1 - Following its investigation into our wastewater treatment works compliance reporting, Ofwat imposed a penalty under Section 22A of the Water Industry Act. We provided in full for this proposed regulatory settlement in the financial statements for 2018–19, reducing profit in that year. We are now making rebates to customers, through revenue, over the period from 2020–25 and these are offset in the income statement by the amortisation of the provision made in 2018–19.
2 - Capital investment for 2020–21 includes an intangible asset of £124.6 million recognised for the future payments to Portsmouth Water in relation to the right to water from the construction of the Havant Thicket reservoir. This is a non-cash valuation in the year and payments will be made to Portsmouth, over the period to 2100.
3 -Net debt for 2020-21 and 2019-20 has been restated to following the release of a deferred credit held on the Balance Sheet following a review of the substance of the transaction as described in note 1 to the financial statements.
4 - ROCE is presented as the ratio of profit before interest and tax (£17.6 million) to non-current assets excluding debt (£6,887.2 million) less current liabilities excluding borrowings and lease liabilities (£427.2 million) from the Statement of Financial Position.
5 - Regulatory Capital Value (RCV) a measure of the value of our regulatory capital asset base as published by Ofwat. The RCV for March 20 has been restated to reflect the adjustments made by Ofwat at the end of the last regulatory period.
6 - The net debt to RCV ratio is calculated as short and long-term senior borrowings, less cash and short-term deposits to the RCV (all values taken from our Regulatory Accounts).
Use water wisely
Our performance in 2021–22
During 2021–22, we reduced leakage levels to 94.9 megalitres per day (Ml/d), a three-year rolling average, (2021: 98.5 Ml/d) against Ofwat’s target of 93.9 Ml/d. We have increased investment in-year by £1.2 million to accelerate the roll out of our Advanced Pressure Management System.
During the height of the COVID-19 pandemic in 2020, we saw individual water usage increase by around 8% with so many of our customers spending more time at home. However, over the past year, we have started to see household usage levels drop to an average of 133.6 litres per person, per day during 2021–22 (2021: 137.6).
The pandemic has also meant that we were not able to make our usual Water-Saving Home Visits during periods of lockdown. However, over the past year we are pleased to have more than doubled the number of visits we were able to make, achieving a cumulative water saving of 359 cubic metres per day (2021: 105) over the year.
Through our water-saving communications campaigns, in our targeted water-stressed areas, we have achieved an 11% increase in positive perception. A total of 71% of customers surveyed claim to have reduced their water usage.
We are developing a series of smart metering trials in our most water-stressed areas.
We have expanded our detection team and will continue the roll-out of our Advanced Pressure Management System to drive down the volume of leakage in our network.
Deliver great service
Our performance in 2021–22
Thanks to significant efforts to improve resilience and work with our customers at property level to reduce blockages, we have seen a second year of improved performance for external flooding with us reducing incidents to 3,934 (2020–21: 4,409), resulting in a £0.948m reward.
Unfortunately, internal flooding incidents increased to 614 (2021: 393), as a result of a number of severe weather events over the summer period, resulting in a penalty of £7.835 million.
Disappointingly, our water quality measure Compliance Risk Index (CRI) score has risen to 6.69, (2020–21: 4.53), as a result of increased scores at our service reservoirs and consumer taps. We also experienced quality failures at our Burham Treatment Works in November 2021.
We have seen a reduction in the time our customers are without water during an incident (for more than three hours) achieving nine minutes, 22 seconds (2020–21: 12 minutes, 43 seconds), although we missed Ofwat’s target of six minutes and eight seconds.
In terms of customer satisfaction (C-MeX) we ranked 16th out of 17 water companies in the UK (2020–21: 16th). As a result, we have incurred a penalty of £4.5 million.
We saw a notable increase in complaint volumes during the year as a result of the Environment Agency prosecution outcome and increased scrutiny around storm overflow releases. The total number of complaints we received in 2021 was 9,131.
We will continue to focus on reducing supply interruptions for customers by a further 18% during 2022–23.
We are setting up a new Digital team and refreshing our website, which will increase access to self-serve tools for our customers – due to launch towards the end of 2022.
Our Hazard Review programme will continue to focus on improvements at our water supply works and help to increase our CRI score.
Protect and improve the environment
Our performance in 2021–22
Our Treatment Works Compliance has improved to 97.94% for 2021 (2020: 97.1%) as a result of changes to management processes at our wastewater treatment works. This year we saw a total of seven failed treatment works (2021: 10).
Although the total number of pollution incidents has reduced (per 10km of sewer), with us achieving 93.63 (2020: 101.52), we know we must go further to reduce these incidents. We are disappointed to have recorded an increase in serious category 1 and 2 pollutions from four in 2020 to 12 in 2021. We recorded 372 category 1-3 pollution incidents (2020: 400) in year. We are committed to this through our Pollution Incident Reduction Plan and we have increased our self-reported incidents, reaching 90% (2020: 88%) in 2021.
Meeting 100% of the required standards, we saw a total of 60 of our 84 bathing waters achieved Excellent status during the 2021 reporting year (2019: 58). We continue to work with partners along our more than 700 miles of coastline to increase this number.
Our renewable energy generation target for 2021–22 was 21.3%, and we achieved 15.85%, falling short of where we wanted to be. As a result, we incurred a penalty of £1.326 million.
Renewable Energy Guarantees of Origin (REGOs) have been purchased through to April 2024, ensuring that 100% of the energy we use is green.
We beat our target for reducing the amount of water we take from the River Itchen at the most sensitive time of the year for river flows, in September, earning us the maximum reward of £0.5 million.
We achieved a 100% biosolid recycling record during 2021–22 (2021: 100%). Biosolids (a byproduct of the treatment process) are recycled as a fertiliser.
Pollution awareness training will become compulsory for all employees in the company.
We are trialling a new method to collect and report data in real time, in order to upgrade our Beachbuoy storm release notification service.
We will use the results of our first-ever natural capital baseline assessment of our land holdings to direct investment and feed learning into our Natural and Social Capital Framework.
Fit for the future
Our performance in 2021–22
We measure the number of mains repairs per thousand kilometres of our entire water main network. Our Ofwat target was 118.3. During the year we outperformed this achieving 101.5 (2020–21: 150), resulting in a reward of £0.9 million.
We achieved a 9% improvement on last year’s number of sewer collapses, but the Ofwat target of 226 incidents was not met. We achieved 314 incidents (2021: 315), resulting in a penalty of £4.110 million.
In July 2021 we launched GetConnected, our new online portal for customers to make it easy for customers to submit, track progress and pay for their water and wastewater connection applications.
We refreshed our approach to non-household retailer engagement, helping reduce the number of long unread meters and providing an increased range of credit support options, which has led to an improved retailer experience rating, moving us up four industry places from 11th to 7th this year.
We have created a sustainable development policy which sets out our expectations in relation to drainage and water efficiency when developers are drawing up their plans.
While we have not been able to carry out school visits due to the pandemic and subsequent lockdowns, we plan to reinvigorate our work in this area following the appointment of a dedicated Community Education Officer in March 2022.
In partnership with our local Rivers Trust we will launch a new education programme for primary school children in Hampshire later this year.
We will continue to modernise and rationalise our networks through our Network 2030 programme.
Southern Water Annual Report and Financial Statements 2021–22