1. April 2018 71 High Holborn, WCIV6DA
Outcomes meeting 2
April 2018
71 High Holborn, WCIV6DA

2. Agenda 9.00 1 Welcome & declarations of interest – CCG Chair 2
Introduction – CCG Chair 3
May 3 submission - SEW 4
Common measures – definitions on leakage & interruptions update
Break 5
Outcomes & definitions discussion
Lunch 6
Outcomes assurance - gap analysis 7
Next steps
15.00
Close

3. 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.

4. Our role
“CCGs will challenge companies on their approaches to setting performance commitments including how well they reflect customers’ views and how stretching they are. Ofwat’s assessment will include focussing on the CCG report.”

5. 14 Common Measures
Bespoke measures in: vulnerability environment; resilience; Abstraction Incentive Mechanism; gap sites & voids – or justify why not appropriate
Within bespoke there is – mandatory bespoke & SEW bespoke plus SEW has its own KPIs/others
Some common measure definitions not yet finalised e.g. Interruptions & leakage update
Reminder -background
the different price controls (water resources, wastewater network plus etc.)7;

6. Ofwat’s aims
We want companies to develop a balanced, challenging package of performance commitments with stretching performance commitment levels so that:
Stakeholders can more easily compare and challenge the stretch in companies’ proposals in key areas
Companies commit to delivering stretching and good value service performance levels to their customers;
Companies have strong incentives to deliver on their commitments to customers;
Companies are able to develop innovative performance commitments that reflect their customers’ priorities; and
Stakeholders have trust and confidence in the outcomes framework.

7. Focus of today
Bespoke outcomes (in the context of the wider ‘outcomes package’)
The priority areas selected – do they reflect customer & stakeholder priorities
Definitions – way of measuring success - will they incentivise the right behaviour – deliver the ‘right’ outcomes
3 May submission to Ofwat
Out of scope (as for Meeting 3)
Performance commitment targets
Incentives - rewards & penalties
Transparency & publication of penalties
NEXT STEPS - GAPS

8. Bespoke outcomes
Companies have the freedom to engage widely with their customers and local stakeholders, to propose bespoke performance commitments that reflect their customers’ particular preferences.
There should be no, or very few, exemptions included in the definitions of bespoke performance commitments - exemptions must be justified & have customer support.
Scheme specific performance - A company should engage with its customers and CCGs on any scheme-specific performance commitments, as part of its engagement process on all its performance commitments.

9. Suggested questions…for each priority area
Understand the context
Are there any Ofwat requirements or restrictions in this performance commitment area?
Where appropriate, what were the previous commitments in this area e.g. for vulnerability, environment, asset health etc.
What is the company’s performance in this area over the last few years? Ofwat want to be clear companies are not dropping commitments as have performed badly against them.
What is the company’s proposed overall ‘package of outcomes’ in this area – bespoke and common?
What are the company’s proposed bespoke outcomes in this area?
What has changed since last time - is anything new/has anything been dropped/are there any exemptions? Ofwat expects SEW to justify any changes.
Why have the areas been selected? e.g. strategically importance to customers, SEW, or to meet mandatory requirements?

10. Evidence base for priority areas
Are SEW’s proposed outcomes focused on the issues that matter most to customers/their community/ies? What’s the evidence base?
Are the bespoke commitment areas informed and evidenced by ‘high-quality’ customer engagement and research from multiple data sources?
What areas were considered – why were these ones selected while others were excluded – what was the long list under consideration? Were there any tensions and challenges in making the selection – how was this selection made?
To what extent do the performance commitments reflect the specific priorities of the South East Water constituency?

11. To what extent has SEW developed their outcomes – including definitions with customers and stakeholders and obtained their support? What specific engagement has been done around this? Is this high-quality engagement?
Who has SEW engaged with regarding its definitions?
What was the customer feedback? Has it been incorporated – if yes, why, if no why?
Is the CCG assured that SEW has effectively engaged on the definitions and has support for the proposed approach?

12. General
Is the CCG assured that feedback and challenge has genuinely shaped the outcome area and definitions?
To what extent have SEW clearly explained the challenges they face and the trade offs made?
How has SEW balanced the interests of different current and future consumers, and the wider public interest?
What behaviour/outcome will the performance commitment/s collectively drive – is this the right outcome given customer priorities, existing company performance and culture?
How is SEW minimising any potential risks to consumers, society or wider stakeholders?

13. General
Has the company sought to make the commitments more challenging or innovative? E.g. has it chosen innovative metrics that genuinely challenge the company and lead to significant changes in operating practices or culture for the benefit of customers or the environment? E.g. performance commitments that involve working together i.e. via catchment management schemes
Are the outcomes aligned with SEW’s overall strategic direction?
Do the measures cover the majority of spend/and or does each measure relate to a non-trivial level of expenditure?
Are measures sufficiently controllable?
Is there a good balance between outcomes based and asset-based measures?

14. Lastly…
Are the performance commitments clear, unambiguous, complete and concise? “We expect companies to draft their bespoke performance commitment definitions in plain English, to use technical terms and acronyms only where necessary (and define these where they are used). “