Ofwat rates companies on their information quality

30 Nov 2016 03:47 PM

Ofwat has yesterday published its rating of the quality of information and assurance water companies provide customers about their performance. It is also consulting on how companies can make their information easier to understand and set more stretching targets.

Ofwat’s annual assessment of water companies’ information quality is intended to challenge companies to publish information that can be trusted by their customers.

Three water companies have moved to the highest category. Four companies have moved to a lower category.

Keith Mason, Senior Director at Ofwat, said:

“We expect companies to be transparent and have processes in place to ensure their information can be trusted. The ratings we have published yesterday enable customers to compare their water company with others, which is important to help drive improvement.

“We assess large water companies each year on the quality of their information. The top performers will have less involvement from us. Where we’re concerned by the quality of this information, we will intervene to make sure they improve.”

South East Water, Severn Trent Water and United Utilities have all moved up to the self-assurance category. These companies met expectations in most, if not all, of our assessments, and exceeded our expectations and demonstrated good practice in a number of areas.

South West Water and Affinity Water have moved down to the targeted category. They did not consistently meet the high standards expected for companies in the self-assurance category, which led to a reduction in the trust and confidence stakeholders can have in their information.

Ofwat has also moved Yorkshire Water and Southern Water to the prescribed assurance category. It has demoted these companies because of concerns with how they assure their data. In some areas these companies did not provide sufficient confidence and assurance about their ability to deliver, monitor and report performance, leading to a reduction in trust and confidence. They join Bristol Water and Dee Valley Water who remain in the prescribed category.

Ofwat will take account of the quality of companies’ information in its next regulatory review, PR19. Concluding in 2019, PR19 will review monopoly companies’ revenues and pricing policies beyond 2020. Companies that wish to secure ‘enhanced’ status, and benefit from a streamlined process, need to demonstrate high quality information and assurance. All targeted and prescribed companies now have the opportunity to improve their status before this process begins.

Ofwat is also asking how companies should engage with customers about their performance in the future in a new consultation.

Through its consultation on outcomes it is encouraging companies to focus even more on delivering the services their customers want. Outcomes are what matter to consumers, society and the wider environment. Like the quality and reliability of their water supply, how well water companies look after their local environment, and how good their customer service is.

The outcomes framework was a major innovation when Ofwat introduced it for the first time at the 2014 price review (PR14). It is consulting on ways this could be developed further beyond 2020. Ofwat will take account of the views from respondents to this consultation in the further development of PR19.

Notes for Editors

1. Description of assurance categories: 

• Self assurance: Apart from minimum requirements that apply to all companies, these companies have discretion to deliver self assurance for any extra assurance arrangements they have to put in place to give stakeholders the confidence that information they publish is accurate and reliable.
• Targeted assurance: Companies which have not consistently met the high standards that customers and other stakeholders expect in all areas, will be subject to targeted prescriptive assurance requirements, to ensure that the arrangements they put in place are sufficient to protect customers. Companies, in conversation with their stakeholders, are best placed to identify the risks, strengths and weaknesses in providing the quality of information that stakeholders want and will trust.
• Prescribed assurance: Where companies have not provided us with sufficient confidence about their ability to deliver, monitor and report performance, then we will prescribe assurance requirements for all the information that we have asked them to publish. We do this to protect customers. In addition to meeting the requirements of self-assurance and targeted categories, companies in the prescribed category are required to publish their assurance plans for all information in advance of reporting. This is so that stakeholders (including us) can gain confidence and if necessary provide comments or guidance that the company would need to respond to.
• The risks, strengths and weaknesses exercise that a prescribed company carries out with stakeholders will highlight the areas of reporting that have the most significance or are of greatest risk to customers. For these areas the company will need to incorporate independent external assurance as part of its assurance plans.

2. For the outcomes consultation we are asking:

• how we can incentivise companies to set more stretching performance commitments for their service levels;
• how rewards and penalties (‘outcome delivery incentives’) for delivering or exceeding the services customers can be strengthened;
• how the regulator can better reflect resilience in outcomes; and
• how performance commitments can be made more transparent to customers.

3. Ofwat (The Water Services Regulation Authority) is the economic regulator of the water and sewerage sectors in England and Wales. It exercises its powers in a way that it judges will protect the interests of consumers, promote value and safeguard future water and sewerage services by allowing efficient companies to carry out their functions properly, and finance them.
4. Information about how water companies are performing can be found at www.discoverwater.co.uk

Media enquiries to Sharon Robinson in the Ofwat Press Office on:

0121 644 7642 / sharon.robinson@ofwat.gsi.gov.uk