7,128 (2015: 3,314) due to the impact of implementing a new customer billing system and a change in customer behaviour (with telephone complaints down by nearly 2,500)

Environment

  • £15 million already invested in our sustainable drainage programme – RainScape – in Llanelli, Burry Port and Gowerton which offers an innovative solution to tackle urban flooding with the next £25million phase underway
  • Investing £24 million in transforming Five Fords wastewater treatment works into an innovative Energy Park - incorporating solar, advanced anaerobic digestion, wind and hydro generation schemes at the site
  • £8 million invested in marine project to undertake full survey of any potential impacts of waste water operations on coastal waters
  • Acquired Llanishen and Lisvane Reservoirs to increase resilience of drinking water supplies to Cardiff and potentially to offer improved recreational access to these sites in Wales’ capital city.

The customer consultation on how surpluses could be used in future years will be launched on July 11th. Further information will be made available closer to the time.

Ends

For further information, please contact Welsh Water’s Press Office on 01443 452452