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Investing in future water services

Household water and waste water charges in Scotland are among the lowest in Great Britain. Customers have told us that their preference is to continue with stable charges (charges that increase by no more than inflation) to allow investment to further improve services in the areas that customers have told us are a priority.

Every £1 of customers charges in future contributes to: 75p in maintaining service levels, 18p for interest costs for historic investment, 4p in meeting new statutory obligations, 3p in improving service provision

Future costs

Most of Scottish Water’s annual budget - and the charges paid by customers is used to maintain existing levels of service for customers. We will continue to look for ways to be more efficient. It is expected that maintenance costs will rise as treatment works built in the last 15 to 20 years are refurbished. We also expect the number of customers to rise, meaning there will be more customers paying for water services.

It is anticipated that investment to meet statutory obligations will reduce over the next 25 years. We expect capital investment requirements to remain around £500 million per annum (in 2012/13 prices).

Our strategy to improve services

We plan to increase investment for service improvement to around 3% of what customers pay to:
  • Reduce interruptions to water supplies
  • Reduce flooding from sewers
  • Investment to support reducing long-term costs
  • Encourage water efficiency
  • Improve the customer experience of our services

We believe statutory obligations can be met and proposed customer service improvements delivered while keeping charges broadly constant in real terms - excluding the impact of inflation. This is based on around £120 million per year of Government borrowing being available to support an overall investment programme of around £500 million. Our projections are based on assumptions of future economic circumstances and costs.

We expect the costs of providing services to meet new demand from both households and business premises to remain broadly stable. Increased water efficiency and surface water management approaches could reduce the long term demand for investment to meet new demands.

Investment to meet statutory obligations for environmental legislation is expected to reduce over time, allowing more investment for improving service levels in other areas and reducing long term costs. Investment to meet drinking water quality standards is expected to continue over the next 25 years.

Around 18% of bills go towards paying interest associated with historic investment to deliver services today.

In response to ‘Your Views Count’, a majority of customers have told us that they wish to see further service improvements and price rises around the level of inflation. The Customer Forum advise that its research suggests there is an acceptance that prices will rise, but that we need to consider customers’ economic circumstances in each price control period when considering the appropriate balance between prices and the rate of service improvements

We are therefore planning service improvements at a rate that is supported by prices that rise slightly below the rate of inflation.

 

Some key improvements by 2040 and the expected service level in 2015:

  • Resilience of water supplies: we have the capability to maintain supplies for 15% of our customers, by 2040 we plan for 100%
  • Drinking water quality: we expect 99.88% of samples taken at customers' taps will be compliant by 2015.  We plan for 100% compliance by 2040.
  • Internal flooding from sewers:  by 2015 we expect the annual number of incidents of internal property flooding from sewers to be around 800
  • External flooding from sewers: by 2015 we expect the annual number of incidents of flooding from sewers that affects gardens, roads and open spaces to be around 14,000. By 2040 we plan to work with customers to reduce this significantly
  • Over 80% of flooding is caused by inappropriate items being flushed down drains, find out more here