What will Ofwat’s supply interruptions probe include?

Sudden severe weather caused water supply outages across the UK. Now Ofwat is scrutinising how well companies dealt with them in a formal investigation. Katey Pigden reports.

Supply interruptions hit regions throughout the country earlier this month, and the water sector’s handling of them is about to be put under the microscope.

Ofwat will probe water companies to “get to the bottom” of the matter as thousands of customers, particularly in the South East, were left without water following the extreme cold snap and subsequent rapid thaw.

The regulator says it will evaluate water companies’ “preparedness” in the run up to the severe weather conditions to determine if they “planned ahead sufficiently”.

“To be left without a vital public service like water – in some cases for several days – is deeply distressing, particularly for those in vulnerable circumstances,” says Ofwat’s chief executive Rachel Fletcher.

Ofwat aims to identify what lessons can be learned so customers experience “minimum disruption in these kinds of circumstances in future”.

But Fletcher stresses Ofwat will uncover not only where companies did well by their customers but also “where they’ve fallen short”.

And it won’t just be the companies’ handling of the situation during the incidents that will be assessed as the compensation they pay out to affected customers is also a key focus for the regulator.

As yet, the total bill remains a mystery, but no doubt it will be a hefty one with some companies having to fork out substantially more than others.

Fletcher says: “Water companies should ensure that compensation adequately reflects the scale of inconvenience and distress caused to their customers. Compensation should be fair, fast and free from hassle for customers.”

Southern Water estimates it will be paying out around £700,000 to customers – going above the normal Guaranteed Standards Scheme (GSS) payment. A spokesperson for the company tells Utility Week: “We welcome Ofwat’s review into how water companies responded to the recent freezing weather and subsequent bursts.

“At Southern Water we’ve already begun a review of our performance, taking feedback from stakeholders on what we could improve and looking at our internal processes. We are fully supporting Ofwat’s review and look forward to incorporating lessons learned into our response plans.”

Thames Water is still tallying up its final bill, but the company has also agreed to compensate all affected customers over and above the statutory minimum. Ofwat says under the GSS customers are entitled to £20 for the first 48 hours of supply disruption and then £10 for each 24-hour period thereafter.

Thames’ customers will receive £30 if they were affected for between four and 12 hours, rising to £150 for up to 72 hours.

“Customers will not have to make a claim or do anything to receive this compensation, and we will be writing to those affected,” a spokesperson for the company says.

They say Thames Water is already applying lessons that it learnt from the experience and will be completing a full assessment to identify what it could have done better.

A spokesperson for Affinity Water, says: “We operate to a water industry scheme which guarantees the levels of service to our customers.

“We are currently investigating this incident and will contact customers who are eligible for compensation. We will also provide Ofwat with any information requested to assist them in their investigations. Businesses who are eligible for compensation will also get an automatic payment from us.”

Meanwhile South East Water says in just five days the company fixed 550 leaks – more than 10 times the normal amount.

Simon Earl, South East Water’s operations director, tells Utility Week: “For us, like all water companies, the extreme weather caused an unprecedented number of leaks and bursts across our supply network, which led to supply interruptions or low pressure for many of our customers.

“We had prepared for the weather, but the extraordinary combination of very low temperatures followed by a rapid thaw put additional pressure on the network and increased the scale of the issues we faced.”

He adds: “We have been in contact with Ofwat throughout the incident and have started our investigation and in the coming weeks we will prepare a report that reviews this incident and our recommendations for lessons learned to be incorporated into our emergency plan which we will provide to Ofwat to support its own investigation.

“Our review will include feedback from stakeholders, customers and employees who have all been invited to provide us with their views on our preparations ahead of the freezing weather and actions taken once supplies were interrupted. We are also undertaking surveys of those customers and stakeholders affected.

“We have written to our customers affected with details of the compensation we are offering, which is over and above the statutory minimum.”

The company will also donate £2,500 to each school affected by the supply interruptions and will offer education packages. Thames Water and Southern Water pledge similar commitments, with the former agreeing to donate the same amount and the latter promising £2,000 to each affected school in its supply area.

As part of the review, Ofwat says it will be seeking input from a wide range of groups including: household and business customers who were directly affected by supply issues, public representatives, community organisations and local authorities.

It will work with the Consumer Council for Water (CCWater) and will liaise with the Department for Environment, Food and Rural Affairs (Defra) and the Welsh government.

The regulator says it will consider whether any further regulatory action is needed when it has completed the review.

Phil Marshall, deputy chief executive of CCWater, says: “Our engagement with the companies and the insights we’ve gained from dealing with a very large number of calls and emails from customers mean that we are well placed to support Ofwat’s review. We expect our involvement to mainly focus on water companies’ communications and whether household and business customers felt they were given the information they needed, when they needed it during the supply interruptions.”

He adds: “We know from the complaints we received that many customers felt they were not kept well informed and this created further confusion and frustration in some cases. But we also want to identify examples of good practice that can help other water companies refine their approach to handling water supply incidents in the future.”

Ofwat says it expects companies to learn from the review’s findings and implement the recommendations, but they may have a few months to wait to see how they fare in Ofwat’s critical examination, the conclusions of which it plans to publish by 15 June.

Ofwat’s review will cover:

• Assessment – A thorough assessment of the issues or problems that arose, what caused them and their impact on customers.
• Planning and preparation – Did companies have advance knowledge or insight into problem areas in their networks that might be adversely impacted by the weather conditions experienced? What did companies do proactively in advance of the freeze/thaw to prepare themselves and customers and to mitigate risks? Were emergency plans in place and adequate to cope with the problems and had lessons been learned from previous incidents? Were those emergency plans appropriately enacted?
• Handling of incidents – What did companies do to deploy resources to deal with problems including distribution of bottled water, speed and effectiveness of repairs, management oversight and governance?
• Communication and support – How well companies communicated with customers and stakeholders during the incidents and their identification of, and support for, vulnerable customers.
• Ongoing support – How customers are being looked after now, particularly whether companies have proactively provided fair and speedy compensation.