Northumbrian Water Limited (NWL) has published its Annual Performance Review for the year ended 31 March 2015 for Northumbrian Water and Essex and Suffolk Water.

The detailed 94 page Annual Performance Report describes the water company’s performance in the year against a wide range of measures. The report says that while the outcomes identified in the PR14 business plan do not become the vehicle for formal regulatory reporting until 2015-16, they have already been embedded in the business. NWL has accordingly described its performance for 2014-15 in the report under each of the outcome statements.

Northumbrian Water was ranked joint second of all the water and sewerage companies in the recent Service Incentive Mechanism pilots ran by Ofwat. Although there was a slight dip in performance in 2014-15, the report says SIM performance score has improved from 72 at the start of the AMP period to 83.72.

NWL welcomed Ofwat’s new qualitative SIM measure, which is changing in the future to focus more attention on the customer experience, from first point of contact to the resolution of the issue, saying:

“We welcome this change because we believe customers’ views of performance are more important than quantitative measures, such as volume of unwanted contacts.”

“We also support that the new SIM measure surveys all customers who contact the company within a specified period. The extent of customers to be surveyed is now absolutely clear and there is no chance that the approach to choosing the sample can affect the results.”

 Customer research via a daily survey

As well as customer satisfaction tracking research, the report says NWL has now also introduced a daily survey and ask circa 10,000 customers each week what they think of the service.

Examples of subject-specific customer research during 2014 and 2015 include customers’ experience of pollution in rivers and their expectations. NWL said this will provide an understanding of how customers experience river water quality, their concerns and what they expect of NWL which will help to influence where investment is concentrated in the future.

Operational activities highlighted included the opening of the expanded Abberton reservoir in June 2015, the culmination of over 20 years' work to promote and construct the project. The reservoir, which secures drinking water supplies to 1.5 million people in Essex, completely filled with water for the first time during the period.

Water supplies to the vast majority of customers in the Northumbrian Water region are supported by Kielder Reservoir, which has significant surplus capacity.

Berwick and Fowberry resource zone – nitrates a concern

The report says that NWL is currently separately taking steps to maximise deployable output and manage demand in its small Berwick and Fowberry resource zone which is served only by groundwater sources and investigating the sustainability of the sources. There is some concern that the groundwater resource sufficiency may not be sustainable in the longer term and may also be under threat from nitrates from farming.There is an increasing nitrate trend in the fell sandstone groundwater from which the Berwick and Fowberry boreholes draw water.

Modelling will be undertaken during 2015 to establish when the nitrate drinking water standard would potentially be exceeded.

NWL has also agreed to joint fund a project with the Environment Agency and Newcastle University starting in April 2016 which will seek to quantify nitrate leaching under current land management practices and to establish what mitigation measures could be implemented.

“Very strong focus on sewer flooding”

The water company said it continued to have a very strong focus on improving its sewer flooding performance and reduced the risk of internal sewer flooding for the largest number of properties ever in a single year. The number of properties in its area flooded internally from sewers for all causes (excluding severe weather) reduced from 831 properties in 2009-10 to 228 in 2014-15.

 NWL has also made improvements in repeat sewer flooding, which includes flooding in severe weather – down from 351 instances in 2013-14 to 118 in 2014-15.

 All of the bathing waters in the NW area achieved the basic ‘Mandatory’ pass and 31 of the 34 bathing waters (91.2%) met the highest current European water quality standard, known as ‘Guideline’ - this is the highest pass rate in the country.

Operating costs rose to £489.9m from £446.5m in 2013-14

Commenting on its financial performance, Northumbrian Water reported an increase in turnover to £787.7m in 2014-15 (2013-14: £776.4m), while operating costs rose to £489.9m (2013-14: £446.5m), including an exceptional one-off asset impairment charge of £30.7m in relation to sludge drying plant abandoned as a result of the successful implementation of advanced anaerobic digestion technology.

Capital investment in the regulated business, net of contributions, for the year was £229.5m  (2013-14: £212.5m). In January and April 2014 the company drew £50m loans from the European Investment Bank (EIB) and is in preliminary discussions with the EIB regarding the provision of further investment funding over AMP6.

Regulatory data collection strengthened

The report also provides an update on progress with regard to a programme of actions related to regulatory data integrity which started in 2014.  The initiative is aimed at promoting actions and behaviours that are appropriate all the way through the process starting from the source of the data (e.g. customer centre of excellence and water and waste water operatives and contractors) through to senior managers and, ultimately, the Board.

 In the first phase of the campaign NWL endeavoured to raise the profile of data integrity by communicating at every opportunity "the keen interest of the Board and Audit Committee" in robust data.

In the second phase, NWL is now checking that everyone involved in the data ‘supply chain’ understand their responsibilities and appropriate checks and controls are in place. Working with data owners and operational managers, the water company is mapping the route and treatment of the data involved in the monitoring of each performance commitment.

The report says NWL’s aim is that everyone who takes part in regulatory data collection will know:

• what regulatory data they are collecting as they carry out their duties;
• how the data is used and why it is important;
•  the importance of accurate data;
•  the consequences of misreporting (e.g. penalties or loss of reputation); and
•  what they should do if they are not confident about the data in any way.

 Innovative sustainable solutions delivered in liaison with partners

The report also draws attention to NWL’s efforts to delivering innovative, sustainable solutions in liaison with its partners. While the majority of improvement works have been conventional up-sizing of the network and/or the provision of additional storage, during 2014-15 the water company has also delivered a number of more innovative and sustainable solutions to reduce flood risk, much of which has been carried out in partnership with other agencies.

 An innovative approach to partnership working has led to the formation of the Northumbria Integrated Drainage Partnership (NIDP) between the company, all 13 Lead Local Flood Authorities (LLFAs) in its region and the Environment Agency has developed an agreed proactive approach and implemented a regional risk based prioritisation methodology to identify integrated drainage issues. In 2014-15, NWL started jointly funded studies in 18 areas and are now already ‘on site’ in three of those delivering sustainable solutions.

“Sustainable solutions becoming part of  “business as usual processes”

 Commenting on the outcome of four flooding pilot studies agreed with Ofwat as studies that would increase learning in terms of the design and delivery of sustainable solutions in conjunction with other partners, the report highlights the following three key lessons learnt:

1. The complexities of multiple partner issues require time and flexibility to resolve the uncertainties of resources, budgeting and prioritisation;
2. A strong and sensitive customer engagement process is required to support both customer understanding of issues and the delivery of property level interventions; and
3. Good quality feasibility studies are required to support partner discussions and demonstrate benefits to the community.

The report draws attention to the Princes Road, Brunton Park Pilot project which involved diverting a river to achieve reduction in flood risk from the sewerage system and the river. Identified as a complex project in terms of identification of the flooding mechanisms, available solutions, partnership interrelationships and local land tenancy arrangements with the council, the project has confirmed:

• the financial complexities of multiple partner projects;
• the need for clear risk allocation between partners; and
• the need for wider aspects of local issues to be considered.

 On a separate pilot project at Great Ayton, the report says the project has confirmed:

•  the need for a flexible timescale for such projects ;
•  the need for improving the understanding of developers / landowners of the benefits of and responsibilities for SUDS; and
•  the benefit of a united approach from the respective flood risk managers.

 Further sustainable solutions and partnership working to be expanded 

 Based on the success of the pilot projects, NWL has continued to expand the number of projects that include sustainable solutions and partnership working. The report says the company has incorporated the lessons and considers that sustainable solutions are now becoming part of its “business as usual processes” for resolving hydraulic incapacity in the sewer network.

 Asset Health – more investment in proactive monitoring

 The report also refers to NWL’s innovative Asset Health approach set out in its  AMP6 business plan which uses baskets of measures to help understand if the asset base is being properly maintained over time.

As well as appropriate service related measures this also includes lead indicators of asset condition (water mains bursts and sewer collapses). NWL said it is continuing to improve the way it monitors discharges from  sewage treatment works, with increased online instrumentation and early warning trigger management in order to resolve problems before there is an impact on the water environment.

On pollution incidents, the report says NWL is continuing to invest in sewer level monitoring (SLM) technology and trend analysis in order to improve performance,  to aid prediction of where pollution incidents are likely to occur and to detect and resolve problems at a warning level before they cause an overflow.

 Over 85% of the firm’s Combined Sewer Outfalls (CSOs) are now monitored. For 222 cases in 2014, operators were alerted and attended site to clear a problem before there was any overflow. By 2017, NWL is aiming  to have nearly all of its CSOs monitored and to have developed a business intelligence system that will improve its capability to predict where problems are likely to happen.

Metering replacement programme reprioritised in AMP6

On metering, NWL failed to achieve its 80,000 replacement  target for AMP5 it  forecast back in October – instead it actually replaced 71,464 meters. The report attributes the reduction to the fact that in certain areas some of the oldest stock of meters proved more technically challenging to replace than anticipated. Some meters had initially been installed directly to pipe work underground without a boundary box, while others were situated in very narrow boundary boxes that needed specialist equipment to change.

NWL said this has slowed down the pace of replacements and it was now in the process of reassessing the programme timings to deliver revenue meter replacements as part of an overall reprioritisation of the asset maintenance programme for AMP6.

Commenting on the report, Chief Executive Officer, Heidi Mottram, said:

“I am pleased that our planning, hard work and investment have resulted in service levels that continue to improve and are at the very forefront of industry performance."

“This brings us even closer to our aim to be the national leader in the provision of sustainable water and waste water services. Whilst this is an excellent set of outcomes, and we are justifiably proud of what we have achieved, we are not complacent and have plans to make further service improvements in 2015-16."

NWL has also published a customer-facing annual performance review with its presentation using an innovative web-based approach. The firm is planning to publish a separate environmental report on its website in the autumn.

Click here to download the Annual Performance Report 2014-15 in full