Minutes of the 167th Board meeting of the Water Industry Commission for Scotland on 6 November 2025

Present:

Ronnie Hinds (Interim Chair)
Morag Sheppard (Member, Chair of OCAG)
Jo Aston (Member); Heather Reid (Member)
Robin McGill (Member, Chair of ARC)
David Satti, Chief Executive  

In attendance:

Colin McNaughton, Director of Pricing – Items 5 & 6
Mark Cassidy, Director of Markets - Item 4
Anthony Daye, Director of Finance and Corporate Services - Item 1-4
Shona Coan, Head of Finance - Item 3.2 & 3.3
Leo Tymianski, Experienced Analyst - Item 5
Danny Taylor, Experienced Analyst - Item 6
David Innes, Retail Senior Manager - Item 4
Cosmin Diaconita, Retail Manager - Item 4
Kirsty McLean, Assistant Manager

Chair’s opening remarks

The Chair opened the 167th meeting of the WICS Board and welcomed Members, including newly appointed Directors Mark Cassidy and Anthony Daye to their first Board meeting for their respective sections. 

The Members and Directors provided congratulations and thanks to the wider team for the extremely positive induction experience provided upon joining. 

1.    Apologies for absence

There were no apologies.

2.    Minutes of the last meeting and regular updates     

2.1    Declaration of conflicts of interest in relation to the agenda

The following interests were noted and confirmed as having no conflict in relation to the agenda for this meeting:

• Morag Sheppard is a Member of the Environmental Standards Scotland Board.

2.2    Minutes of the 166th meeting

The Board approved the minutes of the 166th Board meeting.

2.3    Summary of action points

The Board reviewed the summary of actions and agreed that material updates would be addressed under other agenda items. 

Members commended the recently approved communications plan which has been very well received.

The CEO provided an update on action A297, relating to the Board paper outlining stakeholder insights ahead of the Board’s decision on the draft determination. He confirmed that a paper has been drafted and will be brought to the Board in due course. 

2.4    Members Update

The Chair updated Members on recent engagements with Scottish Government through the regular Sponsorship Team Meeting. The following key points were noted: 

• Ahead of the next regulatory price review, much earlier engagement should be planned to establish baselines for the framework within which WICS operates.
• The Director General for Net Zero at the Scottish Government confirmed he would engage with the Cabinet Secretary on outstanding recruitment matters, with an aim to avoid delay from Scottish Government on pending approvals.
• A meeting has been planned for the Chair and CEO to meet with the Cabinet Secretary early December to debate the role of public bodies such as WICS.

The following points were also noted:

• The Chair requested that the publication of WICS feedback on Scottish Water’s Business Plan be elevated to the homepage of WICS corporate website for better visibility. 
• The Chair confirmed the recruitment for the permanent Chair of WICS is well underway with the shortlist meeting held on 05 November. Interviews take place on 13 and 14 November.
• Morag Sheppard noted the recent data request from the Public Sector Reform Summit confirming work is underway to respond.
• In light of the Cunliffe Review, Members collectively discussed the potential for WICS to take the lead in considering how the Water Industry might evolve. There was support from the Chair to engage further.  
• Robin McGill queried whether the late UK budget would impact WICS SRC process. The CEO confirmed this will have no direct impact on WICS. 

3.    Finance and Corporate Services

3.1   HR matters

The Board noted an update on a confidential HR matter and agreed to proceed with option two.

3.2  Cash reserves

The Head of Finance presented a paper focusing on cash reserves, following the recent work carried out by the Financial Sustainability Review Group. The paper provided the Board with a detailed review of the risks that might impact WICS financially, and proposed an approach and policy for managing cash reserves moving forward.

The Chair and Members thanked the Head of Finance and the wider team for the quality and detail of the paper, specifically on the breadth of risk considerations presented. They also commended the good relationship management between WICS and retailers.

The group noted that communications regarding the future reduction in retailer charges and Scottish Water costs should be carefully considered and planned.

The Board approved the cash reserves policy and accepted the recommendations within the paper, subject to providing clearer rationale and a stronger argument for the benchmark reserve level. 

The CEO confirmed the cash reserves policy would now be implemented and regularly reviewed thereafter.

3.3   Finance update

The Board noted the update provided by the Head of Finance on financial results, including that WICS remains underbudget largely due to vacancies. The Board look forward to receiving a further update on budgeting at its December meeting.

The Head of Finance informed the Board that the external audit for 2024-25 is substantially complete. The Annual Report and Financial Statements will be submitted to the Audit and Risk Committee at its November meeting.

The CEO informed the Board that WICS has received confirmation from the Public Audit Committee (PAC) that all investigations covering 2022-23 and 2023-24 have now been closed.

The Board considered and approved two items of expenditure, which will be submitted to the Scottish Government for approval.

3.4   Organisational change update

Morag Sheppard informed the Board that the work of the Organisational Change Assurance Group (OCAG) is almost complete, confirming steps will be taken at its next meeting to ensure outstanding actions are passed forward before closing down the group.

Following close of OCAG, a new People Committee will be established. The Terms of Reference for this Committee will be presented to the Board at its December meeting.

The CEO informed the Board that the MOTU between WICS and ZWS has now been signed.

The Chair raised the need for the Board to approve the appointment of the internal whistleblowing champion. 

The Board noted the update on organisational change and endorsed the appointment of Morag Sheppard as the internal whistleblowing champion.

3.5   Annual work plan

The CEO presented the Annual Workplan progress update to the Board, confirming that some areas are now complete while others remain in progress. 

The Board congratulated the IT Team on reinstating the Cyber Essentials Plus certification. 

Members queried the delay in reviewing Scottish Water’s investment governance. The CEO confirmed that work is underway to establish how the new WICS-run Investment Group will operate in future.

The Board noted the update on annual work plan delivery, including the status of amber items and areas completed since the previous meeting. 

4.    Markets

4.1    Licence transfer: Brightwater Services

The Chair introduced the Markets team and asked the Senior Retail Manager to provide an update on the transfer of Brightwater Services Limited. 

The Board were provided with an update on the acquisition process, which was completed earlier in the year, with Castle Water now looking to transfer Brightwater Services water and sewerage services licence. 

The Markets team informed the Board of the consultation and notice of representation stages to conclude this process, should the Board be minded to consent to the transfer of the licence. It was noted that the transfer of any licence brings the same or improved terms and conditions ensuring no detriment to the customer. 

The Board approved the proposed licence transfer and agreed to delegate authority to the CEO to make further and final decisions concerning the transfer of such licences.

4.2    Licence condition investigation

The Chair welcomed the Retail Manager and asked for an update regarding the investigation into the compliance of two retailers. 

The Markets team informed the Board that both retailers have acknowledged a breach and taken proactive steps to improve their terms and conditions. WICS will collect further information in order to progress the investigation.

It was confirmed that any enforcement action is a matter for WICS’ Board and therefore the team will ensure they are kept fully informed of developments and recommendations. 

The Retail Manager confirmed that both investigations will conclude by April 2026. The Board will be further updated at both January and February meetings, with formal approval being sought in March 2026.

The Board was reminded that the Code of Practice will improve practices and behaviours of retailers across the market. 

The Board noted the information paper and is content with the formality of the process. 

4.3 Business Stream Governance

The Senior Retail Manager provided the Board with an update on the proposed changes to the Governance Code and confirmed that external legal support is being provided to ensure appropriateness of any proposed changes.

The Board noted the update from the Markets team regarding proposed updates to the Governance Code, requesting an options appraisal of next steps at its December meeting.

5. Performance and reporting

5.1 Scottish Water's performance report

The Director of Pricing provided the Board with an overview of findings presented within WICS report of Scottish Water’s Performance during 2024-25. 

Additionally, the Board was informed that feedback had been received from Scottish Water on the draft report on 06 November which related specifically to (i) carbon, and (ii) WICS granular assessment of expenditure. The Board heard that this feedback would not materially change the performance report as drafted, and could be incorporated by a footnote, for example.

The Board provided some feedback on the draft report, specifically as follows: 

• Executive summary to be better balanced, for example by substituting leakage for another metric. 
• Add additional information to support the analysis relating to expected capital expenditure compared to allowance in SRC21.
• Strengthen areas where commitments are not being met.
• Update table 2 on output categories with under-delivery as of March 2025 to include units as well as percentages.
• Consider adding a section at the end of the report to highlight the challenges ahead.

The Board thanked the team and approved the report pending the incorporation of the above considerations. 

6. Pricing

6.1 SRC27 project update

The Board was provided with an update on the work of the deliberative research group which will review Scottish Water’s final business plan. WICS may explore options to utilise this group further to support seeking customer involvement. 

The Director of Pricing informed the Board that Consumer Scotland is carrying out an assessment which is due to conclude in May 2026 (although there might be scope to bring this forward).

The Board noted the update on the Strategic Review of Charges 2027–33, including the project dashboard, and requested visibility of the critical path as the project progresses.

6.2 Scottish Water's response to WICS' Business Plan feedback

The Director of Pricing provided the Board with an update on recent developments regarding the Strategic Review of Charges 2027-33, with a focus on Scottish Water’s response to WICS business plan feedback.

It was confirmed that Scottish Water has now finalised its internal governance processes and has agreed to meet the requests of SEPA and DWQR. 

The Board noted the update on WICS feedback on Scottish Water’s business plan. 

6.3 Scheme of Charges 2026-27

An update was provided to the Board in relation to Scottish Water’s upcoming Scheme of Charges for 2026-27. Confirmation was given that a further paper will be presented to the January Board meeting for approval. 

The Board noted the update on the scheme of charges 2026-27. 

6.4 WICS' duties

The Director of Pricing presented the Board with an update on the duties placed on WICS as a Scottish Public Body. Most specifically, the three duties directly relevant to the Strategic Review of Charges: 

• Consumer duty
• Accessibility Regulations
• Biodiversity duty

The Board welcomed the biodiversity duty approach and recognised the increasing importance and support for nature-based solutions. 

The CEO provided additional information relating to the Human Rights Bill which proposes that WICS will become a designated body should it become legislation.  

Members requested WICS also explore whether the following additional impact assessments are relevant for consideration: 

• Island Communities Impact Assessment (ICIA) as required under the Islands (Scotland) Act 2018 
• United Nations Convention on the Rights of the Child (UNCRC) Impact Assessment

The Board noted the update on WICS’ duties and how they apply to the Strategic Review of Charges 2027-33. 

6.5 Scottish Water structure consultation

The CEO provided the Board with an update in relation to Scottish Water’s proposed draft Public Services Reform Order 2026 which seeks to amend paragraph 2 of Schedule 3 of the Water Industry (Scotland) Act 2002 to reduce the minimum number of executive directors on Scottish Water’s Board from three to two.

The CEO confirmed that the SG has approved the new structure and recruitment is already underway. 

Morag Sheppard and Robin McGill challenged where the focus on customers and employees will come from in the new structure given the lack of Board level representation of operational matters. Some assurance was provided in that the customer and employee aspects of business will be covered by the Senior Executive Team.

The Chair requested that feedback is provided to both Scottish Government and Scottish Water highlighting the key points raised by Members. 

Meeting close

The Chair closed the meeting by thanking colleagues for their valuable contributions.