This report covers the second year of the ten-year price limits which I set in 1994. It addresses the companies' performance, both in relation to customer service, such as written and telephone contacts with customers, and in the provision of water supplies and sewerage services. I am publishing, for the first time, company-specific data on the speed with which customers' telephone calls are answered and the number of calls which are abandoned by customers. As in previous years, this report includes information provided by the Drinking Water Inspectorate and the Environment Agency on drinking water quality and the treatment of waste water respectively.

In last year's report I commented that reductions in companies' costs were to be welcomed provided that service levels were maintained and companies fully complied with their statutory duties. I have recently published the 1996-97 Report on the financial performance and capital investment of the water companies in England and Wales, which reported that companies have continued to spend less than was allowed for in price limits. That report also noted the concerns of the Environment Agency as to whether companies were now fulfilling their statutory duties and whether they would do so in the future.

I am glad to report that the overall performance of companies in delivering the core activities of water distribution of sewerage services has improved. These improvements reflect changes in operational procedures and, in relation to pressure problems and sewer flooding, the use of efficiency savings to finance additional investment.

Although overall performance has improved across the industry, the performance of some companies in certain aspects of service is below that which customers might reasonably expect. In these cases, I have asked the company concerned to explain its performance and to set out its plans for improvement. In a few cases, I have asked the company to set targets for improvements over the next two years.

Comparative customer service data from other utilities has again been included, where available, although this is less extensive than in last year's report. The better-performing water companies continue to provide a service which compares well with that offered in other sectors.

I C R BYATT

Director General of Water Services

FOREWORD BY THE CHIEF INSPECTOR,
DRINKING WATER INSPECTORATE

I am very pleased to contribute once again to Ofwat's report on the service provided by water companies. The quality of the water supplied to customers is a key element in this service. The Inspectorate has, and will, continue to provide summary information to the Director General of Water Services each year on the performance of each water company in achieving and maintaining the very high quality of drinking water in England and Wales. My yearly reports, which provide the detailed accounts, have demonstrated the significant improvement in water quality since the start of the regulatory system. Although it is not possible to draw up meaningful league tables, owing to the many aspects of drinking water quality, this summary of the quality of water supplied by each company complements the report on the levels of service indicators.

MICHAEL ROUSE

Chief Inspector

Drinking Water Inspectorate

FOREWORD BY THE CHIEF EXECUTIVE,
ENVIRONMENT AGENCY

The performance of the sewerage companies in meeting environmental quality standards is a crucial element of the service they provide and is fundamental to maintaining and improving the quality of the aquatic environment. The Environment Agency enforces these standards and publishes detailed reports on compliance. Once again, I welcome the opportunity to provide summary information for this report which will give a broad perspective on company performance against clear objectives. The Environment Agency will continue to regulate and report on company compliance so that the highest standards are achieved and maintained by the companies.

ED GALLAGHER

Chief Executive

Environment Agency

SUMMARY

Each year the 18 water companies and ten water and sewerage companies of England and Wales provide Ofwat with information on their performance against various aspects of service. This report reviews the performance of the water industry since 1992-93 and the performance of individual companies in 1996-97.

As for the past two years, information about companies' performance in 1996-97 against measures of drinking water quality and sewage treatment is included in the report. More detailed information on drinking water quality is available from individual companies or the annual report of the Drinking Water Inspectorate (DWI). Similarly, the annual report of the Environment Agency provides further details on the quality of discharges to rivers, estuaries and the sea.

Ofwat and the Customer Service Committees (CSCs) continue to monitor the quality of other aspects of customer service through audits of company files and other means. The effectiveness of the companies' complaints procedures, their service to meet special needs, and their debt and disconnection policies have been the subject of separate reports.

Company performance 1991-97: an overview

Overall performance by the water industry, as shown in Table 1, has improved across the whole range of services to customers, particularly in the core activities of water distribution and sewerage services. These improvements reflect, in part, the use of efficiency savings to finance additional investment, particularly to reduce problems of low pressure and sewer flooding.

As last year, Ofwat has sought to compare the performance of the water companies against other sectors. For this report, data has been obtained from the electricity, gas and telecoms sectors. This information, unlike that of the water industry, is not independently certified and comparisons with the water industry's performance relative to the other utilities need to be treated with caution.

As previewed in last year's report, Ofwat has dispensed with the fixed performance descriptors - known as Illustrative Profiles - for billing contacts (DG6) and written complaints (DG7). The value of Illustrative Profiles has diminished because the 'very good' category can no longer be considered as such, having regard to the standards achieved by some water companies and the standards achieved elsewhere. Instead, as trialled last year, water companies are compared against each other and with reference to standards of service achieved outside the water industry. This change of assessment method should not, however, disguise the fact that most companies have reported continued improvements in performance.

Company performance 1996-97

• Overall, companies report an improvement in services to customers compared with 1995-96.
• Folkestone & Dover achieved the best overall performance, recording well above average performances against five measures of service.

• The number of written complaints fell by 8% to 157,000, approximately the same level as two years ago.
• Ninety-two per cent of billing contacts were answered within five working days. This was the seventh successive year that the water industry registered an improved performance. Nine companies reported over 95% of contacts answered within five working days, a level of performance which matches or exceeds the best-performing companies in other utility sectors.
• Almost 95% of written complaints were answered within ten working days, a slight improvement on last year. Thirteen companies - almost half the industry - reported response rates in excess of 98%, thereby matching or exceeding the best-performing companies in other utility sectors.
• The number of customers receiving a measured bill during the year, based on a company's or customer's reading of the meter, increased by 1% to almost 98%. This is significantly better than the performance reported by British Gas, but remains slightly below that reported by the electricity industry.
• The number of meters unread by the companies for two years or more fell to less than three-quarters of one per cent. Companies expect further reductions in this figure next year as their more active meter reading policies and procedures begin to make an impact.
• Almost one-in-ten telephone calls made by customers to water companies were abandoned and only 81% of calls received by water companies were answered within 30 seconds. Overall, this is unsatisfactory, although some water companies were able to provide a good level of service that was comparable with performance in other utility sectors and in other service industries.

• The number of properties reported as being at risk of low water pressure fell for the seventh successive year, to 98,000, less than one half of one per cent of all connected properties.
• After last year's significant increase - largely due to the effects of the freeze/thaw around Christmas 1995 - the number of unplanned and prolonged (12 hours or more) supply interruptions fell to its lowest level since 1990. Overall, the underlying trend in unplanned and unwarned supply interruptions is one of improvement.
• Almost 30% of customers experienced a hosepipe ban in 1996, a reduction on the previous year. Three companies - Yorkshire, Folkestone & Dover and South East - imposed hosepipe bans across their whole area of supply, while a further four companies imposed more limited restrictions.
• In 1997, Essex & Suffolk imposed a hosepipe ban throughout its supply area from mid-June.
• The quality of drinking water, as measured by the DWI, showed a further improvement. Of the three million-plus water quality tests carried out during 1996, 99.7% met the required standard. This compares with 98.7% in 1992.

• For the fourth successive year, the number of properties experiencing internal flooding fell, from 5,176 to 4,627. Most of the reduction was accounted for by incidents that resulted from overloaded sewers, reflecting investment in this area since 1990.
• The total number of properties at risk of internal flooding, due to the hydraulic inadequacy of the sewerage system, fell by almost 5%, from 30,377 to 28,983.
• Overall performance in meeting environmental quality standards improved for the third successive year.

• Overall, the number of payments made by companies under the Guaranteed Standards Scheme (GSS) fell from 37,000 to 22,000. If the 21,000 payments made last year because of interruptions to supply caused by freeze/thaw conditions are discounted, then the underlying trend is upwards.
• Where payments are required to be made automatically, this is happening. In addition, many companies will make automatic payments for those failures which require a customer to submit a written claim.
• Fifteen companies have introduced their own customer charters which go significantly beyond the GSS.

The specific measures of service covered in this report are:

• customer service -
  response times to billing contacts (DG6)

  response times to written complaints (DG7)

  bills for metered customers (DG8)

  ease of telephone contact (DG9)

• water service -
  inadequate pressure (DG2)

  supply interruptions (DG3)

  restrictions on use of water (DG4)

• sewerage service -
  sewer flooding (DG5).

As in previous years, assessments of water company performance have been made with reference to total industry performance. These are shown collectively in Table 2 with the criteria against which these assessments have been made explained within each relevant section. These comparisons help customers to make informed judgments about their local company's performance in delivering services.

Information quality

Fair comparisons between companies rely on them providing reliable and accurate information of a comparable nature. Company procedures for collecting information and the reliability of the information is assessed on behalf of Ofwat by independent consulting engineers (the Reporters). The information which companies provide has steadily improved since 1990-91 and this, in turn, enables Ofwat to make more robust comparisons between companies.

Where Ofwat considers that company procedures may not provide sufficiently robust and comparable information, information relating to that company has been placed in square brackets.

The quality of reported information for the new 'ease of telephone contact' indicator is less robust for a number of companies as their reporting systems do not fully meet Ofwat's reporting requirements. For this indicator only, Ofwat has applied the accuracy banding of the Confidence Grade assigned to the data to illustrate the potential impact of data quality on reported performance. The effect of this revision is to place some companies with better-reported data, but less reliable information, below those with systems which can provide accurate data which can be readily audited.

Action by Ofwat

Some companies have reported, for one or more indicators, performance levels either significantly below the industry average or showing a deterioration in service which is not adequately explained in the July Return. These companies have been asked to set out the reasons for their poor performance and the actions they propose to take to improve service to customers. In some cases, an interim report on current performance has been requested, for example, to confirm that an expected or claimed improvement is, in fact, being delivered. In a few cases, where customers are receiving particularly poor service, companies have been required to propose targets for rapid improvement.

Last year Ofwat wrote to 14 companies where there were concerns about aspects of their services. In all but two cases, those companies have reported significant improvements. In the case of North West (for bills for metered customers) and Portsmouth (for its response to billing contacts), performance remains unsatisfactory. Accordingly, the Director has required both companies to set targets for 1997-98 and 1998-99.

Table 1: Total industry performance 1990-91 to 1996-97

Indicator	Description	1990-91	1991-92	1992-93	1993-94	1994-95	1995-96	1996-97
		%	%	%	%	%	%	%
DG2	Properties at risk of low pressure	1.85	1.69	1.27	1.02	0.81	0.78	0.43
DG3	Properties subject to unplanned supply interruptions of 12 hours or more	0.42	0.20	0.38	0.35	0.26	0.58	0.21
DG4	Population subject to hosepipe bans	41	13	12	0	3	39	30
DG5	Properties subject to flooding incidents	-	-	0.05	0.04	0.03	0.02	0.02
DG5	Properties at risk of flooding	0.13	0.11	0.09	0.09	0.09	0.07	0.06
DG6	Billing contacts not responded to within 5 working days	31.18	30.49	20.15	16.27	11.05	10.00	8.16
DG7	Written complaints not responded to within 10 working days	31.09	25.64	18.14	24.12	5.48	5.79	5.07
DG8	Bills not based on meter readings	-	-	-	-	-	3.67	2.32
DG9	Telephone calls not answered within 30 seconds	-	-	-	-	-	-	18.60
DG9	Calls abandoned	-	-	-	-	-	-	9.35

Notes: It is not appropriate simply to add up the totals for each indicator to determine the overall total of customers receiving poor service. Some customers may be included in more than one row. For example, a customer at risk of low pressure (DG2) may also be subject to a hosepipe ban (DG4). Where information was not collected, it is shown as - .

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Table 2: Overall assessment of company performance against measures of service in 1996-97

	Sewer flooding incidents (capacity)	Sewer flooding incidents (other causes)	Pressure of mains water	Interruptions to supply	Bills for metered customers	Response to billing contacts	Response to written complaints
Company	DG5	DG5	DG2	DG3	DG8	DG6	DG7
Anglian	C	A	D	B	D	A	B
Dwr Cymru (Welsh)	B	C	[ A ]	D	B	C	A
North West	D	D	C	C	E	C	B
Northumbrian	D	B	C	B	C	D	A
Severn Trent	E	B	C	C	B	C	D
South West	A	B	C	E	B	C	D
Southern	B	C	B	B	B	B	A
Thames	B	B	B	E	E	A	D
Wessex	A	B	D	B	A	B	A
Yorkshire	D	E	C	C	B	C	B
Bournemouth & W Hants			E	A	A	B	C
Bristol			C	B	C	D	A
Cambridge			C	C	C	B	A
Chester			C	A	A	D	A
Essex & Suffolk			B	C	D	E	E
Folkestone & Dover			A	A	A	A	A
Hartlepool			A	B	A	A	A
Mid Kent			C	C	C	C	B
Mid Southern			B	B	B	A	A
North Surrey			A	B	B	D	C
Portsmouth			A	B	A	E	B
South East			[ A ]	B	A	A	A
South Staffs			A	B	A	C	C
Sutton & East Surrey			B	A	B	A	A
Tendring Hundred			A	B	B	A	D
Three Valleys			D	C	B	D	C
Wrexham			C	A	A	A	A
York			A	A	A	B	C

Key to assessments

A Well above average

B Above average

C Average

D Below average

E Well below average

Note: [ ] Companies with comparative performance of 'well above average' where the Confidence grade allocated by the company or Reporter indicates a less robust methodology than other companies in the same performance band.

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