South West Water – Behind the scenes of our business plan for 2020-25

 

Susan Davy, Pennon Group Plc. (November 2017)

 

As part of PR19, Ofwat asked the three fast track companies to share their behind the scenes insight into the development of their business plans for 2020-25. 

Susan Davy, Chief Financial Officer at Pennon Group Plc (owner of South West Water) gives her insight below.

Running a business that delivers essential public services – and has a real impact on peoples’ quality of life – is a genuine privilege.

But developing a 5-year business plan that satisfies multiple needs and audiences is never easy, particularly in a changing world where regulation is getting tougher, societal expectations are shifting and the challenges from climate change and population growth are growing.

Guided by our vision and values, we’ve always tried to do the right thing and strike the right balance between the interests of customers, the environment and investors. For Pennon, it has driven our pioneering performance in securing sustainable finance and our award of the Fair Tax Mark.

At South West Water we wanted to build on our current highly-rated business plan. Although the basic need to provide high quality drinking water and waste water services remains constant, how it is delivered is crucial and subject to change. You can never stand still. Having an energetically enterprising corporate spirit helps to drive continuous improvement and efficiency. And putting customers at the heart of the business is paramount.

It can take almost three years to develop a business plan, so almost as soon as you’ve got the green light for one, you’re starting to think about the next. It’s a constant evolution, especially when investing in long-term resilient infrastructure.

Submitting a good business plan starts and finishes with the customers and communities we serve.
Considerable research – via focus groups, online and telephone surveys, and online engagement tools and polls – is undertaken to identify their priorities and willingness to pay for improvements. And clearly priorities vary between different groups, demographics and geographies, so the development of a rounded business plan that makes progress on multiple fronts and in multiple places is key. The development of the plan is iteratively tested against regulatory requirements and customer priorities to ensure it delivers against rising expectations.

Behind-the-scenes an army of cross-functional teams develop and submit improvement plans to a dedicated ‘Price Review’ team. Rooms are booked months ahead to ensure that the tight-knit, co-located team gets what it needs to analyse inputs, ask questions and develop papers for Executive and ultimately Board sign-off. The role of the independent Waterfuture Customer Challenge Group, which includes the Environment Agency and Drinking Water Inspectorate, is crucial in challenging proposals and providing other external perspectives.

It’s a huge insight-based collection, collation, compilation and presentational exercise, tested every step of the way – and many late-night pizzas are devoured to keep energy levels high! But, although it culminates in a written submission, it’s no paper-based exercise, but one that is rooted in the reality of the special regions we serve and the identified needs of our customers.

As plans are developed, we obviously have to keep the business running efficiently and have the flexibility to meet challenges like the Beast from the East and the hottest summer in England on record, highlighting the continuing need to be resilient in the face of extreme, increasingly volatile weather.

Having a fast-tracked business plan – uniquely, for the second consecutive time – provides early confidence to South West Water and our customers as we prepare for the next chapter in our service story.

Our ‘New Deal’ plan was shaped by our customers so, in our view, it is only right that they should have the opportunity to have a stake in the business, through a unique shareholding offer, and a greater say in how it’s run. It’s a philosophy that builds on our existing WaterShare scheme, which shares our success with customers either through lower bills or more investment.

Overall, in 2020-25 we’ll be reducing bills, taking extra steps to look after our most vulnerable customers and investing more than £1billion to maintain and improve services, including our biggest environmental improvement programme for 15 years.

We are proud that our plan sets the standard for our sector and look forward to the next stage in our journey.