The CCG assurance role Meeting 1 Outcomes meeting The CCG assurance role Meeting 1

Overview – reminder To provide independent challenge to companies and independent assurance to Ofwat on: the quality of a company’s customer engagement; and the extent to which the results of this engagement are driving decision making and are reflected in the company’s plan. Detail in the circulated Ofwat ‘Aide Memoir’

Customer evidence should inform and support the outcomes, commitments and incentives “Evidence from customers should influence many of aspects of a company’s plan including, but not necessarily limited to, company proposals on outcomes, performance commitments (PCs), outcome delivery incentives (ODIs), affordability, vulnerability, special cost factor claims and profiling of bills over time. We expect CCG reports to cover these issues.” Ofwat

Challenge to the company: Customer service Vulnerability Affordability Environment & resilience Water quality At every stage – is SEW’s approach informed by ‘high-quality’ customer engagement and research? To what extent has SEW developed their ODIs in consultation with customers and obtained customer support for the approach including the overall RoRE range proposed in their business plan? Are SEW’s proposed outcomes focused on the issues that matter most to customers/their community/ies? How has the company balanced different evidence, including customer engagement information, and wider data sources in setting outcomes and performance commitment levels? How has SEW balanced the interests of different current and future consumers, and the wider public interest?

Challenge to the company: Customer service Vulnerability Affordability Environment & resilience Water quality Are the company forecasts for 2019/20 service levels robust and appropriate? Are targets esp. for rewards and penalties genuinely stretching? E.g. relative to the company’s current performance; benchmarks within the wider water sector; other appropriate sectors and crucially customer expectations To what extent have SEW clearly explained the challenges they face and the trade offs made? Does the approach reflect customers overall appetite for risk and how customer behaviour and wider factors might influence performance? How is SEW minimising any potential risks to consumers, society or wider stakeholders?

Penalties for asset health performance commitments Has the company set their asset health penalties using a wide variety of customer research so they can strengthen their incentives in line with customer preferences? How effectively has the company engaged with us as a CCG and their customers on asset health issues? To what extent have SEW clearly explained the challenges they face and the trade offs made? Does the company’s asset health penalties (and any rewards) relate to their past performance and the asset health challenges they face?

In-period ODIs “If a company proposes not to apply an in-period ODI, it will need to justify, with evidence, why this would not be in customers’ interests. It will need to explain why future customers should pay for, or benefit from incentives, related to the service performance affecting current customers. The evidence should include customer research and the views of CCGs.” Ofwat

Other challenges/questions? Your thoughts…