Our role in encouraging better performance from Scottish Water
We have a role working with Scottish Water to ensure this happens. We do this by providing independent scrutiny of Scottish Water’s performance and encouraging ongoing service improvements.
There has been significant progress in the 20 years since Scottish Water was formed.
- Scottish Water’s service quality performance – as measured by an overall performance indicator – has more than tripled since 2002.
- Its customer service and operational efficiency are at least as good as those of the leading water companies in England and Wales.
How we monitor performance
In our final determination for the 2021-27 period, we set out our expectation that Scottish Water will continue to improve its efficiency while investing around £4.5 billion to meet the objectives that the Scottish Ministers have set for the industry. This means that Scottish Water will make progress towards its net zero emissions target while maintaining (at a minimum) its current levels of service.
We assess Scottish Water’s performance against this expectation by comparing how it is planning and prioritising its investment and what it is actually delivering for customers. We do this using detailed information that Scottish Water submits to us each year.
The Delivery Plan provides a two-year outlook on how Scottish Water is planning to deliver its objectives, the investment required, and the pricing profile required to fund this investment.
There are two industry stakeholder groups that oversee the progress of Scottish Water’s investment programme:
- The delivery assurance group or ‘DAG’ reviews Scottish Water’s progress in delivering the investment endorsed by the investment planning and prioritisation group or ‘IPPG’.
- The IPPG focuses on reviewing Scottish Water’s long list of investment needs. It endorses to Scottish Ministers Scottish Water’s view of priority needs that should be progressed within its investment programme.
The groups are chaired by the Scottish Government and attended by Scottish Water, WICS, Citizens Advice Scotland and the quality regulators (the Drinking Water Quality Regulator and the Scottish Environment Protection Agency).
Scottish Water's performance
We report on Scottish Water’s performance every year.
Commenting on performance
Our annual overview covers the following aspects of performance:
- key outcomes for customers and the environment (such as levels of service and delivery of the investment programme);
- expenditure (investment and operating costs); and
- key financial ratios.
The report provides information about the targets that were set for Scottish Water, its performance against those targets, and our assessment of progress. This helps give customers and other stakeholders confidence in Scottish Water’s delivery against its agreed targets.
Scottish Water’s performance is now in line with that of the best performing companies in England and Wales. Looking forward, a further transformation in performance is required if Scottish Water is to deliver its net zero emissions target by 2040 in an effective and efficient way.
How we will assess performance in future
Our regulatory approach is to encourage candour and transparency in all interactions between ourselves as the economic regulator, Scottish Water and other stakeholders.
We are thinking long-term about the challenges the sector faces, and working with others to make sure that robust evidence and analysis supports decision making.
As part of this we are moving away from a fixed investment programme for the regulatory control period (the period over which we set charge caps). This change enables Scottish Water to plan and prioritise its investment programme in a more dynamic way, thereby ensuring maximum long-term value. It will also mean that the way in which performance is assessed in future is changing.
To maintain stakeholder confidence, Scottish Water will be required to engage fully with its customers and communities and to explain very clearly the consequences and impacts of its decisions.
In relation to performance Scottish Water will take ownership for:
- setting its own stretching targets and justifying these targets;
- outlining the steps it will take to meet these targets; and
- reporting performance (both the good and the not-so-good) to its customers and communities in a way that is transparent and accessible.
We will continue to be there to ensure that we understand stakeholders’ perceptions of Scottish Water and can share our own assessment of performance and progress.