Minutes of the 171st Board meeting of the Water Industry Commission for Scotland on 16 April 2026

Present:
Morag Sheppard (Acting Chair)
Jo Aston (Member, Chair of Future Regulation Group)
Heather Reid (Member, Chair of People Committee)
David Satti, Chief Executive

In attendance:
Colin McNaughton, Director of Pricing - Item 5 and 6
Danny Taylor, Experienced Analyst – Item 5
Mark Cassidy, Director of Markets – Item 4
Anthony Daye, Director of Finance and Corporate Services – Item 3
Stephanie Capaldi, Head of Corporate Office & Comms and Secretary to Commission
Jo Blewett, Scottish Government (Observer) Items 1 to 3
Dave Reynolds, Drinking Water Quality Regulator – Item 6.1
Nicole Paterson, CEO SEPA – Item 6.2
Sharon Forrester, SEPA – Item 6.2

Apologies:
Robin McGill (Member, Chair of ARC)

Chair’s opening remarks

The Chair opened the 171st meeting of the WICS Board.

The Scottish Government formally thanked the Acting Chair for her role during the interim period of recruitment for a permanent Chair, and expressed appreciation to the Chief Executive for his support in the Chair recruitment exercise.

1. Apologies for absence

There were from Robin McGill.

2. Minutes of the last meeting and regular updates

2.1 Declaration of conflicts of interest in relation to the agenda

Morag Sheppard is a Member of the Environmental Standards Scotland Board and confirmed there is no conflict in relation to the agenda.

2.2 Minutes of the 169th meeting

The Board approved the minutes of the 170th Board meeting.

2.3 Summary of action points

The Board noted the summary of actions with material updates covered elsewhere on the agenda.

2.4 Members Update

There were no further Member updates following the March Board meeting.

2.5 CEO report

The Board welcomed the introduction of the revised reporting format, noting that directorate dashboards will support delivery tracking of the work plan, while the Chief Executive’s report will provide higher level strategic context and highlight forward looking issues.

The Chief Executive outlined recent engagement activity, including attendance at industry conferences, and noted increasing attention on the water industry following the Cunliffe Review. It was recognised that this focus is likely to intensify following publication of transition plans in England.

The Board noted the strategic importance of the June 2026 Board meeting in the context of the Strategic Review of Charges (SRC27) and the resulting high workload for the Commission. The Board agreed that there should be focused engagement ahead of the June meeting by way of an additional dedicated Board workshop on the Draft Determination (A407).

The Board noted the importance of clearly distinguishing regulatory communications from those of Scottish Water and of articulating longer term cost and investment signals extending beyond the current price control period.

Members also agreed that the CEO report should be shared with the Commission monthly, including on months where there is no formal board meeting scheduled.

The Board requested that year end work plan progress reporting include clearer narrative explanation where any planned milestones had not been achieved or re-prioritised (A409).

3. Finance and Corporate Services

3.1 FCS dashboard reporting

The Board noted an update on key performance metrics for the Finance and Corporate Services Directorate.

The Director of Finance and Corporate Services reported that, as WICS transitions into a steadier operating position, improved budget phasing and clearer staffing assumptions are providing a more reliable indication of the organisation’s future expenditure profile. This was noted as an important step in understanding the full cost base of WICS over the next corporate planning period.

The Board noted positive progress in recruitment for vacant positions and welcomed WICS’ return to full resourcing levels in the coming months.

Members also noted the strong interest from candidates across current recruitment exercises.

The Board discussed office accommodation and noted high levels of desk utilisation. The Directorate is considering options to optimise space over the lease extension period.

The Board approved expenditure for UKRN membership and M365 licences.

3.2 Board reporting update

The Board supported the continued move towards dashboard-based reporting, development of organisational KPIs (both as a regulator and as a public body), and clearer separation between governance matters and regulation, particularly as committees become embedded.

The Chief Executive noted that the ongoing Board effectiveness review will inform future decisions on reporting formats, meeting frequency and the overall structure of Board business, including consideration of the needs of the incoming permanent Chair.

3.3 Closure phase 3 update*

The Board noted that this programme of work is now materially complete.

3.4 People Committee

The Board approved the People Committee annual work plan.

3.5 ARC update

The Board noted the update from the Audit and Risk Committee. It was confirmed that all actions due for completion had been delivered, with the exception of whistleblowing training, which remains partially complete with 70% staff completion.

The Board noted the strategic risk register and requested that further updates on the West Central Bioresources project be considered under the Pricing Directorate agenda item.

3.6 Overview of Board Strategy Session

The Board noted the overview of the March Board Strategy Session as an accurate record of the Commission’s initial strategic positions.

Members requested a further dedicated board workshop to support the development of corporate plan prior to taking a final decision in October/November 2026 (A406).

3.7 Future Regulation Group

The Board approved the designation of the Future Regulation Group as a Board-sponsored and chaired Working group. It was noted that short-term actions will be progressed through directorate reporting, with longer term actions returning to the Board where decisions are required.

4. Markets

4.1 Formal investigations update

The Director of Markets provided an update on progress on licensed provider investigations. The Commission reaffirmed the position taken in March and confirmed its intention to proceed to the next stage by issuing a final notice of penalty.

4.2 Conservaqua licence

The Board confirmed that it is minded, subject to representations received, to grant water and sewerage licences to Conservaqua.

5. Pricing

5.1 SRC27 dashboard

The Board noted that the Strategic Review of Charges is progressing to plan. The Director of Pricing highlighted the significant volume of information received as part of Scottish Water’s final business plan submission.

The Board discussed initial findings, with particular focus on the West Central Bioresources project and on emerging options for the form of price control for SRC27.

The Board confirmed that it is content with the proposed staged approach to reviewing information across the draft and final determination phases. It was noted that key assurance reports are expected during May, and the Board requested a summary assurance table ahead of the June 2026 draft determination decision to support discussion at the dedicated workshop (A410).

5.2 Draft Determination key messages

The Board discussed the overarching tone and messaging for the draft determination and agreed that it should reflect a collaborative and supportive tone signalling priority where further challenge will be applied based on the information and evidence submitted by Scottish Water.

It was agreed that headline messages should be concise, consumer focused, and presented up-front in the overview document. The narrative should clearly articulate the value of regulation to date, the consequences of under investment, and WICS’ long term independent role in protecting both current and future customers.

The Board emphasised the need to strike the right balance between investment ambition, charges, acknowledging that not all needs can be addressed within the available funding envelope. Members agreed there could be benefit in expanding on elements such as population shift (West to East) to highlight key elements of the challenge that might resonate with customers. Also, further emphasis on encouraging Scottish Water to be more innovative and do things differently.

6. Stakeholder session

6.1 DWQR

The Board welcomed the presentation and feedback on Scottish Water’s business plan. It was noted that DWQR is broadly supportive of the drinking water quality programme and acknowledged improvements made between draft and final submissions.

Key points raised included:

Strong support for outcome‑focused regulation rather than reliance on headline compliance metrics.
The need for greater ambition in some outcome measures.
Ongoing concerns regarding operational risk, risk normalisation, and the resilience of disinfection and storage.
The importance of clear accountability, delivery milestones, and consequences where outcomes are not achieved.
The need for greater transparency in how investment addresses risk and protects public confidence.
Support for a flexible investment framework to enable reprioritisation as higher‑risk needs emerge.

All agreed that continued joint regulatory engagement with DWQR would be valuable.

6.2 SEPA

The Board welcomed SEPA’s presentation and feedback on Scottish Water’s business plan. SEPA expressed conditional support for the investment programme, alongside concerns regarding deferral, cumulative environmental risk and over‑reliance on studies.