Scottish Water to deliver investment challenge

The Scottish Water Board accepted the challenge of delivering a record-breaking improvement program over the next four years within limits laid down by the Water Industry Commission. This means any increase in customer charges is likely to be kept below inflation from 2006-2010. The intention is to keep any increases in household charges to 0.5% below inflation while bills for business are pegged at 1.5% below inflation...

EDINBURGH, Scotland, UK, Jan. 27, 2006 -- The Board of Scottish Water has accepted the challenge of delivering a record breaking improvement program over the next four years within the limits laid down by the Water Industry Commission.

This means that any increase in customer charges is likely to be kept below inflation between 2006 and 2010. The intention is to keep any increases in household charges to 0.5% below inflation while bills for business are pegged at 1.5% below inflation.

The GBP 2.1 billion program to deliver ministerial objectives between 2006 and 2010 will be the second largest in the UK. It will consist of more than 2,000 projects across Scotland. The projects will deliver improvements to the quality of drinking water for more than 1.5 million customers and clean up more than 530 kilometres of rivers and coastline. An initial GBP 160 million will be made available over the four years to tackle the issue of development constraints across Scotland.

Chair of Scottish Water Alan Alexander said: "Much has changed over recent months. A new approach has been developed with Regulators which has allowed us to revise our view of the overall costs of delivering the Ministerial objectives. We now accept the extremely tough challenge of delivering this record level of improvement within a funding limit which will keep customer charges stable for four more years."

For instance, Scottish Water, working with the Drinking Water Quality Regulator, originally costed the need for major work at 270 water treatment works. It is now agreed that the Minister's objectives can be achieved by carrying out significant improvements at 115 works. Improvements in water quality at other water treatment works will be achieved, in this period, through maintenance and operational enhancements.

The Water Industry Commission has also asked that we carry out further investigative work on a number of projects.

Once more work has been carried out the Water Industry Commission will give further consideration to these projects.

Alan Alexander added: "The Chair of the new Water Industry Commission, Sir Ian Byatt, has brought a pragmatic approach to clarifying what we are required to do with the money being made available, at the same time he has set us tough efficiency targets that drive out more benefit for customers.

"This program will deliver thousands of improvements across the country and result in another great stride being taken to update the water and sewage infrastructure of Scotland. That's good news for our customers in that it maintains the right balance between continuing significant investment without increasing costs to customers."

The improvement program includes:
• Almost GBP 600 million to provide even better quality drinking water for 1.5 million of our customers.
• More than GBP 100 million to continue to improve customer service by sorting poor pressure problems, tackling odour at identified waste water treatment works and dealing with homes flooded with sewage.
• An initial GBP 250 million to improve the environment.
• GBP 780 million to maintain our assets.

Notes to Editors:
Scottish Water's GBP 2.1 billion investment programme aims to deliver the ministerial objectives announced to the Scottish Parliament on Feb. 9, 2005. These include
• To improve drinking water quality for 1.5 million customers.
• To improve 530 kilometres of rivers and coastline through better wastewater treatment.
• Reduce the total number of properties affected by sewer flooding by 1100.
• To expand our treatment works to ensure that 120,000 new homes and 4.050 hectares of industrial development are connected to our networks between 2006 and 2014.

Within the final determination, published on Nov. 30, 2005, the Water Industry Commission has adopted a different approach when assessing the lowest overall cost to deliver Ministers objectives. They have suggested a blend of solutions involving capital investment, capital maintenance and operational interventions to meet Ministers' objectives. This is a departure from the approach taken in previous Quality & Standards and strategic review processes.

Details of the actual projects which will be carried out are being finalised between Scottish Water and its regulators -- the Water Industry Commission, the Scottish Environment Protection Agency and the Drinking Water Quality Regulator.

Details of many of the projects will be made available on Scottish Water's website as the programme is agreed with a range of stakeholders including DWQR, SEPA and local authorities.

Facts Re Scottish Water's performance since being created in 2002
• Scottish Water is delivering GBP 1.8 billion investment in improvements for customers.
• Across Scotland in the first four years of Scottish Water, more than 350 improvements in the quality of drinking water are being delivered.
• Pollution is being reduced at a 1,000 places across Scotland through better sewage treatment and the removal of continuous discharges into rivers and the sea.
• Scottish Water has set an industry record for renewing water pipes. At the peak of the work we were relaying 36kms a week. In the four years we will fix 2,550kms -- that's the distance from Inverness to Bucharest.
However, when that work is finished it only amounts to 6% of the water pipes in Scotland and there's still a lot of work to do to reduce the amount of water which leaks from our Victorian infrastructure.

We are saving our customers £2 million ever week by running the water industry more efficiently than in the past.
The inherited annual running costs of Scottish Water are now more than a GBP 100 million less than the former authorities.

The average household water bill in Scotland is now currently lower than for six of the private companies down south.

Customer Service
Scottish Water has improved every measure of customer service since we were created in 2002.
A recent Audit Scotland report into Scottish Water concluded -- "Scottish Water has made significant improvements in efficiency and performance."

Customer satisfaction with Scottish Water has improved from 75% in early 2002 to 95% in 2005.
Scottish Water was runner up in the UK Utility Company of the Year 2005 against the countries top utility companies from electricity, gas and water.

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