Alongside its annual results for 2020-21, Dŵr Cymru Welsh Water, the first, and still the only, not-for-profit utility company in Wales and England has announced today that it plans to achieve net zero carbon emissions by 2040.

The company is one of the largest energy users in Wales with an annual energy bill of £46 million.

Since 2010 Welsh Water has reduced its net operational emissions (market based) by 80%, resulting in a total carbon emission reduction of 65%.

The utility currently generates 23% of its own energy needs through wind, hydro, solar and advance anaerobic digestion (AAD) with the rest procured from 100% renewable energy resources.

Welsh Water plans to be 35% energy self-sufficient by 2025 and will invest a further £21 million to achieve this over the current AMP7 regulatory investment period to 2025, ultimately becoming 100% energy self-sufficient - or energy neutral - by 2050.

Welsh Water will also increase the use of renewables to become more energy self-sufficient. Building on the success of its flagship £36 million energy park in Wrexham, North Wales, the company has recently invested £50 million into Cog Moors Wastewater Treatment Works in the Vale of Glamorgan.

This will generate clean, green energy from sewage through its state-of-the- art Advanced Anaerobic Digestion (AAD) facility, creating enough energy to power the works which will make it an energy neutral site.

£353 million capital investment in 2020-21

Glas Cymru Chairman, Alastair Lyons, said:

“Today marks a significant moment for Welsh Water, as we announce our journey to achieving net zero carbon emissions by 2040. This is more than a target in relation to infrastructure or operational emissions: rather it’s about changing the way we think, plan and deliver. As one of the flagship companies in Wales, it’s about taking responsibility for managing the biggest challenge of our time in terms of climate change, focusing on the long-term and ensuring we help protect our customers, communities and the wider environment and create a better future for generations to come.”

The announcement to achieve net zero carbon emissions comes as the company publishes its Annual Results for 2020-21, showing that it invested nearly £1 million a day in its water and wastewater services (£353 million in 2020-21) - with £44 million invested in environmental improvements during this period which will help protect the quality of rivers and coastal waters around Wales.

Welsh Water also confirmed that it has incurred additional costs of £34 million to help deal with the Covid-19 pandemic and protect public health while supporting 5,000 household customers in financial need, temporarily suspending payments for approximately 45,000 businesses which closed for a period due to the Government’s social restrictions.

Financial results

Capital investment during the first year of AMP7 2020-21 totalled £353 million (2019-20: £456 million), forming part of the £1.8 billion investment plan for 2020-25.

Operating costs were £329 million – £3 million higher than in the previous year (2020: £326 million)

Operating profit (before interest and tax) reduced to £7 million (2020: £36 million) primarily due to incurring exceptional items totalling £34 million. This included our response to the Covid-19 pandemic comprising bad debt charges, personal protective equipment and increased hygiene and deep cleaning.

Following eleven years of below-inflation average bills, in February 2021 Welsh Water continued to set prices below the rate of inflation for a further year. Gearing – total net borrowings as a percentage of regulatory asset value – currently stands at 60% compared to 93% in 2001 (2019-20: 60%)

Welsh Water’s credit ratings, which are amongst the strongest in the sector, have remained unchanged since last year – with Fitch at A rating; Standard & Poor’s at A- rating and Moody’s continue to rate us as A3. All ratings have a stable outlook.

Operational performance

Operational performance highlights include:

• In 2020, the firm achieved 99.99% compliance with drinking water standards tests (2019: 99.98%).
• In 2020-21, the average customer minutes lost to supply interruptions was 11 minutes and 5 seconds compared to 2019-20 which was 17 minutes 46 seconds
• Annual leakage was on target at 163.6 megalitres per day (2019/20: 169 megalitres per day) and represents the sixth successive year of achieving target. This despite restricted interaction with customers during the pandemic and higher demand.
• Good overall wastewater treatment works performance with a slight improvement on last year: 99.66% of works fully complied with discharge permits in 2020 (2019: 98.18%)
• 77 wastewater pollution incidents (2019: 94), of which all but 1 were “Category 3” (the least serious incidents) (2019: 0)
• For internal flooding, the company failed this target due to a significant storm weather incident in Newport in December 2020 - 2020-21 saw 302 internal sewer flooding incidents (2019-20: 256)

Customer service

Overall, Welsh Water achieved its highest ever C-MeX score and customers rated us strongly in terms of both customer service and communication. In the final 2020/21 C-MeX results, Welsh Water achieved 4th place out of the 17 water companies and was 3rd of the water and sewerage companies. The company achieved 1st place in the “non-contact” element of the survey and 4th in the “contact” aspect.

Welsh Water also retained its position as the top-rated water company in Wales and England for customer service in the Institute of Customer Service survey. It was also the only water company to be ranked amongst the Top 50 companies in the UK

Commenting on the results, Welsh Water Chief Executive, Peter Perry, said:

“We have faced an unprecedented, challenging year in responding to Covid-19 but we have shown resilience and adapted the way we operate and provide our essential services.

“As a company owned on behalf of our customers, we are rooted in the communities we serve. Our not-for-profit operating model continues to benefit our customers and communities and we are proud to announce our ambitious environmental plans to ensure that we can continue to provide an effective, resilient and affordable service for decades to come.”

As well as committing to becoming carbon neutral by 2040, the company aims to reduce total carbon emissions by 90% by 2030. To transform water and wastewater services, the company has set aside a record budget of over £80 million for research and innovation over the next five years.

Between now and 2040 it plans to innovate how it harnesses nature through its biodiversity plan, peatland restoration, wetland treatment and catchment management.

To provide detailed oversight of the strategy developed to deliver these objectives, and of the measurement and reporting of progress against it, the Board has formed a new committee – the Environmental, Social, & Governance (ESG) Committee – chaired by Non-Executive Director, Debra Bowen Rees.