DWR CYMRUWelsh WateR: YoUR CoMpanY. YoUR plan.2015-2020

WELCOMECROESO

WELCOMECROESO

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Sewerage region boundaryWater region boundary

Bangor

Pwllheli

Rhyl

Wrexham

Dolgellau

Aberystwyth

Hereford

Chepstow

CardiffBridgendSwansea

CarmarthenFishguard

Holyhead

Welcome 03our plan – at a glance 04Who we are 06our challenges 08Consulting with our customers 10You said / We listened 12What this will mean for bills 14Monitoring our progress 16our outcomes 18Meeting our targets 41our sustainable Future: 2015 - 2040 42

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Croeso / Welcome

At Dwr Cymru Welsh Water, we are proud to provide over three million people with a reliable source of high quality tap water, whilst protecting public health and the environment in our care by removing sewage safely and responsibly.

We are also proud that we are different to other companies. Without shareholders, we put your needs and priorities first. Whatever gains we make, we’ll return to you, either in further improvements to the service you receive or lower bills.

Over the summer, we asked for your feedback on our proposals to improve our services between 2015 and 2020 and what impact this would have on your bill. The response was very positive with thousands of our customers taking the time to respond.

Over 11,000 people took part in our roadshows, open evenings and events – and 84% of you considered our plans to be acceptable. Your feedback told us that we’d generally struck the right balance between investment and bills, whilst you didn’t want to see a deterioration in service, even if that could lead to a lower bill. However, you also told us that keeping bills low is a big priority, and some customers said that a reduction in bills would be welcome.

As a result, we plan to keep any price increases 1% below the rate of inflation between 2015 and 2020. Whilst maintaining our current high levels of service, we will also continue to invest at record levels to improve our business in the long-term, for the benefit of you, your community and our environment. We’ll also give more help to those who are genuinely struggling to pay their bills and we will aim to pay for all these improvements by cutting our own costs and driving innovation through the business.

Thank you to all our customers who have helped us shape this Business Plan and also to the independent Customer Challenge Group who have rigorously scrutinised our plans to ensure they match your priorities.

Some additional research in recent weeks has shown that 94% of our customers consider this plan to be acceptable and 85% think it represents better value for money compared to our earlier consultation proposals.We hope you agree.

As a company owned on behalf of its customers, we are committed to doing the right thing for both today’s customers and for future generations. We are confident that this plan reflects what you want from your water company from 2015 and beyond and that the decisions we take today will benefit you and future customers.

Diolch

Robert aylingChairman

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our plan - at a glance

Having considered the views and opinions of the thousands of customers who took part in our biggest ever customer consultation – ‘Your Company. Your Say.’ - this booklet outlines our Business Plan for 2015 to 2020.

We will continue to make significant investment to maintain, and where necessary, improve the services we provide to the three million people we serve in Wales, Herefordshire and parts of Deeside.

We believe that this plan represents an attractive and sustainable outcome for our customers by including commitments to:

keep any increase in average bills to 1% below the rate of inflation from now until 2020

invest some £1.5 billion to maintain our service and deliver significant improvements in areas such as customer service, environmental performance and in the resilience of our core infrastructure

help customers who genuinely struggle to pay their bills by doubling the number benefiting from our range of social tariffs to over 100,000

guarantee that all gains will continue to go customers - whether from favourable economic circumstances or out-performing our key targets

We will measure our performance against these eight key outcomes:

You will have complete confidence that your drinking water is safe, reliable and tastes good

We will safeguard a sustainable environment that we are proud to hand on to future generations

We will adapt our activities to deal with the potential effects of climate change, whilst reducing our own carbon footprint

We will continue to provide our customers with excellent customer service

Our prices will reflect good value for money for our customers, with an effective range of help for those struggling to pay

We will maintain our assets for future generations, at the most efficient cost

We will develop a team of people who can provide a great service to our customers

We will continue to be an efficient business with a strong credit quality

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What improvements can you expect to see? Whilst maintaining our current high standards for drinking water and protecting the environment, we will by 2020:

improve the appearance, taste and odour of our drinking water leading to a 10% reduction in the number of times customers contact us to report these problems

reduce leakage from our water mains by 8%

reduce the number of properties that suffer low water supply pressure by some 25%

reduce interruptions to water supply by 10%

reduce the number of properties that suffer flooding from sewers by 20%

reduce the number of customers affected by unpleasant odours from our sewage works by around 2,000

reduce pollution incidents from our sewage network by around a third

significantly increase the use of sustainable drainage schemes to protect properties from flooding and to safeguard the environment

develop an enhanced range of social tariffs targeting help to customers who genuinely struggle to pay their bills

reduce the amount of energy we use on our sites by 5%

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WELCOMECROESO

CROESOWELCOME

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Who we are...

a lot of hard work goes into every drop of water on its journey to and from your home. this is how we work:

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1We operate a vast network of reservoirs, treatment facilities and pipes. If we had to build our entire network again from scratch, it would cost more than £25 billion – that’s more than £20,000 per household customer!

2We look after 91 reservoirs and treat and supply over 800 million litres of safe, clean drinking water each day through 27,000km of pipes. We also carry out almost 300,000, tests a year on your tap water at our state-of-the-art laboratories in Newport and Bretton.

3Despite increasing energy and supplier costs, our price increases by 2015 will have been below the rate of inflation for five consecutive years. Because we have no shareholders, all of your money goes towards operating, maintaining and investing in your service.

4We manage 40,000 hectares of land. This includes four visitor centres that attract around one million visitors a year. Around 40,000 school children and young people per year visit our education centres or receive lessons from us as part of our outreach programme.

5

If you need to contact us by phone in Welsh or English, you will speak to a real person based in Wales. We are also one of the first water companies in the UK to use texts and automated voice messaging to let you know if there’s a problem in your area.

6Laid end to end, our sewers would stretch over 30,000km – or all the way to Australia and back. We deal with over 2,000 blockages a month and manage to stop flooding or pollution in 99% of cases, helping to protect public health and the environment.

7We provide water and sewerage services to around three million people and around 110,000 businesses in much of Wales, Herefordshire and parts of Deeside.

8We are one of the biggest companies in the area. We contribute over £1 billion a year to the Welsh economy, directly employing around 2,500 staff and supporting a further 3,500 jobs through local companies and suppliers.

9The water industry was privatised in 1989, and in 2001 Welsh Water was acquired by Glas Cymru on behalf of its customers. We don’t have shareholders but we do have around 60 Members (appointed on the recommendation of an independent panel) who reflect our diverse range of customers and hold the company to account.

Welsh Water is different from other water companies. We don’t have shareholders and we are owned and managed on behalf of you and all the customers we serve. all our gains go to customers and since 2001 we have paid £150 million back to customers to help lower their bills. since 2010, customers are also enjoying other benefits such as accelerated investment and additional financial support for those who genuinely struggle to pay their bills, whilst we have also absorbed the costs of maintaining 17,000km of private sewers which used to be the responsibility of customers – all to a value of £140 million.

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our challenges

Meeting your expectationsWe talk to our customers every day. We try to respond immediately to any pressing issues and to take on board your comments when planning for the long-term. Based on this feedback, we know that you want us to maintain high quality drinking water; tackle problems such as low pressure and discolouration; reduce the risk of pollution and sewer flooding; and keep any interruptions to your water supply to a minimum. We aim to provide value for money compared to other bills and we can’t let our service standards slip.

Cost of maintaining the private sewer networkFollowing a change in Government legislation in 2011, we took on the responsibility of maintaining over 17,000km of sewers that were previously the responsibility of private households, doubling the size of our sewer network. We currently fix more than 1,000 blockages on these extra sewers every month, which is expected to cost us £20 million a year by 2015.

affordable billsWe know that the general cost of living for our customers is increasing whilst the cost of energy, materials and other items we have to pay for to provide our services is also going up. Despite this, we will keep our annual price increase below the rate of inflation until 2020 and this means that we will have kept our price increases below the rate of inflation for a decade (from 2010 to 2020). Through our support schemes, we are now helping around 52,000 customers who genuinely struggle to pay their water bills.

Investing in the futureWe have thousands of kilometres of pipes, sewers, storage facilities and other infrastructure needed to keep your water running and remove your sewage. Replacing all our assets at once isn’t possible and so we must prioritise our investment carefully. It’s a significant challenge, especially as we have to make up for the many decades of under-investment before Glas Cymru took ownership of Welsh Water in 2001.

tighter environmental standardsWater is vital to everyday lives. In order to avoid water shortages and to protect the environment for future generations, we must only use what we need and carefully manage where it is taken from. More demanding environmental standards, designed to improve the quality of our rivers and seas, are placing new demands on the company, especially as Wales has the second longest coastline of all the water companies in England and Wales.

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InnovationIn order to meet future challenges, we need to be even more efficient and innovative. This includes generating energy from sewage at our own sites and developing different ways of dealing with surface water and flooding, whilst also thinking of new ways to keep in touch with customers in a fast moving digital world. Being more innovative will help us solve some of our problems more efficiently which, in turn, will also improve our general services to customers and help reduce our operating costs.

the impact of climate changeUnpredictable weather, including longer, drier periods and more frequent storms, is putting our network under greater strain than ever before, with both the increased risk of flooding and water shortages. To limit the effects of climate change, we will all need to use water more efficiently in the future. We will need to create a more resilient water network, where water can be moved more easily to parts of the country where it is needed during drier periods. We must also improve our sewer network as it was never designed for the challenges of today’s urban society and the severe storms we are experiencing.

Changes in the water sectorWhilst some very large business customers can already choose their water supplier, households and most business customers cannot choose who supplies them. From 2017, businesses in most of England may be able to choose their water and sewerage supplier. Although this change will not affect the majority of businesses in our area, our aim is not to disadvantage our customers in any way by striving to deliver value for money and service of the highest quality.

Funding our workMaintaining our network of pipes, treatment works and other assets requires long-term planning and significant investment. Without shareholders, we pay for this work through customers’ bills and by raising funds through long-term, low cost bonds. Delivering an excellent service and developing a good reputation helps us to achieve good credit ratings, which are crucial to the success of our long-term plans and our ability to maintain our services and keep bills low.

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Consulting with our customers

We don’t have shareholders and so everything we do is shaped by the needs of our customers – now and in the future.

That’s why this summer we delivered our biggest ever customer consultation – ‘Your Company. Your Say.’ - to hear your views on our investment proposals for 2015-2020. Between 5 June and 30 August, we visited communities in Wales and Herefordshire and publicised our consultation in the national and regional media, via social media and local community networks, to ensure as many people as possible shared their thoughts on our proposals.

With over 11,000 customers visiting or taking part in our consultation events, we spoke with more of our customers than ever before about the future of their water and sewerage services.

This was supported by a wider and more formal programme of research – including focus groups and in-depth interviews – carried out by a leading independent research company who spoke to a representative cross-section of 3,000 of our household and business customers.

our consultation activity:

Roadshows Six three-day Roadshows visiting communities from Swansea to Llandudno. Almost 9,000 customers visited our Water Pod to discuss our plans with staff and share their thoughts with us.

Water podTaking our Water Pod to the Royal Welsh Show in Builth Wells and the National Eisteddfod of Wales in Denbigh.

open eveningsEight Open Evenings where customers and elected representatives were invited to review our plans at a more local level.

oveR

40FoCUs

gRoUps

3,000InteRvIeWs

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To scrutinise our investment and consultation plans, an independent Customer Challenge Group (representing customers, businesses, environmental groups and other stakeholders) was established in line with Ofwat guidance.

The group commended the scope and nature of the customer research and consultation that we carried out. However, based on the detailed findings of that work, they challenged us strongly to amend our Business Plan to make it even more acceptable to our customers.

We understand the Customer Challenge Group’s main priorities included:

was the £13 increase in bills in 2015 to pay for the adoption of private sewers justified and acceptable to customers? If not, why?

whilst customers overall supported our proposals, a revised plan with below inflation price increases would attract even stronger customer support

could we be more ambitious and set more challenging efficiency targets?

could we do more to find out the views of those customers who genuinely struggle to pay their water bill and do more to help them?

how were we going to amend our proposed outcomes, measures of success and investment plans, in light of the results of our research?

one-to-one meetings One-to-one meetings with key stakeholders and regulators such as the Welsh Government, Natural Resources Wales, Drinking Water Inspectorate, Consumer Council for Water Wales and others.

WorkshopsFive sessions and a workshop with representatives of ‘hard to reach’ customers

Dedicated websiteA dedicated bilingual website – yourcompanyyoursay.com – where customers could take part in the consultation online.

As we explain in the next section, the customer feedback and the input we received have really helped us to shape our plans.

The Customer Challenge Group was central to the success of the consultation and it is our intention to build on this successful approach in the future.

oveR

11,000CUstoMeRs

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You said: Flooding a home with sewage is the worst possible way that we can fail our customers.

We listened: We now have an additional target to reduce the number of properties flooded internally by sewage.

We have increased investment in the plan to tackle internal sewer flooding of properties.

You said:Investment is needed now rather than storing up problems for future customers.

We listened: We will maintain our record investment between 2015 and 2020.

You said: You agreed with our eight proposed outcomes but disagreed with some of our measures of success and targets.

We listened: Our outcomes remain the same but we have changed some of our measures and targets to better reflect your views.

You said:You want us to improve our communication with you and to help you be more water efficient.

We listened: We have added a new target to build customer trust through improved education and communications.

You said: Controlling leakage from our water network is important and should be a key target.

We listened: We have made our aim to reduce leakage into a specific target.

You said: Price increases in line with inflation are acceptable although lower bills would be preferable, but not if this led to a worse service.

The need for a proposed increase of £13 to bills in 2015 – to cover the new costs of maintaining private sewers – wasn’t clearly understood.

We listened:Our average household price increase will be kept below the rate of inflation for each of the five years to 2020.

We will not increase our bills by £13 in 2015.

You said / We listened

In finalising our plans for 2015 to 2020, we have considered your feedback and have made many significant changes to our original proposals:

our annual price increase will be kept 1% below the rate of inflation for each of the five years to 2020

new measures of success have been added to our plans and others replaced

our investment activity will focus on the key areas which our customers regard as important

The scrutiny and work of the independent Customer Challenge Group helped us to deliver a very successful public consultation and championed the interests of customers, making sure that your views were considered.

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You said:We should work more closely with others (e.g. farmers and environmental groups) to improve our catchment areas and natural habits.

We listened: We have improved our plans to research and invest in ‘catchment management’ through restoring habitats, wetlands and finding better ways of managing the land.

You said: Investing to protect the environment is a key priority.

We listened: We have increased investment in tackling pollution and generating more energy from renewable sources.

You said: Water meters are the fairest way of reducing water usage but they should not be compulsory.

We listened: We will help customers understand and assess whether they could benefit from a meter, especially if this would help them to pay their bill.

You said:You support our RainScape approach aimed at reducing the rainwater entering our sewers.

We listened:We will roll-out RainScape projects across Wales and Herefordshire, leading the sector in this innovative approach.

You said: Increasing the number of properties being connected to our network was not a good target for measuring our contribution towards economic development.

We listened: We will no longer use this target but will actively work with councils and other groups to ensure our network meets the current and future demands of our customers and businesses.

You said:Locally based customer services teams who know the area are highly valued.

We listened: We will keep our call centres in Wales and offer both English and Welsh language services.

Your answers:Over 2,500 people responded to our ‘Your Company. Your Say.’ consultation, mainly through our dedicated website. Here’s how you answered our five key questions:

Do you agree with our proposed outcomes?

Do we have the right balance between the level of investment and keeping bills affordable?

Do our plans tackle the issues that matter most to you?

should we invest more than £2 billion between 2015 and 2021?

should we invest less and reduce bills?

94%

84%

– of customers support our proposals

– of household customers and 88% of business customers believe it offers better value for money compared to our earlier consultation proposals

Yes No No response

86 68 %

91 63 %

83 89 %

30 862 %

27 865 %

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19/2018/1917/1816/1715/1614/1513/1412/1311/1210/1109/10

£ (H

UNDR

EDS)

YEAR

Average household bills from 2010 to 2020 (2012/13 prices)

380

400

420

440

460

2015 onwards

our annual price increase will be kept lower than the rate of inflation until 2020 and so our bills are expected to fall closer to the average for england and Wales by 2020.

In 2012/13 prices, our bill in 2019/20 will be £399, compared to £456 in 2009/10 - a reduction in real terms of 12.5%.

As shown in the graph below, this reduction means our price increases will have been below the rate of inflation over the 10 years to 2020 and so your water bill will not increase at the same rate as other household bills and the general cost of living.

What this will mean for bills

Keeping bills affordable is one of the most important things for you – and for us.

Our water and sewerage bills have historically been amongst the highest in England and Wales, mainly due to our mountainous countryside, long coastline and relatively sparse population.

To provide the level of service our customers expect, this means that we need more assets than other water companies such as water mains, pipes, treatment works and sewers. It costs more money to maintain this extensive network of assets.

Our average household bill in 2014/15 is expected to be some 3% higher than the average bill of the ten water and sewerage companies in England and Wales.

However, between 2010 and 2015, we will have succeeded in keeping our price increases below inflation, and the gap between our bill and the average in England and Wales has got much smaller.

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0

100

200

300

400

19/2018/1917/1816/1715/1614/1513/1412/1311/1210/11

£ (M

ILLI

ONS

)

YEAR

Our investment between 2010 and 2020

Cutting our costs to reduce bills

2019/2020

2014/15

399419

-34

-26

+27

+13

CostEfficiency

FinancingEfficiency

ServiceImprovements

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RA

GE

HO

USE

HO

LD B

ILL

(£)

(201

2/13

PR

ICE

S)

Transfer of Private

Sewers

how?

Despite the large increases expected in energy bills and increasing costs from our suppliers, we will reduce your water bills by cutting our own costs.

We will become more efficient and innovative. Since 2001, we are the only water and sewerage company that has cut our operating costs - compared to the other companies that have seen increases of between 10% and 35%.

We will achieve this real terms reduction in the average household bill despite having to cover additional costs such as maintaining 17,000km of private sewers (£13 per customer) and also investing to make improvements to our service levels (£27 per customer).

We will do this by cutting our own costs so that we can continue to meet your needs and provide you with the best possible value for money.

how we plan to invest your money

our research clearly showed that customers didn’t want us to store up problems for the future by cutting investment now. however, considering the current economic climate, we believe that we must also keep bills as low as possible. as a result, we intend to maintain current levels of investment between 2015 and 2020 totalling some £1.5 billion.

Our aim is to spread our investment smoothly over the five years to 2020. This ‘smoothed’ approach will enable our supply chain to resource and plan work more efficiently, delivering lower costs for us and lower bills to our customers.

We originally proposed to invest £2 billion in the six years to 2021. However, customers generally didn’t understand why we were presenting our total investment figures for a six year period and our targets only for five years. All investment figures in this document are therefore for the five year period that coincides with our targets for 2020.

We will invest a total of over £650 million in improving and maintaining in our drinking water services and £800 million in our sewerage services.

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a | high quality drinking waterYou will have complete confidence that your drinking water is safe, reliable and tastes good.

By 2020, we will: improve the quality of our drinking water

reduce problems with appearance, taste and odour of drinking water

improve the reliability of our supply

Monitoring our progress

Between 2015 and 2020, we will invest £1.5 billion to:

Meet customers’ priorities

Make good progress towards long-term goals and challenges

Keep bills affordable

Our plan identifies eight key ‘outcomes’ that we want to achieve by 2020 for our customers, communities, the environment and others who have an interest in what we do. These outcomes are in line with our customers’ priorities.

We will measure our success towards achieving these outcomes against a number of key targets influenced by our research. Below is a summary of what we will hope to achieve by 2020 with more detail about our targets on the following pages.

B | protecting the environmentWe will safeguard a sustainable environment that we are proud to hand on to future generations.

By 2020, we will: only take the water we need from rivers

and other water sources

improve the treatment of our sewage in order to further improve the quality of our rivers and coastal waters

reduce the number of times we cause pollution due to failures at our works or problems with our sewers

D | excellent customer serviceWe will continue to provide our customers with excellent customer service.

By 2020, we will: provide customers service ranking among

the best of all water and sewerage companies in England and Wales

significantly reduce the number of customers at risk of repeat problems such as low pressure, odour and sewer flooding

reduce the number of properties flooded by sewage

improve business customer satisfaction with the service they receive

increase customer trust in the company

C | Responding to climate changeWe will adapt our activities to deal with the potential effects of climate change, whilst reducing our own carbon footprint.

By 2020, we will: significantly reduce the amount of surface water

entering our sewer network in order to help prevent flooding and to improve the environment

reduce our own carbon footprint by reducing our own energy needs and increasing the amount of energy we generate on our own sites from renewable sources

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Whilst the world around us may change in coming years (for example, different customer priorities, new legislation etc.), our 2020 targets are a sensible step towards the long-term aspirations outlined in ‘Our Sustainable Future’ (see pages 42 to 46)

e | affordable billsOur prices will reflect good value for money for our customers, with an effective range of help for those struggling to pay.

By 2020, we will: keep any increase in household bills below

the rate of inflation

increase the amount of financial support we give to those who truly struggle to pay their bills

F | looking after our assetsWe will maintain our assets for future generations, at the most efficient cost.

By 2020, we will: make sure that our extensive network of pipes,

treatment works and other assets are well maintained to work as they are designed to reduce leakage

improve the resilience of our key strategic sites to the potential risk of flooding, power loss, vandalism and other such issues

g | Developing our peopleWe will develop a team of people who will provide a great service to our customers.

By 2020, we will: reduce the number of work-related accidents

train our teams so that they can continue to provide an excellent service

h | an efficient business We will continue to be an efficient business with a strong credit quality.

By 2020, we will: reduce our own operating costs

maintain our good credit ratings so that we can continue to borrow money at low cost

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oUR plan –

hIgh QUalItY DRInKIng

WateR

a | You will have complete confidence that your drinking water is safe, reliable and tastes good

Nothing is more important than high quality and safe drinking water. We analyse almost 300,000 samples every year and also work closely with the Drinking Water Inspectorate who measure our performance to ensure that our tap water is of the highest standard.

Inevitably, we have occasional problems such as burst pipes, discoloured water and low pressure.

We prevent many of these problems before they affect our supply, but when they do happen, we always try to keep the impact on our customers to a minimum.

Case study: Catchment managementPesticides, animal waste and other naturally occurring substances can pollute water at the point where we take it from the environment. In recent years, we’ve worked closely with farmers, landowners and other organisations to investigate how we can tackle these problems together to improve the environment and protect our water supplies.

This approach – called catchment management – will help reduce the cost of treating our water to make it safe to drink. Over the five years to 2020, we will invest in restoring wetlands and other habitats, better land management practices and do further research to measure the impact of this work.

You told us: providing safe and reliable drinking water

should be our number one priority

you want us to improve the reliability of your water supply by reducing the length and frequency of any interruptions

you want us to prioritise tackling discoloured water

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> Maintain our high water quality standards

The quality of our tap water is amongst the best in the world. To keep your water flowing 24 hours a day, 7 days a week – and ensure that it is always safe to drink, tastes and looks good – we must maintain our vast network of pipes, pumps and treatment works; protect our water sources from pollution; and embrace new technology and techniques to protect us against new risks and to meet new standards.

Current performance:The Drinking Water Inspectorate is our regulator and sets the water quality standards we’re expected to meet. Whilst we already comply with the standards set by the Drinking Water Inspectorate in 99.98% of our tests, there is still some room for improvement.

Could we do more?Some customers and the Customer Challenge Group questioned whether or not our target for drinking water quality should be 100%. Others suggested our current performance is acceptable and that the money should be invested elsewhere.

Providing safe, clean drinking water is our most important duty for the health of our customers and our economy and reaching our target of 99.99% will place us amongst the top performing water companies. However, the hygiene of customers’ taps and the quality of customer owned pipes also impact on this target, which means that achieving 100% is beyond our control.

BY 2020, We WIll:target that the water we supply to customers meets 99.99% of the water quality standards set by our regulator, the Drinking Water Inspectorate

our plans: make significant improvements at 14 water

treatment works serving 1,600,000 people, including Bryn Cowlyd (serving the Llandudno and Colwyn Bay areas) and Tynywaun (serving the Rhondda)

work with farmers and other landowners on ‘catchment management’ schemes to reduce the amount of potential pollutants entering our rivers and seas

research how water quality is affected by the natural environment and the changing climate before it reaches our treatment works

work with universities to trial new technologies to further improve our water quality and protect our customers

maintain 63 water treatment works

You told us: 68% of customers told us that they preferred to see improvements in drinking water services, including drinking water quality, compared to maintaining current levels of service

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BY 2020, We WIll:reduce the average number of minutes that affected customers are without water during the year by 10% (compared to the level achieved in 2014/15)

> Maintain a reliable water supplyMany of our water pipes are quite old and some are in a poor condition. This can result in bursts, interruptions, low pressure and discoloured water for our customers. There are also areas of Wales that are not adequately connected to other parts of our water network and this can put customers’ supply at greater risk during exceptionally dry periods.

Current performance:We measure the reliability of our water supply by tracking how long a customer is without water when there is an interruption to their supply. The average number of minutes lost per customer was 53 in 2012/13.

Case study: Flow MetersTo keep our services running smoothly, we need to monitor the flows going through our network to make sure things are working properly. In the past, this meant that we had to cut into pipes or shut down the system so that we could install the equipment – flow meters. This was expensive, time consuming and could also interrupt services to customers.

Our team of engineers have now developed a new type of fixed and portable flow meter which we can easily clamp on to our network of pipes. This can read the flows accurately without us having to cut into the pipes and disrupt our services. It’s also safer for our staff and around 70% cheaper than the traditional method. We’re now rolling these out across our network and the technology is also being adopted by other UK water companies.

You told us:Customers value a reliable water supply as one of their top priorities when considering our water services

our plans: renew around 500km of water mains to reduce

the frequency of bursts in high risk areas

increase the resilience of our key strategic assets, replacing 66km of strategic trunk mains

develop and test innovative new technology to fix leakages and bursts on our water mains without interrupting supply

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BY 2020, We WIll:reduce the number of times customers contact us due to the appearance, taste and odour of their drinking water by 10%

> tackling problems with colour, taste and odour to improve customer satisfaction

Despite the high quality service we provide to most people, we are sometimes contacted by customers about the appearance, taste and odour of their drinking water. Most of these problems relate to discoloured water caused by old, iron water mains which can corrode and cause rusty brown discoloured water to flow through customers’ taps. This usually happens after a water main has burst.

Other problems that can cause unacceptable odours or taste include leaking petrol that can seep through pipes and algal blooms which can give the drinking water a musty taste. These are often beyond our control.

Current performance:Every year, we report to the Drinking Water Inspectorate the number of times customers have contacted us to report taste, odour and colour problems with their tap water.

On average just over three people in every 1,000 that we serve contact us about problems with the appearance, taste or odour of their tap water. Despite having seen improvements in recent years, our performance has levelled off, and we need more investment to further reduce the number of people contacting us about these issues.

In recent years, we have proritised tackling our old iron mains and replaced 4,000km of unlined iron mains. However, we still have over 6,500km of mains that need replacing as this is the only way we can eliminate discoloured water.

You told us:Customers value reducing the need to contact us to report discoloured water as a key priority when considering our water services

our plans: replace or re-line around 360km of unlined

iron mains, reducing the risk of discolouration of tap water

continue our general programme of cleansing, re-lining and renewing our water mains

research to operate ‘calm networks’, reducing the risk of bursts and discolouration

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oUR plan –

pRoteCtIng the

envIRonMent

BY 2020, We WIll: continue to meet 100% of the requirements set out in the abstraction licences from natural Resources Wales

B | We will safeguard a sustainable environment that we are proud to hand on to future generations

Our environment is one of our greatest assets. Our work must protect and enhance the biodiversity of our rivers and coasts and the 40,000 hectares of land we manage. We can achieve this and more by only taking the water we need; educating our customers to use less water; reducing the risk of pollution by improving the reliability of our ageing sewer network; and by undertaking detailed studies to meet new legislation and standards in the most timely and cost-effective way.

> Use the water we need, but not waste it

Water is a valuable and limited resource and so whilst we need to use it effectively to meet the needs of our customers, we must not waste it. We put a quarter less water into our network today than we did 15 years ago, largely due to the decline of heavy industry and fewer leaks on our water network. However, more variable weather is causing longer, drier periods and more frequent storms. New European standards to improve rivers for our wildlife and plants could further limit the water available to us.

Good planning now will ensure a sustainable and resilient network that can supply enough water for all our customers; a network that is working efficiently and where leakage continues to fall; and that our customers are better informed about how to be more water efficient.

Current performance:We currently take around 800 million litres of water a day from the environment which is equivalent to 320 Olympic size swimming pools. Whilst this can increase around 10-15% during the summer, we must ensure that we only take the water that we need.

Natural Resources Wales regulates the amount of water we can take from rivers and other sources through 160 separate licences – known as ‘abstraction licences’. We currently meet 100% of the requirements of these licences.

our plans: drill three new boreholes at Leintwardine and

Dunfield in Herefordshire and in Pilleth, Powys, so that we can continue to abstract water safely at these sites

invest in new remote sensor technology in our networks so that we can identify problems before they affect the environment or customers

carry out more scientific research to make sure we fully understand the impact of our abstraction on the environment

You told us:We need to continue to work closely with regulators to make sure we comply with our legal obligations and that we only use the water we need

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BY 2020, We WIll:meet 99% of the standards set by natural Resources Wales’ permits for the treated sewage we return to the environment

> protecting our river and coastal waters

With over 4,600 miles of rivers and a 1,000 mile coastline, it’s important that we ensure the treated water we return to the environment is of a high quality. It’s hard to believe that less than 20 years ago, half the sewage produced in Wales was pumped untreated into the sea.

Today, after investing some £1 billion in more than 80 brand new sewage treatment works around the coast of Wales, we can boast some of the best coastal waters in Europe. Wales has 33 Blue Flag beaches – about a third of the total awarded to the UK, despite only having 15% of the coastline.

Current performance:Our regulator, Natural Resources Wales, sets the permits for the quality of water we put back into the environment through our sewage treatment works. The quality of our river and coastal waters can be affected if our sewage treatment works aren’t working properly.

We currently meet 97% of the standards set by Natural Resources Wales’ permits but sometimes our sewage treatment works fail or cannot cope with unusual weather events, resulting in poor quality water escaping into our rivers. Many of our sewage treatment works are meeting the standards expected but are operating at an increased risk of failure. This is due to their age and because they were not originally designed to cope with today’s demands.

Case study: Kayak RangersWith such an extensive network of sewers, it can be impossible to access some of the sewer pipes due to their remote location within rivers, steep banks or because they are on private land. This can cause us problems as we need to inspect them to make sure they’re working correctly and not harming the environment.

To achieve this, we’ve developed a team of specially trained Kayak Rangers to paddle down these rivers to survey the sewers. Using tablet computers, they can take pictures and upload the information immediately so that we know what maintenance or repair work needs to be done. This innovative approach was trialled on the Rhymney River and has since been rolled out across other parts of South Wales.

You told us:Improving the quality of our rivers was the key priority in terms of environmental targets

our plans: make improvements at 40 sewage treatment

works to ensure river standards do not deteriorate

help protect water quality in bathing and shellfish waters by controlling overflow spills – particularly in Swansea Bay and the Loughor Estuary – and support beach management plans

repair and improve 12 outfall pipes along our coast to further improve our coastal waters

develop a better understanding of how our assets and third parties impact on our rivers and coastal waters

focus on ‘catchment management’ to take a more holistic approach to protecting our environment

make improvements at a further 27 sewage treatment works to improve river standards

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> preventing pollutionIn 2011, our sewer network doubled in size - to more than 30,000km – after we took responsibility for the private sewers which connect to our sewer network. When problems occur, they can cause significant environmental damage as well as inconvenience for you. That is why we intend to substantially increase our investment in our sewerage operations.

Current performance:At current investment levels, it would take over 700 years to replace our entire sewer network. We consider pollution to be a priority area for investment given the increasing risk of our ageing sewers blocking and collapsing and potentially polluting the environment. As a consequence, we need to innovate to identify problems early and stop them causing damage or flooding.

The number of pollution incidents has reduced steadily in recent years.

Case study: let’s stop the BlockWe deal with 2,000 blockages a month in our sewers and drains at a cost of over £7 million pounds a year to the company. Most blockages are caused by everyday items, such as flushed-away wipes, cotton buds and sanitary products; as well as the fat, oil and grease that is poured down sinks.

In April 2013, we launched our ambitious ‘Let’s Stop the Block’ campaign in Rhondda Cynon Taff and Caerphilly - working with domestic and business customers to drive down blockages. Since the campaign was launched, we have measured a 30% reduction in blockages and a 40% customer awareness of the campaign. We are now rolling the campaign out in Cardiff and other areas will follow in early 2014.

You told us:Protecting river water quality is amongst the most important environmental priorities and so we need to reduce the number of pollution incidents

BY 2020, We WIll:reduce the number of pollution incidents (which can be caused by blockages, collapsed sewers or as a result of unforseen mechanical or electrical faults) from 237 to an average of 150 per year

Could we do more? You told us that protecting the environment is extremely important and worthy of significant investment. However, customers questioned the need to include this as a target as we are expected to meet the conditions of our licences. We rely on the environment and we must therefore look after it. If we fail to meet these targets, then we will rightly face the risk of prosecution by our regulator.

our plans: invest £90 million on renewing

our sewers

continue to run a major programme to educate customers about how they can help prevent blockages and pollution

reduce the amount of rainwater entering our sewer network to lower the risk of flooding and pollution of our rivers etc

install equipment at over 2,000 sites to monitor and stop pollution

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C | We will adapt our activities to deal with the potential effects of climate change, whilst reducing our own carbon footprint

Climate change seems to be causing more extreme weather conditions, from increased risk of flooding due to more frequent storms, to drier periods, putting our water supplies at greater risk.

To protect our services from these challenges, we must change the way we work and create a more resilient water and sewer network.

We will also play our part to help Wales achieve its 2020 renewable energy targets set by the Welsh Government by reducing our own carbon footprint and increasing the amount of renewable energy we generate on our own sites.

> Reduce our carbon footprintWe are one of the biggest energy users in Wales. We use a lot of energy to pump and treat water, run our vehicles, maintain our network and build new treatment works. With electricity costs increasing and sources of energy becoming less secure, we plan to generate more power from renewable energy sources on our own sites. From innovative new micro-generation technology to capture the energy of the water flowing through our pipes, to turning ‘sludge’ from our sewage treatment works into electricity, this will help us reduce our carbon emissions and energy costs.

Current performance:We currently use the anaerobic digestion of sludge and other renewable sources to generate around 11% of our energy needs.

BY 2020, We WIll:generate enough energy from renewable sources to power the equivalent of 22,000 homes (compared to 9,000 homes now)

You told us:We should invest more money in renewable energy to cut carbon emissions and customer bills

Case study: Cardiff sewage treatment worksThe water industry uses a lot of energy and so we have invested heavily in recent years to become more energy efficient and produce our own sustainable energy so that we can cut costs - including our £40 million annual energy bill.

In 2011, we opened a new £40 million anaeorbic digestion plant in Cardiff which produces power from the sewage we treat from 300,000 homes across the south Wales valleys and Cardiff. The new technology produces electricity which is used on-site and has reduced the amount of power we take from the national grid at our Cardiff site by 45%.

This site is working well to help us cut our costs – and therefore customer bills.

oUR plan –

ResponDIng to ClIMate

Change

our plans: invest in new advanced digestion facilities at our

Treborth (Caernarfon) and Five Fords (Wrexham)sewage treatment works turning ‘sludge’ into electricity; as well as solar, hydro and wind to reduce carbon emissions and cut energy costs

reduce the amount of energy used on our sites by 5% by 2020

reduce our carbon emissions by a further 7% by 2020 making the total reduction 32% since 2007

explore opportunities to improve energy efficiency at our 400 or so medium and smaller powered sites

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> adapting to climate changeMuch of our ageing sewer network wasn’t designed for today’s needs. Despite significant investment, the amount of surface water entering our sewer network during heavy rainfall can overwhelm our network leading to pollution of our rivers or seas and flooding customers’ homes. This is becoming ever more of a problem as we’re likely to experience more extreme weather due to climate change and growing pressure on our network as a result of housing and economic development.

Current performance:We are leading the water industry in developing and using innovative, sustainable and cost-efficient schemes that will catch, redirect and slow down the speed at which rainwater enters local sewers. This lowers the risk of properties being affected by sewer flooding; helps improve the local landscape; protects the environment and creates greener, cleaner places to live. We call this new approach RainScape.

Case study: Rainscape - stebonheath primary school, llanelliIn Llanelli, Welsh Water has invested £500,000 to create a new ‘RainScape’ playground - the first scheme of its kind in the UK. The school used to generate 10,000m3 of stormwater annually. That is enough to fill four Olympic sized swimming pools.

The new playground – which will be used to educate children about how to use water efficiently - is anticipated to remove 3,000m3 of surface water from the sewer network (equivalent to 6 million bottles of drinking water), by putting the water back into the natural water cycle through the new plants and trees.

our plans: introduce 100 RainScape schemes across Wales

(including Conwy and Colwyn Bay) reducing the risk of sewer flooding and overflow into the environment

invest in 60 surface water management schemes in Llanelli and Gowerton alone

manage surface water in an integrated way to tackle flooding, bathing water quality, capacity, economic growth and pollution

You told us: customers were very interested in RainScape

and supported this innovative way of working

when discussing environmental matters, dealing with surface water was a priority for customers

BY 2020, We WIll:reduce the amount of rainwater entering our sewers by a total volume equivalent to the run-off from the roofs of 25,000 properties (from the current equivalent of 1,000 properties)

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D | We will continue to provide our customers with excellent customer service

We know that providing water and sewerage services, the most essential of life’s needs, is an enormous responsibility. Our first priority is to our customers and we are determined to provide all our customers with a service of the very highest standard.

Whilst problems are generally rare, we believe that every customer should receive a good level of service. If any problems do occur, they should be dealt with quickly, efficiently and prevented from happening again.

As a company owned on behalf of our customers, we are determined to earn the trust of all our customers so that we are always relied upon to do the right thing on their behalf.

> Maintain high levels of customer service

We want to provide the best possible service to our customers every day of the year. Ofwat, our regulator, compares our customer service to all the other water and sewerage companies in England and Wales using an independent benchmark called ‘SIM’ (Service Incentive Mechanism). We will continue to measure our performance against other water companies so we can show our customers that we are committed to providing them with an excellent service.

Current performance:According to Ofwat’s ‘SIM’ measure, our customer service is currently among the best of all the water and sewerage companies in England and Wales.

You told us: most customers are satisfied with the water

and sewerage service they receive from us and believe that continuing to deliver a high quality service should be a priority

the customer service provided by us is generally good but you want us to offer a more personalised and accessible service

BY 2020, We WIll:remain in the top three of all water and sewerage companies for customer service

oUR plan –

exCellent CUstoMeR

seRvICe

our plans: continue to use Ofwat’s preferred customer

service measure - ‘SIM’ - to benchmark our performance against other water and sewerage companies

improve and update our web-based services which will include introducing a new ‘My Account’ facility allowing customers to manage their accounts 24 hours a day, 7 days a week

strive to resolve any issues quickly, ensuring information is easily available using a variety of channels, and that our communication with customers is clear and easy to understand

provide a more personalised and accessible service with more understanding of customer preferences

maintain a Wales-based call centre, providing a service with good local knowledge in Welsh and English

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> Reduce the number of ‘at risk’ customers

Overall, our research shows that you are happy with the service we provide. Unfortunately, a small number of customers do not receive the high standard of service that most of you receive. These customers can suffer from repeat problems with the services we provide – such as interruptions to water supply, low pressure, discoloured water, sewage odour problems or even sewage flooding their properties on repeated occasions. We believe that this is not acceptable.

Current performance:We have around 850 ‘at risk’ customers who suffer repeat problems with the services we supply them.

our plans: renew approximately 500km of distribution

mains where bursts often happen so that we can improve pressure and reduce interruptions to supply

invest in new domestic water pressure pumps and monitoring equipment to tackle low pressure

maintain and improve the operation of 570 service reservoirs and 7 water towers

You told us: customers strongly supported measures for

reducing the number of ‘at risk’ customers

there was specific support for tackling cases of low pressure, which had not been included in our consultation plan

BY 2020, We WIll:improve the service received by 425 – or 50% – of our most ‘at risk’ customers

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> Improve business customer satisfaction

As well as serving three million people, we also provide water and sewerage services to around 110,000 businesses in Wales, Herefordshire and parts of Deeside. About 1,700 of these companies use more than five million litres of water a year - compared to the average household which consumes 128,000 litres.

Current performance:We already offer a range of specific services to our business customers. This includes a dedicated account management function so that every large customer has a named contact as well as a facility which enables businesses to access real time data on their water usage. We also offer leakage detection services and advice on water efficiency and how to reduce bills. At the moment, 87% of our business customises say they are satisfied with the service they receive.

our plans: continually benchmark our services and provide

value for money, seeking to match or beat the best on offer from other water companies in England and Wales

introduce a ‘My Business Account’ facility for businesses to manage their accounts

develop a new portal to support developers

develop new flexible account and tariff structures with a range of new services

BY 2020, We WIll:increase business customer satisfaction to 90%

Case study: Water efficiency at the Millennium stadium, Cardiff We work closely with a number of our largest business customers so that we can help them use water more efficiently. This is important as it helps us reduce the amount of water we take from the environment and the pressure on our network, whilst also helping us meet our leakage targets. In turn, it also helps our customers save money as they use their water more wisely.

A water audit of the Millennium Stadium in Cardiff found that we could reduce the stadium’s consumption by up to 20,000 litres per day. This is the equivalent volume consumed by around 60 families every day. By installing water fittings, we worked with staff at the stadium and succeeded in significantly reducing the stadium’s water usage which benefited everyone involved.

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> Reduce the number of properties affected by sewer flooding

Much of our sewer network is old and has been built to deal with combined surface water and foul sewage which means that it does not have the capacity in some places to cope with today’s demands. As a result, sewers can overload, for example, after heavy rainfall or a blockage – and cause internal flooding in some homes. Whilst this is rare, it is the worst possible service failure for our customers.

Current performance: Tackling sewer flooding has always been a top priority for us. Whilst some level of flooding is perhaps inevitable as one third of our sewers are more than 100 years old and research has shown that 90% of flooding incidents have happened in properties with no history of flooding, we are determined to improve further in this area.

Our average response time is less than one hour and in over 99% of cases we manage to deal with the blockage before it causes property flooding or a pollution incident.

our plans: clean 650km of sewers to reduce the risk of

blockages that could result in sewer flooding

continue with our ‘Let’s Stop the Block’ campaign to encourage customers in those areas that are at the highest risk of sewer blockages not to dispose of fat, oil, grease, wet wipes and other sanitary items down the toilet or drain

stop internal sewer flooding at 214 properties or areas and external sewer flooding at 178 properties/areas

BY 2020, We WIll:reduce sewer flooding incidents by 20% (from 196 to 155 a year)

You told us: we should take more action to reduce

the number of properties at risk of internal sewer flooding

less emphasis could be placed on external flooding to properties or areas

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> Building the trust of our customers We are responsible for the most vital of public services – providing safe drinking water. Customers must have complete trust in the product we supply them and also in what we tell them.

Our unique model allows us to put customers’ interest at the heart of our decision making. Our research has shown that you want to know more about where you money goes, the challenges we face, and what you can do to help us - such as being more water efficient or helping to reduce blockages by not flushing items such as wet wipes and cotton buds down the toilet.

Current performance:Our consultation revealed that you wanted a closer relationship with us through our education activities, direct communications, community engagement and our campaigns. Whilst our research suggests that around 63% of our customers trust us to do the right thing on their behalf, we want to increase customer trust. This will take time as we know that a significant amount of effort and investment is needed to improve the way we communicate with customers so that we can build trust.

You told us: we should play a more visible and

prominent role as a company in the communities we serve

we need to improve the way we communicate with customers about water efficiency, the environment and other issues

our plans: roll-out ambitious behavioural change

campaigns such as ‘Let’s Stop the Block’ to help meet key business and environmental targets

increase the number of children and young people attending our education classes from around 40,000 to 50,000 per year

become a more visible presence in our communities

Case study: Matthew howells, 30, is one of four teachers at Welsh Water“One of our most important roles as a company is teaching our future customers about the role of Welsh Water. As part of my role, I arrange visits for schools to come to Cilfynydd Education Centre - one of our four educational centres, I also visit schools to do outreach sessions. We offer tailored bilingual sessions to primary and secondary school children which involves learning about the company, how the water process works and how we return treated water to the environment.

“These sessions are interactive and enable us to share key messages such as water efficiency and safeguarding the environment which are aimed at influencing attitudes and behaviours. Each group then reviews what’s been discussed so that we can ensure they understand the need to protect this precious resource and share these messages with their family and friends.”

BY 2020, We WIll:increase customer trust to 75%

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e | our prices will represent good value for money for our customers, with an effective range of help for those struggling to pay

The cost of living has increased a lot compared to household income in recent years and many utility companies have increased their bills significantly above the rate of inflation. We also know that household incomes in our area are lower than the UK average and that almost 15% - or 190,000 - of our customers spend more than 5% of their income on water bills.

As a non-shareholder company, all our gains go to customers – meaning that we are able to keep bills lower than they otherwise would be, whilst also helping more customers who are genuinely struggling to make ends meet.

Current performance:Our average household bill in 2014/15 is expected to be £419 (at 2012/13 prices), some 3% higher than the average bill of the 10 water and sewerage companies in England and Wales. However, between 2010 and 2015, we will have succeeded to keep our price increases below inflation every year, and so the gap between our bill and the average bill in England and Wales has got much smaller.

Could we do more?We have been challenged by the Customer Challenge Group, our Board and our Members as to whether we can reduce our bills further. You told us that you don’t want us to hold back on investment now if it would result in us storing up problems for future customers and that you don’t want to see a deterioration in the level of service you receive. It is therefore vital that we strike the right balance between keeping bills affordable and investing in our assets for the benefit of today’s customers and future generations.

If we were to lower bills more now, it would limit our ability to maintain our current service levels and meet key statutory obligations. It could also damage our credit ratings, increasing our financing costs and customer bills in the longer term.

oUR plan –

aFFoRDaBle BIlls

You told us: price increases in line with inflation

(that is, the general increase in the cost of living) are acceptable, but affordability is key and a falling bill would be preferable

you do not want to see a deterioration in service, even if it results in lower bills

our proposal to increase bills by £13 in 2015 - to cover the cost of the private sewer transfer of 2011 that doubled the size of our sewer network – wasn’t clearly understood

investment should continue to be made now rather storing up problems for future customers

BY 2020, We WIll:have kept our annual price increase below the rate of inflation for 10 consecutive years (from 2010 to 2020)

our plans: keep any bill increases 1% below the rate

of inflation for each of the five years to 2020 resulting in a real terms reduction in prices for 10 consecutive years

not increase our bills by £13 in 2015 as proposed in our consultation plan

reduce bills below the average for England and Wales, possibly by 2020

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Case studyWe have recently forged a partnership with Community Housing Cymru and Moneyline Cymru. In February 2013, we funded a new advisor role based at the Moneyline office in Merthyr Tydfil to offer information and advice on a wide range of topics, including how we can help customers lower their bills and reduce their arrears.

Our advisor, Ruth, carries out benefits checks, helps clients to apply for benefits, and helps with the appeals process when decisions are made. In just three months, Ruth has been able to support over 170 customers with money advice and help with their benefits.

> help disadvantaged customersAlthough keeping any price increase as low as possible will help, we are well aware that some customers are finding it difficult to make ends meet. The cost of customers struggling to pay their bill and running up increased debts ultimately results in higher bills for customers as a whole.

Current performance:We provide 52,000 customers with extra help to pay their bills - more than any other water company. Helping those that are on low incomes, those who have certain medical conditions, or who are experiencing severe financial hardship also helps us to keep the level of unpaid bills to a minimum. However, we will actively pursue those who choose to avoid paying their bills. We help:

low income customers through Welsh Water assist, which helps large families or those with relevant medical conditions by offering reduced water charges

customers through Water Direct, which provides an annual £25 discount if they pay their bill directly from their Department for Work and Pensions benefit

tenants through Water Collect, which is an agreement with Registered Social Landlords for them to bill and collect on our behalf, giving a £10 annual discount on their bill

customers through our Customer assistance Fund, which is for customers who are in arrears and experiencing severe financial hardship, providing a means for some to have lower agreed payments.

BY 2020, We WIll:expand our range of help so that over 100,000 of our customers who are genuinely struggling to pay their bills benefit through our range of social tariffs

our plans: carry out further research on the acceptability

of providing additional help to those who are genuinely struggling to pay their bills

work with the Welsh Government, Ofwat and the Consumer Council for Water Wales to develop new customer affordability tariffs for those who are truly struggling to make ends meet

work with a range of organisations to help promote the assistance available from Welsh Water and target customers who may need help

actively pursue those who are choosing not to pay their bills, making use of improved customer credit information and appropriate use of litigation

The privilege of being able to improve the lives and circumstances of those who are in need has always given me immense job satisfaction. Worrying about how to manage on a reduced income and the pressure of debt can affect a person’s physical and mental health. The relief of having that pressure lifted, or at least reduced, makes such a difference to their feeling of well-being.

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Case study: alwen water treatment worksAlwen water treatment works serves more than 50,000 homes and businesses in Ruthin, Mold, Denbigh, Buckley and Holywell.

In 2009, our routine testing picked up evidence that the old filtration system was no longer working effectively. A short-term solution was put in place and a £14 million upgrade and modernisation started at Alwen in 2010. Despite the need to shut down the works 30 times in order to install new filtration, disinfection and chlorination processes during this period, there was no disruption to customers.

The works became fully operational in August 2011, providing a more reliable supply of very high quality water for customers.

our plans: long-term asset planning - a risk based

approach reflecting customers’ views of service standards

invest a total of £1.5 billion (over £650 million in our drinking water services and £800 million in our sewerage services) to ensure that our assets enable us to continue providing a high quality service

address all significant risks identified in our Drinking Water Safety Plans

You told us: you agreed that maintaining our assets

is fundamental if we are to continue providing a high quality service long into the future

you do not want to see a deterioration in service or a reduction in investment even if this means lower bills

BY 2020, We WIll:maintain our assets as ‘stable’ against ofwat’s criteria

oUR plan –

looKIng aFteR oUR assets

F | We will maintain our assets for future generations, at the most efficient cost

Due to the length of our coastline, the mountainous terrain and large areas of sparsely populated land in the area in which we operate, we have one of the largest networks of ‘assets’ – or pipes, treatment works, reservoirs and sewers - in the water and sewage industry.

We need to invest so that we can maintain this infrastructure without storing up any problems or additional cost for future generations. Also, we need to carry on investing now to address those risks and challenges that we can anticipate in the future.

> Maintaining our assets With over 800 sewage treatment works, 91 reservoirs and 27,000km of water mains, our network reaches every part of the area we serve – from the water treatment works high up in the Snowdonia mountains to the sewage works dotted along our coast. The cost of maintaining our assets is huge.

Current performance:Every month, we report on the condition of our assets by monitoring their performance and analysing all relevant data before reporting to Ofwat whether they are operating to an acceptable standard. The current condition of our assets is “stable” – which means they are performing well.

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> Making our assets more resilientOur assets face many risks such as increasingly challenging weather conditions, age, flooding, coastal erosion, power failures and crime. Although these risks are beyond our control, they can adversely affect our services. In order to help reduce the risks, we have developed a new register of our most strategic assets, which helps measure and control the level of risk they face.

Current performance:We have identified our key strategic assets that could seriously impact on our services or the environment if they fail. After measuring the resilience of each asset against the threat of these various risks (e.g. flooding, vandalism, power failures and other extreme events), we have a resilience score of 77%.

our plans: ensure risks or potential issues are identified

and addressed before they become problems for customers

strengthen the resilience of our most critical assets and improve how we monitor them

You told us: it is sensible to protect against increased

and potential new risks

it is important to increase the resilience of our assets

BY 2020, We WIll:improve the resilience score of our most strategic assets to 85%

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> Reducing leakageA key part of our plans to balance the supply of water we take from the environment and the demand from our customers is to continue to reduce leakage from our water supply network. We will set ourselves our toughest ever target on leakage. To achieve this, we will employ the latest leak-detection technology; maintain our rapid leak-repair policy; and expand our pressure management to prevent leaks and replace pipes most at risk of leaking.

Current performance:We put around 800 million litres of water into our supply every day. In the mid 1990s, over 400 million litres were being lost to leakage daily. This has now been more than halved and the cost of fixing the remaining small leaks for us and our customers is very high.

Could we do more?Some customers asked why we don’t reduce leakage even further. With over 27,000km of water mains, and even more water pipes owned by our customers, leaks are inevitable. We regularly measure the level of leakage from our network and the cost it would take to fix the problem. Reducing leakage significantly below the target proposed would be expensive, resulting in higher bills for customers with little benefit to the environment.

our plans: predict and plan for future demand to help

secure water supply for customers

promote the efficient use of water amongst customers and at our own sites

implement a new meter replacement programme reducing the average age of meters from 49 to 25 years

continue to repair some 100 leaks and bursts a day

You told us:Leakage was very important to you and that it should be included as a specific target

BY 2020, We WIll: reduce leakage levels by 8% (from the current 190 million litres a day to 169 million litres a day)

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Case study: talent searchWelsh Water’s apprenticeship scheme ensures that skills are passed on and that we continue to develop a qualified and well-trained workforce. Kirstie Davies, 21, from Pontypridd, is one of our current apprentices:

“I’m based at Llwynon water treatment works near Merthyr, but I cover a wide area including the valleys and Cardiff. The job is very hands-on and my day can vary hugely, from carrying out planned maintenance on water pumps, to attending sites to help out with urgent mechanical repairs. It’s really satisfying to know that the work I’m doing will help keep the water flowing to so many people, including my own community in Pontypridd.”

g | We will develop a team of people who will provide a great service to our customers

We are very proud of the people who work for Welsh Water 24 hours a day, 365 days a year – whatever the weather and dealing with whatever problems they face. We have a team of talented and committed staff who regularly go beyond the call of duty to make sure our customers’ supply of water isn’t interrupted or that sewer blockages are dealt with quickly, efficiently and safely.

We believe that investing in our people is crucial so that we can continue to deliver the high standards our customers expect and provide the correct training and support that will help drive further improvements.

oUR plan –

DevelopIng oUR people

Current performance:In April 2013, we launched a new initiative called ‘Progression in Role’ to ensure that our teams are trained and competent to perform the task expected of them, and committed and motivated to deliver the services our customers expect. ‘Progression in Role’ allows us to assess and measure individuals’ knowledge, skills and competence for the job they’re expected to do. 85% of our staff are currently trained to full competency for their role.

You told us:We must have a qualified and skilled workforce to deliver the services expected

Could we do more?Some customers asked why we aren’t targeting 100% of staff to be fully trained for their roles. Due to turnover of staff, we would expect relatively new employees – approximately 5% of staff - to require further training at any time and so 100% is not an achievable target.

BY 2020, We WIll:ensure 95% of all our staff are trained to be fully competent for their roles

our plans: continue to invest heavily in externally accredited

training and assessment programmes

further develop our ‘How2Wow’ customer service training

bring more graduates, apprentices and trainees into the business

develop long-term partnership agreements with UK universities to develop our staff and drive innovation

develop partnerships with leading European water companies to exchange best practice

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I developed eight different tools which are now helping us to remove the most common items we find that cause blockages

> Creating a safe environment to work in

The nature of our work is often dangerous and unfortunately accidents can happen. The health and safety of our staff is paramount and they must have the confidence that they will be able to return home safely at the end of each working day. It is down to us all to ensure that our working environment is safe and we will train staff to work with the correct behaviours to carry out our duties safely, without risking their or anybody else’s health.

Current performance:So that our staff and contractors can have the confidence that they work in a safe environment, we have the proper policies and procedures in place to ensure that they have the training, tools and equipment they need. We measure our health and safety performance against the number of work-related injuries that must be reported to the Health and Safety Executive. These are known as RIDDORs. The average number of RIDDORs per year in the past three years has been 26.

BY 2020, We WIll:report no more than 20 RIDDoR incidents every year

You told us:Complying with health and safety rules is a must

our plans: continue to develop Health and Safety plans

and policies in light of best practice

develop our Behavioural Safety Strategy (STEP - Safety Takes Every Person) to help reduce the number of safety incidents

work with our supply chain, including local companies, to encourage and help them to achieve the same high standards and behaviours that we aspire to

Case studyGeraint Williams, a sewer operator in Rhondda Cynon Taff, describes how he’s developed an innovative way to help tackle blockages in our network.

“My colleagues and I were spending more and more time trying to reach and remove items that were blocking the sewers.

“When we couldn’t do this, we’d have to call specialist engineers to come along and use an expensive high pressure jetting system to clean the sewers or even sometimes cut into the pipes and even disrupt our services.

“I went home, and after some late nights in the garage, I developed eight different tools which are now helping

us to remove the most common items we find that cause these blockages. It’s making our work safer and our lives much easier. It’s also saving the company – and more importantly customers – a lot of money.”

WELCOMECROESO

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h | We will continue to be an efficient business with a strong credit quality

> Financing the businessThe money we raise from customers’ bills doesn’t fully cover the cost of our investment programme. This shortfall is covered by long-term, low-cost bonds raised on the capital markets. Without shareholders, we cannot raise money elsewhere and we must therefore maintain our good credit ratings so that we can fund our investment without increasing bills.

Current performance:We have strong a credit rating which is among the best in the UK’s utility sector and so we’re able to borrow money at a lower cost. This helps us keep our customers’ bills lower than they would otherwise be.

oUR plan –

an eFFICIent BUsIness

BY 2020, We WIll: maintain our a grade credit rating to ensure that we can continue to access low-cost, long-term finance

You told us: You want us to carry on investing now, at the lowest possible cost, and not store up problems for the future

our plans: maintain good relationships with long-term

investors

ensure open and transparent reporting, including quarterly investor reports and annual investor meetings

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Since being installed, the project is out-performing its financial and energy targets… it is also saving us around £200,000 per year.

> Cutting our own costsIn order to keep customers’ bill to a minimum, we must also keep our own costs as low as possible.

Current performance:We’re the only water company to have reduced our own operating costs over the past ten years. Since 2001, we have reduced our operating costs by 2% compared to other water and sewerage companies who have seen increases of between 10% to 35%.

BY 2020, We WIll:reduce our operating costs by 18%

You told us:You expect the company to be efficient and offer good value for money

Case study: Mike pedley, Welsh Water’s head of energy, explains our new way of generating electricity:“We’re committed to protecting the environment and reducing our carbon footprint by using the natural resources available to us. “Hydro power, where energy is created from falling water or running water, is a natural fit given the assets that we have.

“The potential of Strata Florida water treatment works in mid Wales was quickly identified as it is fed by a twin water supply system which offers significant potential to generate energy. “We therefore decided to install a hydro turbine to the works which are powered by the flows of water entering the site and we achieved this without disrupting any of our day to day services.

“The project is now the model that we will be using for our other hydro projects as we look to cut our costs and customers’ bills.”

our plans: become more innovative by using new smart

technology to monitor our systems in real time and prevent problems from occurring

introduce innovative new operating procedures, reducing the costs of breakdowns and minimising waste

plan further ahead to reduce buying costs for investment schemes

invest in energy efficiency and more renewable energy generation

reduce bad debts through improved customer information

carry out annual cost benchmarking studies with leading water companies around the world

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Meeting our targets

> What you can expect if we fail to meet our targets

We’re confident that we can meet the ambitious targets that have been outlined in this business plan. But if we fall short of the high standards we’re setting ourselves, our first priority will be to compensate those who are affected.

In the five years to 2020 we are committed to introducing new penalties if we fail to meet targets for our key measures of success outlined in this document in one of three ways:

Compensate customers where they have been directly affected by our failings

Compensate communities if there is a wider impact on the environment or individual compensation is not appropriate. For example, where a burst sewer has led to the pollution of a river we may re-stock fish in the river, or make a payment to a relevant local charity

Material failures to reach a specific target of the highest importance to customers will lead to a reduction in customer bills

All gains go to customers

Reputation& rating

Financialcost

Service& affordability

Investment& lower bills

The Dwr Cymru model

> What can you expect if we exceed our targets?

We will strive to outperform on all our targets. However, if we succeed in exceeding our targets for preventing pollution and reducing sewer flooding, we propose that there should be a financial reward for the business, which we would return directly to our customers. Under our non-shareholder model, all our gains go to customers.

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our sustainable Future: 2015-2040

although this booklet outlines our plans for 2015-2020, many of the decisions we take today will have a major impact on our customers, the economy and the environment for decades to come. that is why we are not only planning for the five years to 2020, but for decades ahead.

We first published our long-term vision ‘Our Sustainable Future’ in 2007. This was an important milestone for the company as we outlined our vision for the next 25 years and how we would strive to provide better value for money for customers.

By 2040, we will continue towards this vision and customers should be able to look forward to:

even higher quality standards – for drinking water, customer service and the protection of the environment

a zero tolerance approach to pollution and service failure

at least a 50% cut in greenhouse gas emissions

the lowest possible customer bills – lower than those of other equivalent UK water and sewerage companies

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high quality drinking water for all our customersYou will have complete confidence that your drinking water is safe, reliable and tastes good.

By 2040, you can expect: water quality of the highest possible standard

and we will aim for 100% compliance with the Drinking Water Inspectorate’s standards

investment in the latest technology to monitor the performance of our assets, allowing us to identify and rectify problems before our customers’ service is affected

the elimination of low pressure problems on our water supply network

any interruptions to supply to be kept to a minimum

robust Drinking Water Safety Plans that are regularly reviewed and updated

the promotion of the health benefits of tap water

protecting our environmentWe will safeguard a sustainable environment that we are proud to hand on to future generations

By 2040, you can expect: a zero tolerance approach to pollution caused

by our works and sewers targeting

any adverse impact our business has on rivers to be minimised

coastal bathing waters that achieve the very high standards set by EU Directives

the way we take water from the environment is sustainable and be 100% compliant with ‘abstraction licences’

our water and sewage treatment infrastructure will deliver sector leading exemplary compliance with permit and licence requirements

our investment programme will actively support our environment for tourism and recreation

leakage targets to be met at levels which minimises bills to customers, taking into account the effect of abstractions on the environment

a continuous education programme to promote water efficiency amongst our customers, especially the next generation

active promotion of conservation and enhancement of biodiversity on our own land and water, working alongside others to protect the environment and enhance biodiversity elsewhere

SHOP

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Responding to climate changeWe will adapt our activities to deal with the potential effects of climate change, while reducing our own carbon footprint.

By 2040, you can expect: our services to meet the challenges of more

varied and extreme weather conditions through the development of Water Resource Management Plans and through the enhanced protection of our key assets from flooding

Welsh Water to lead the UK water industry in implementing a sustainable approach to dealing with sewer flooding and surface water reduction. We will remove the equivalent surface water run-off from 125,000 properties from our sewer network

a six-fold increase in the amount of renewable energy generated at our sites from 40GWH to 260 GWH – enough to power 58,000 homes. This will include more advanced anaerobic digestion of sewage sludge; solar and wind turbine energy; and the adoption of hydro generation technologies on our sites

low carbon approaches to be embedded across all our activities and the reduction of carbon costs will be a major factor in our business planning, particularly when considering new treatment standards or assessing other carbon intensive investment schemes (e.g. concrete storage tank solutions)

a reduction of in our own carbon footprint of 50%

excellent customer serviceour customer service will be as good as the best utility companies in the UK.

By 2040, you can expect: Welsh Water to be recognised as having

the best customer service in the UK

a first class service for all customers and the elimination of repeat problems – such as low pressure, interruptions to supply, discoloured water and sewer flooding

a zero tolerance approach to supply failures achieved by maintaining our assets to very high standards and using remote monitoring to anticipate problems before they happen

all preventable pollution incidents are avoided

a hosepipe ban less than once in every 20 years

to be able to contact us when and how you want in both Welsh and English

know our customers’ preferences, with an emphasis on ‘self-serve’ option and the availability of better real time information for customers on our website and through proactive measures, such as texting, webchat and other social media technology

SHOP

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affordable billsour prices will reflect good value for money for our customers, with an effective range of help for those struggling to pay.

By 2040, you can expect: a continued focus on value for money

and affordable bills

our bills to be lower than the annual average household bill for the 10 water and sewerage companies in England and Wales

increased support for disadvantaged customers through a well targeted range of assistance funds and tariffs so that they can make a fair contribution

that we will be recognised as one of the most efficient companies in the sector

looking after our assetsWe will maintain our assets for future generations, at the most efficient cost.

By 2040, you can expect: the use of new technology across our network

to monitor the performance and reliability of assets that are critical to maintaining service

investment in new technology that will improve asset management information in order to enhance planning and decision making capabilities

the full integration of the private sewer and pumping station network with the remainder of our sewer network, enabling us to address any legacy problems

our services to cope with the demands of increased population and business needs in order to support economic development

all our strategic assets to be resilient to risks such as flooding, security, power loss – all to reduce the possibility of interruptions to our services

us to maximise biodiversity and wildlife habitats at all our sites

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Developing our people We will develop a team of people who can provide a great service to our customers

By 2040, you can expect: that we will continue to be a progressive

and ethical company

a safe working environment for our staff

sector leading performance in Health and Safety

a strong technical and scientific capability within the company, consistent with the use of new technology

our continuing contribution to the culture and economy of the area that we serve

employee satisfaction will continue to be tracked through staff opinion surveys and achieving a rating of at least 80%

an efficient business We will continue to be an efficient business with a strong credit quality.

By 2040, you can expect: our company to still be owned on behalf of our

customers and operated on a not-for-profit basis

our financial structure and gearing to be at an optimum level allowing ready access to low cost funding for the benefit of our customers

our excellent credit history and rating will mean that our bonds will be regarded as the benchmark for the sector

all gains will continue to go to customers which will compare favourably with the returns enjoyed by shareholders of other water companies

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