Ken Hutchison Managing Director Scottish Water International Serving Delivering for Scotland 24/7 Putting customers first Trusted Managing Director Scottish Water International Held in trust Building resilient services for the future Building Nations Symposium 26 October 2017

Water Insights Scottish Water: A Model for New Zealand?

Our Vital Role Our Journey Our Performance The Benefits of a national public utility

Our vital role over 5 million customers over 1.3 billion litres of water every day 2.49 million households 152,000 business premises 244 water treatment works more than 1800 waste water treatment works over 30,000 miles of water pipes £1.2 billion turnover around 4,000 people

Customers & Communities Scottish Water: our purpose Customers & Communities at the Heart

The ‘Scottish model’ of regulation

The Scottish Water Industry : A History Lesson

Scottish Water formation ~1900 >1,000 Community Arrangements >1,500 WTW 210 Water Boards 800 WTW 1945 13 Regional Boards + CSWDB 700 WTW 1968 12 Regional Authorities 600 WTW 1976 North, West and East of Scotland Water Authorities 500 WTW 1996 Scottish Water Formed 400 WTW 2002 2017 249 WTW

More recently Pre 1996 Then….. In 2002….. Scottish Water Owned and operated by 12 municipalities across Scotland Then….. In 1996 merged into three regional water companies – NSWA, WSWA & ESWA In 2002….. Became single national Water Utility serving entire population of Scotland

Scottish Water: Primary Objectives Scottish Water created by merger of three regional authorities Reduce operating costs by 40% Deliver £2.3 billion investment for £1.8 billion Improve every performance measure including Customer Satisfaction

There was lots to do…

Headlines 2002

Value for Customers & credibility with stakeholders The Journey FOLLOWING LEADING Setting the Frontier Major Cost Gap Closure Improve Asset Performance Closure of performance gap Innovation & Service Risk Management Value for Customers & credibility with stakeholders 2002 2006 2010 2015 2040+ England & Wales Scottish Water

The Regulation Journey Confrontational Parent /Child Relationship Woke up to Regulation Being Good Customer lead ‘Ethical’ regulation Collaborative Value for Customers & credibility with stakeholders 2002 2006 2010 2015 2040+ England & Wales Scottish Water

SW’s transformation journey: 2015 – 2021+ Customer at the heart of Business Becoming Intelligent Move from Information to Insight Cost Programme Shift from Asset risk to Service risk management Improving Resilience

Transformation: When you get it right

Our Performance

Scottish Water is run by 4 KPIs OMD £ PBIT 20

Business performance Water Quality Compliance Environmental Pollution Incidents

Customer Satisfaction 72.0% 74.0% 76.0% 78.0% 80.0% 82.0% 84.0% 86.0% 88.0% 90.0% 92.0% 94.0% 500 1000 1500 2000 2500 3000 3500 4000 4500 2010/11 2011/12 2012/13 2013/14 2014/15 2015/16* Formal Complaints Customer Satisfaction % (Old) Customer Satisfaction (New)

Written complaints volumes per 10,000 connected properties 2015/16 vs 2016/17

Health and Safety

UK Customer Service Index Target Utilities

Consistently achieve an OPA score above 390, 90% Customer Satisfaction Summary Performance: Costs and service Consistently achieve an OPA score above 390, 90% Customer Satisfaction 2017 2002 132 OPA Points 63% Customer Satisfaction £480m OPEX Service Improvement Opex Cost “High Cost & Low Quality Service” “Low Cost & High Quality Service” 40% OPEX cost reduction 26

What was key to delivering these Improvements?

2012 Utility Industry Awards Winner – Staff Development 2012 National CIPD People Management Awards Winner – Organisational Learning 2015 Scottish Top Employers For Working Families

What are the benefits of a publically owned national utility?

A National Utility Drives : Efficiency : Benchmarking Focus on Water & Wastewater Service :Centres of excellence Strategic approach to investment Risk Regional resilience Funding of larger schemes Competence built everywhere

Shift requires: A driver for change Bold Leadership Political Company Effective regulation Employee Engagement Resilience to stay on the journey

THANK YOU!