Your Interview: Geoff Loader of Southern Water (From The Argus)

Your Interview: Geoff Loader of Southern Water

11:30am Saturday 9th February 2013 in News

Geoff Loder

In our new weekly feature your Interview, we give you, our readers, the chance to ask key figures and groups across Sussex the questions you want answered. This week Geoff Loader, director of communications at Southern Water

006 and a third (online): Are you seriously intending to rattle off the same lame excuses used generally by privatised, dysfunctional, bonus culture utility companies?

It’s needed for investment and upgrading infrastructure’ has been chortled all the way to the bank for so many years.

Can't we pay the increase to get an industry regulator that does more than hand out tiny fines that are paid by the taxpayer anyway?

Geoff Loader (GL): I’m sorry you feel the need to describe things that way but investing in improved services and environmental quality, together with upgrading infrastructure, is much of what we are about.

Billions of pounds have already been invested in this and, currently, from 2010 to 2015, a further £1.8 billion is being spent in this area – equivalent to almost £1,000 for each property in the area.

The latest average increase, of less than 50p per week per household, will ensure our customers receive drinking water that is among the best in Europe, help wastewater treatment works meet stringent environmental standards and safeguard water supplies.

It is also worth noting that our shareholders are not taking a dividend over the current investment period and are instead investing the dividends back into the business.

This demonstrates a commitment to ensuring the company continues to deliver the high quality service our customers expect both in the short and longer term.

As for bonuses, these are determined by an independent committee and are considered in relation to clearly defined performance targets.

Dominic Shorehead (email): You have one of the worst records for leaks in the country. What’s going to happen if after this price increase, and after you’ve spent millions fixing pipes, you still fail to hit leaks targets? Another price rise?

GL: If you go back a couple of years, Southern Water did fail its leakage targets and, given the tight water resource situation in the South East, I agree that is completely unacceptable.

I am pleased to say we have turned things around, are beating our targets and, on a per property basis, have one of the lowest levels of leakage in the UK.

To pick up on the previous question, we have spent £55 million over three years (2010-2013) to reduce leakage and last year cut the amount by 13 million litres a day to beat our target by 11 million litres a day.

I would also say that we are currently in a good position to beat our 2012/13 target and would ask that anyone who spots a leak contacts us on our Freephone Leakline 0800 820999.

Bridget Godfrey (email): Would Southern Water welcome an open market whereby consumers can pick and choose their water supplier?

GL: As a monopoly company, we are in a very privileged position, and I can fully understand the point you raise. In the short term, while being open to the concept of competition, we agree with the position set out by the government, that there is no case for introducing competition into the domestic water services market at this time.

This is because the potential benefits to customers would be outweighed by the likely costs involved in making such a change and the risk that overall bills could increase for domestic customers.

Of course, don’t forget, that the current water bill is some way below other utilities where customers can choose their supplier.

However, we are supportive of the introduction of competition for business customers, as per the proposals included in the draft Water Bill.

Under this proposed legislation, all businesses and public sector bodies in England will be able to switch their water and sewerage suppliers, allowing them to obtain more competitive prices, improve their efficiency and tender for services better suited to meet their individual needs.

We remain committed to delivering more and better services to business customers and are working towards the April 2017 date identified by Defra, the government department which looks after the water sector.

Mike Eade (online): Would there have been a price hike if there was any real competition in the industry? £271 million pounds profit is obscene. With the present climate of austerity it would have been a nice gesture for a price freeze.

GL: I talk about competition in the previous answer and can understand why you view our profit figure in this way. However, please look at my comments above about shareholders not taking dividends and the level of investment in improvements that those profits help fund.

Our profit after tax last year was £79.9 million and sums like the £1.8 billion we are investing cannot be funded from revenues alone.

We must, therefore, borrow substantial amounts in the capital markets to pay for the work that we have to carry out. It is worth noting that much of this work is required by European legislation and, in this regard, the Southern region has 330 projects – more than any other water company.

However, while our charges must rise to meet the enormous cost of our investment, we have a duty to our customers to keep our increases to a minimum and will always be fully mindful of that, particularly at the current time.

That is why the increase in our bills of less than £2 a month this year is lower than that allowed in our five-year funding plan, agreed with regulator Ofwat.

Timothy Carey (e-mail): The residents of the villages of Barnham, Eastergate and Westergate are having to endure effluent, raw sewage in the nearby fields following the recent flooding.

When will Southern Water undertake the urgent repairs to the foul sewer between Westergate and the Lidsey SYW? Is it in your ‘five year plan’?

GL: I fully understand everyone’s concern about these issues which are being caused by the wettest year we have seen.

Specifically in the Barnham area, the rain, together with natural springs, is overloading drainage systems and, as a result, our sewerage systems are being inundated.

It has to be a joint effort to deal with this and we will certainly play our part in working closely with the Environment Agency, West Sussex County Council and Arun District Council to create a management plan which will help all of us to understand the precise nature of the situation and identify potential solutions.

We have carried out various improvements to the sewerage system in the area in recent years and will act further on this once we have the long-term solutions from the plan.

Jan Godfrey (email): I had a water meter installed before it was made compulsory in this area on the basis that my bill was cheaper.

I remarked at the time that when water meters are compulsory bills would immediately go up – and they did.

So, this rise is nothing to do with saving water is it? It was to get us all on the same tariff, so that you can jack up prices for a captive audience.

GL: A good topic to raise and, let’s be completely clear, our metering programme has everything to do with saving water.

Meters help to reduce consumption because, not surprisingly, customers use less water when charged for every unit they consume.

We expect the savings from metering to help meet demand for water for the next 20 years – even taking into account climate change and population growth.

Therefore, metering has a vital role to play in saving water, especially in a region, which, despite the rain of the past few months, is still officially described by the Environment Agency as being seriously water-stressed.

Regarding prices, it’s only fair that people should pay for each unit they use, although, incidentally, bills have immediately gone down for 60% of metered households since we began our metering programme in 2010.

It is also important to note that using less water also means a reduction in energy bills because a third of all the energy used in homes is associated with water use.

As for prices, I can assure you that our metering programme is far more cost effective than building reservoirs or desalination plants to secure water supplies and, therefore, keeps bills down by reducing the amount of investment required.

Hoarder12345444 (online): I would like to express my absolute disgust at this rise. My last water bill before my new water meter was reduced.

Now the bill is over £300 for a 2 bed flat and it has increased each year. Where are the benefits?

GL: It is good to hear that your water meter has reduced your bill and, if it is encouraging you to save water, I hope you will notice a drop in your energy bills too for the reason described earlier.

In terms of price rises, these relate to helping to fund the substantial investment taking place in the region.

The largest example of this is in the Brighton and Hove area where our Cleaner Seas For Sussex Scheme is costing £300 million.

In 2013/14 alone, we will be investing more than £400 million on improvement schemes with the spin-off benefit of supporting local economies and thousands of jobs. However, I fully accept that no price rise is ever welcome.

The Argus: The money raised from this price increase will go towards improving future infrastructure. When we have built a system for the future, can we expect the prices to come back down?

GL: Currently we are making plans for how we will deliver water and wastewater services over the next 25 years and engaging with customers and wider stakeholders to get their views.

The opinions of people from across Sussex will help develop a 25-year Strategic Statement, setting out our long term goals, as well as our Water Resource Management Plan, which sets out what we will do to ensure we have enough water available to meet the needs of our customers and future customers over the next 25 years.

People’s views will also feed into a Business Plan for 2015 to 2020. This plan will set out how much we need to spend to supply high quality drinking water and safely recycle wastewater back into our rivers and off our coastline.

It will show how much we need to invest to improve our services, meet new tougher legislation, meet projected growth across the region and tackle the effects of changing weather patterns.

Once this, together with the requirements of European legislation, are known, we will know more about future prices. If you want to join in this process, please take a look at our website swhaveyoursay.co.uk.

Matt Tasker (email): Does this price increase claw back the money you’ve paid out in fines over the years? For example, the £20.3m you were fined for deliberate misreporting in 2007. Surely you don’t just take these fines on the chin?

GL: The simple answer is: “No it doesn’t”. Fines are not in any way passed to customers.

They are borne by the business and, I am sure you would agree, that is quite right. So, in short, we do “take them on the chin”.

Tim Sparrow (Twitter) : Water meter installations and now a price rise. At the moment we have no choice, but why should we trust you?

GL: You are quite right – we are a monopoly business and, as such, must do everything we can to gain the trust of customers.

That said, we are also heavily regulated to ensure we deliver to your expectations.

Ofwat, together with the Consumer Council for Water, will always be focused on protecting the interests of water customers while the Environment Agency and Drinking Water Inspectorate monitor the delivery of our key services.

Reference, metering, I believe that paying for what you use has to be the fairest way to charge for water while also putting you in far more control of your bill.

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