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Southern Water expects its environmental performance rating to improve rapidly, following the launch of its three-year turnaround plan earlier this year.
In particular, Southern is confident that it will achieve a 3-star performance rating from the Environment Agency within the next two years. It then has its sights set on achieving the maximum 4-star rating before 2030.
Southern is currently has a 2-star rating. It has not achieved a 3-star rating since 2017 and fell to a 1-star rating in 2021.
As part of its three year turnaround plan, which heavily focuses on environmental improvements, the company said adequate progress was being made on self-set metrics to ensure compliance and enhancements at wastewater treatment works.
These include building capacity and resilience at sewage plants to meet changing permit requirements and reduce spills from storm overflows.
In the company’s first update since launching the turnaround plan in May this year, chief executive Lawrence Gosden described it as “a short sharp ambitious improvement” that will be delivered by 2025.
The plan has four main outcomes: safeguarding water resources now and for the future; enhancing water quality to river and seas; improve customer service; and, supporting employees including enhanced health and safety.
At this stage in the plan, the company is on track for its water resource commitments to reliability and quality, but not its ambition on developing smart networks. It is also falling behind on its pressure management programme, which will support leakage and network resilience.
Gosden was appointed chief executive in 2022 after joining the company from Thames in 2020. He had previously spent 13 years at Southern, having joined as a graduate.
He said: “In terms of customer service, we know that we still have a long way to go to improve overall customer satisfaction, but we are making progress. Complaints are now 29% lower than they were in the first quarter of 2023.”
Elsewhere, under the turnaround, Southern has begun overhauling its water operations with new processes, expanded teams and capacity increased to double the volume of water treated at 20 sites.
The company has started £150 million upgrades at four sites to boost resilience and enhance water quality in Hampshire.
On the wastewater side of the organisation, the company said it was on-track for its sewer cleaning programme and is reviewing 180 high risk rising mains as well as upgrades to the controls and sewer monitoring to allow for proactive maintenance.
Progress on the turnaround plan will be monitored and tracked through a team reporting to the chief financial officer to liaise with the board, as well as being reported to Ofwat.
Since 2017 when misreporting was uncovered at Southern that led to major regulatory investigations and record fines, the company began a full company reset.
This focused on transparency both with consumers and better communication through the chains of command in the business – especially when there were problems.
In 2021 Macquarie acquired a majority stake in the business and ploughed £1.55 billion into it.
The next steps will be to deliver on its 2025-30 business plan, which was submitted to Ofwat in October. Like the rest of the sector, Southern will significantly ramp up its capital delivery to meet more stringent environmental requirements particularly around nutrients and combined sewer overflows.
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