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					MINUTES OF THE SIXTH MEETING OF THE CONSUMER COUNCIL FOR WATER LONDON & SOUTH EAST COMMITTEE HELD ON WEDNESDAY 17 JUNE 2009 AT THE THISTLE HOTEL, KINGS ROAD, BRIGHTON BN1 2GS Present: David Bland Larner Bernard Helen Charlton Margaret Ginman John Havenhand Janet Hill Kristin Jones Lynn Judge Linda Perham Margaret Shaw Laura Simons Jill Thomas Andrew Whetnall (Chairman)

Secretariat:

Karen Gibbs Siobhan Aris Alastair Lloyd

(Secretary) (Assistant Secretary) (Deputy Consumer Relations Manager) (Sutton and East Surrey Water) (Thames Water) (Southern Water) (Three Valleys Water) (South East Water) (South East Water) (Folkestone & Dover Water) (Portsmouth Water) (Portsmouth Water) (Environment Agency) (Environment Agency) (D.W.I.) (Member of the Public)

Water Company Representatives Nick Fisher Victor Freeney Darren Bentham Sandra Kerr David Hinton Marek Podsiadly Pauline Wilson Neville Smith Paul Barfoot Also in attendance: Nigel Hepworth Owen Turpin Jeanette Sheldon John Melson

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Chairman’s welcome and apologies for absence The Chairman welcomed everyone to the sixth meeting of the London & South East Committee in particular Nigel Hepworth and Owen Turpin from the EA, Jeanette Sheldon of the DWI, new company representatives, Pauline Wilson, Neville Smith and

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Sandra Kerr, and Alastair Lloyd the deputy Consumer Relations Manager from the CC Water London & South East office. 1.2 Apologies for absence were received from Annette Marchant, Peter Midgley and Barry Atkinson. Minutes of the fifth meeting held on 11 March 2009 Accuracy: The minutes of the meeting were approved. Matters Arising: 6.3: Thames Water to advise why WaterSure was not advertised on the company’s bill Victor Freeney of Thames Water explained that there is insufficient room on the bill to include details of the scheme and the necessary supporting information. Instead details are included on a customer information leaflet which is sent with all bills. The Chairman suggested that both the company and CCWater should monitor and review how this approach compares to other company approaches in terms of take up. 7.4: DWI to provide further information on metaldehyde. Jeanette Sheldon of the DWI said that there are no new developments on metaldehyde and confirmed that a briefing note will be provided which can be circulated to members with the minutes of the meeting. 8.5: Consumer Relations Manager to explain discrepancy in the total of written and telephone complaints in the Complaints Report Alastair Lloyd explained that the discrepancy referred to was as a result of the outsourcing of some complaints to other regional CC Water offices. Figures for this and future meetings are/will be accurate Chairman’s Report David Bland referred to the CC Water Board meeting held on 2 June. He reported that the Board agreed that there is a need to look at South East England’s water supply issues and consider the national implications. CC Water’s Consumer Service Group has agreed its terms of reference; it will consider benchmarking and appropriate customer satisfaction targets. PR09: Overview of Current Process/ Changes between draft & final Plans David Bland introduced the item by referring to CC Water’s commissioned research by Fathom on Cost of Capital which was discussed at the June meeting of CCWater’s Council. He explained that the results of this were at odds with research commissioned for the water companies and several water companies have expressed concerns about the disparity. CCWater’s concerns are the impact of the cost of capital will have on customers’ bills. The committee invited the views of the companies on the cost of capital. David Bland said that he is aware that some companies in the region had been upset by CC Water’s response to their final Business Plans.

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Andrew Whetnall advised that the Fathom report is on the CC Water website. He suggested that there is scope for debate on cost of capital. Ofwat will be looking at the state of markets in the current economic climate. David Hinton of South East Water thought that the CCWater response to his company’s Plan was reasonably balanced and a good document. It demonstrated that CC Water had analysed and understood the plan, and South East Water understood the concerns highlighted on behalf of consumers. However, the press release had not been balanced and failed to draw attention to the water resource and other constraints that the company faced. He suggested that the press release was issued too quickly without time for proper reflection. Victor Freeney explained that Thames Water is unhappy with several aspects of CC Water’s response to its Plan. He accepted that the delay in arranging a quadripartite meeting prior to the deadline for submission of CCWater’s comments meant there had not been an opportunity to share and discuss the content in advance of submission. He listed the areas that Thames Water feels they have been unfairly criticised for as the deferment of investment when Thames has already reduced capital expenditure from £6.5 to £5.5 billion, and added that the company has no scope to reduce it further as it is needed to ensure levels of service and obligations that the company has no control over. The proposed reduction in mains replacement will also reduce the impact on bills and the company believes that it has pushed this as far as possible to keep it within the constraints of cost/benefit criteria. Other issues that the company feels that CC Water could have underlined in its response are the shortfall in revenue of £200 million in AMP4 that was absorbed by shareholders, levels of customer debt, increases in energy costs and business rates. Most surprising to Thames Water was CC Water’s stance on social tariffs, which the company had gone to great lengths to develop, and which could adversely influence Ofwat giving approval to the tariff. In response to the social tariff point David Bland explained that CC Water believes that water poverty should be addressed by the tax and benefit system. The outcome of the Walker Review was expected but not yet available, so while this option still remained it was not appropriate for CCWater to endorse alternatives like the social tariff. However, if, as anticipated, social tariffs are recommended as the solution to water poverty, CCWater will play an active part in developing the future strategy. He acknowledged that Thames Water has already undertaken a lot of good work to develop a social tariff and this had been commended in CCWater’s submission on the company’s business plan. With regard to the other issues that Thames Water feels were unfairly commented by CC Water, the Chairman accepted that some of the comments appear stark but these were made in consideration of Thames Water’s historical position as a low cost company. These issues are a matter of judgement and ultimately will be decided by environmental and metering lobbies. Andrew Whetnall drew attention to the £200 million revenue deficit caused by reduced consumption following the drought. He observed that this deficit arose from a metered base of 27% and asked companies to reflect on what the impact would be on revenue with a metered base of 90% as proposed in some business plans and urged by the EA. Notwithstanding Thames Water’s defence of its cost of capital proposal, he highlighted that its bid is higher than that of other water and sewerage companies. He stressed that CC Water does not hold Thames Water responsible for

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the decision to construct the Thames Tideway tunnel, but that the company is responsible for the costing of it. He offered to write a more detailed piece on CC Water’s response for the Thames Water website. 4.9 David Bland commended water companies for the amount of work they have carried out on cost/benefit and willingness to pay research. It was all well designed well and executed. Victor Freeney advised that Thames Water will be revisiting its suite of Willingness to Pay surveys to ensure that the current economic climate is reflected in customer responses. Presentation by the Environment Agency on its Water Resources Strategy and Regional Action Plans David Bland introduced Nigel Hepworth of the Environment Agency Southern Region and invited him to deliver his presentation which gave an overview of the new Environment Agency national water resources strategy (launched at the end of March 2009) and explained how regional action plans are being prepared to set out how each region will contribute to implementation of the actions identified in the national Water Resource Strategy. Nigel Hepworth explained that the draft Regional Action Plans for the Southern and Thames regions had not yet been finalised, but will be by early July and the EA will be inviting more feedback on them over the summer. Issues particularly pertinent to these two regions are the need for more integration and connectivity between water companies on water resources. These two regions should also take a lead in consumer education on valuing water. Following the presentation he invited questions. Jill Thomas asked what the time span is for the Regional Action Plans and was advised that they will tie in with 5 year Environment Agency corporate strategy schedules but will look ahead to 2050 (The period covered by the strategy). John Havenhand queried whether the predicted increase in population and reduced water consumption will lead to deteriorating living conditions. David Bland said that increases in compulsory metering will amount to rationing by price. Linda Perham added that focussing on reducing hot water usage could have hygiene implications if distinctions in necessary and unnecessary usage are not stressed. Margaret Shaw asked how abstraction licences issued in perpetuity at peppercorn rents will be tackled. Nigel Hepworth said that the agency would have to decide which licences to target first and where compensation payments may have to be made the agency would have to work within the compensation fund that it can build (as ultimately governed by Defra). Lynn Judge commented that there could be an issue of bad timing if climate change recommendations are not incorporated in regional action plans. Nigel Hepworth concluded by saying that the EA is inviting feedback on the regional action plans by September and that they should be signed off in December 2009.

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David Bland thanked Nigel Hepworth for a very useful presentation that would help focus the committee when responding to our region’s action plans. Water Framework Directive Andrew Whetnall drew attention to the disproportionate costs in the draft Thames River Basin plan, and a number of unanswered questions about how benefits had been derived. With widespread metering customers will be paying more for water but getting less for their money. David Bland stressed that CC Water is not just concerned with the price of water being cheap. We do recognise that important projects must be paid for but these must demonstrate benefits that outweigh the costs. CC Water has real concerns about revenue volatility for water companies with widespread metering and water poverty for growing numbers of consumers, especially households with children. Jill Thomas said that the costs of the South East Plan are too high for consumers. Benefits are unbalanced as is the plan itself. The burden of costs falls on consumers and they are not sufficiently shared with other sectors. Future costs are not explored beyond the current 6 year cycle and carbon costs are too high. Owen Turpin of the EA said that the Agency is aware of the issue of balancing environmental improvement against carbon costs. As yet there are no answers to this but the agency is looking into it further. Nigel Hepworth added that the EA is looking at the balance between different sectors in response to consultation comments that have been received. Quarterly reports David Bland thanked water companies and the DWI for submitting their quarterly reports. He reiterated the committee’s previous requests for each report to be assigned a named person from each water company. The committee’s company leads were then invited to raise questions arising from the reports. Jill Thomas commended Folkestone & Dover Water for doubling the number of customers on the WaterSure tariff and hoped to see that continue to rise. She also commended the company for having no incidents notifiable to the DWI and for improving on the leakage target. Pauline Wilson for the company said it is proposing to Ofwat that its leakage targets are further reduced. Andrew Whetnall asked Pauline Wilson if there had been any further seismic events that had affected aquifers. She advised that the company was not aware of any but the situation would be reviewed later this year. He then asked if the company had learnt anything it could share with other water companies relating to water consumption following widespread metering. Pauline Wilson said that there had been a reduction in consumption and the company is currently analyzing this. Commenting on the Southern Water report John Havenhand said that complaint figures are heading in the right direction and have in fact decreased by a larger

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percentage than that shown in the report. He asked companies to provide explanatory paragraphs alongside tables in future quarterly reports. 7.5 Lynn Judge was pleased to note that Portsmouth Water had also increased the number of its customers on the WaterSure tariff. She will keep a watching brief on environmental issues. Neville Smith of Portsmouth Water advised that the company had exceeded its leakage target this year due to extensive mains bursts during the cold weather at the start of the year. Janet Hill voiced concerns about South East Water’s water quality compliance as the same location had been affected twice earlier this year. Marek Podsiadly for the company explained that they were both related to pesticides. Jeanette Sheldon of the DWI added that it has ongoing liaison with the company on these incidents. David Bland commended the DWI for its excellent communication with CC Water when incidents arise. Janet Hill asked South East Water to explain its below target performance in dealing with customer complaints and answering phone calls. Marek Podsiadly admitted that the annual billing cycle had raised unanticipated problems and that as a result there had now been several changes to the structure of the management team. Larner Bernard asked if South East Water could explain the problems connected with dual flushing devices. Marek Podsiadly said he will feed this information back after the meeting. Action: M. Podsiadly David Bland asked Nick Fisher of Sutton & East Surrey Water if he had any comments on the staff empathy training that had delivered such good results. Nick Fisher said that the empathy training had arisen from comments on the June Returns and had significantly improved on the company’s performance this year.

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7.10 Linda Perham observed that Sutton & East Surrey’s payment line seemed popular with customers. However complaints have risen significantly in particular for charging and billing. Nick Fisher advised that this was due to increased metering and that it was expected that this trend will continue. 7.11 Andrew Whetnall commended Thames Water’s in depth report which is both easy to read and contains useful graphics. He was pleased to note that customers on both the WaterSure and Special Needs register are increasing at a steady rate, although he added that with a company as large as Thames there must still be many customers who should be on either or both schemes. He also requested further explanation of financing arrangements and suggested that this might need to be linked with June Return reporting in future. 7.12 Linda Perham asked for further details of partners in Thames Water’s 10 for 10 initiative. Victor Freeney said that the partners were of a diverse range and that a fuller update will be included in the next quarterly report. 7.13 Andrew Whetnall commended Thames Water for its reduction in complaint numbers. 7.14 David Bland asked Thames Water to keep us informed of its customer experience research.

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7.15 Larner Bernard asked for further details of the increase in public liability claims referred to in the Thames Water report. Victor Freeney said that he will report back to the committee on this after the meeting. Action: V.Freeney 7.16 Helen Charlton said that in future it would be very useful if all companies could include details of burst mains in the equivalent period of the previous year to enable us to make comparisons. 7.17 Margaret Shaw asked Three Valleys Water to provide more information on their trust fund in future reports. She congratulated the company on increasing the number of customers who use the password protection scheme and suggested other companies try to do the same. She asked the company if the seasonal tariff trial had provoked many complaints. Sandra Kerr for the company said that to date only 6 complaints have been received but no bills have been sent out yet. 7.18 David Bland was disappointed to note that Three Valleys was below target for reading meters and hoped that performance would improve from now on. 7.19 Jeanette Sheldon of the DWI explained that since January 2009 there had been a reclassification of incidents shown in reports. This delivers more consistency and takes into account customer perceptions. 7.20 Jill Thomas asked for further information from the DWI on the Twyford incidents to be forwarded to her which she will pursue with Southern Water. 7.21 Helen Charlton noted that there is a discrepancy in the number of incidents reported by Thames Water and the DWI. Victor Freeney said that this was due to Thames Water over-reporting before the DWI had decided on classification. 7.22 Larner Bernard said that the DWI’s report showed that Sutton & East Surrey Water had 8 breaches in the period, but the company’s report showed none. Jeanette Sheldon explained that these were breaches but not incidents; the company’s report only detailed incidents. Helen Charlton said that in future it would be helpful if all companies categorize their reports in the same way as the DWI. 7.23 John Havenhand suggested that it might be useful for members to have a short presentation in future on reporting methods. Karen Gibbs suggested that the DWI’s launch of its annual report next month might provide an appropriate opportunity to ask questions on this. Action: DWI 8. 8.1 8.2 Complaints report David Bland welcomed Alastair Lloyd to his first meeting and invited him to elaborate on any items of note in the Consumer Relations report. Alastair Lloyd said that he was pleased to report that there had been a considerable decrease in the number of complaints received during April and May 2009 compared to previous years. This demonstrated that water companies are dealing with the billing cycle more efficiently than in previous years.

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Alastair advised that staff in the regional office had good working relationships with key complaint handling staff at water companies. This helped to nip complaints in the bud and regular monthly meetings with senior staff at the largest 4 water companies are also helping to tackle and address root causes of complaints. An increasing percentage of this region’s complaints are being outsourced to quieter regional offices. Consistency in complaint handling is being communicated to staff in these offices, and Thames Water is arranging to visit staff in the CC Water Bristol office to introduce key staff and explain policies. Alastair was pleased to report a big improvement in the complaint handling performance of the CC Water London & South East office in 2009. This was due to recruiting additional staff in the office and the outsourcing of complaints to quieter CC Water offices at busy times. From June 2009 customer satisfaction with CC Water’s complaint handling will move from a crude method of ticking boxes in a pre-paid reply card to an in-depth telephone survey that will separate water company and CC Water’s performance. Water company performance will not be scored but will be differentiated, something that did not happen with the previous customer satisfaction survey and which skewed the outcome results. David Bland welcomed recent initiatives to improve on the complaint handling performance of the regional office which had trailed behind other regions in the past. A recent meeting between Regional Chairs and Consumer Relations Managers had been held to discuss ways to enhance our service and this appeared to be delivering positive results. Other business David Hinton of South East Water asked when CC Water’s response to the Cave Report would be available. David Bland advised that it was on the agenda for CC Water’s Board Meeting in July. David Bland drew attention to the Water Resources in the South East Stakeholder newsletter which this time gave an overview of water companies water resources management plans providing a very useful overview. He also encouraged attendance at the Hampshire Water Festival on 25/26 July; leaflets with full details could be collected after the meeting. David Bland thanked everyone for attending the meeting, especially Nigel Hepworth who stood in at the last minute for Peter Midgley and who delivered an excellent presentation. The next public meeting will be held in London on Wednesday, 23 September 2009.

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Siobhan Aris 19 June 2009

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