PERIODIC REVIEW OF PRICE LIMITS 2014 (PR14) CUSTOMER ENGAGEMENT NORTHUMBRIAN WATER AND ESSEX & SUFFOLK WATER FORUMS TERMS OF REFERENCE

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1 PERIODIC REVIEW OF PRICE LIMITS 2014 (PR14) CUSTOMER ENGAGEMENT NORTHUMBRIAN WATER AND ESSEX & SUFFOLK WATER FORUMS TERMS OF REFERENCE BACKGROUND The Northumbrian Water and Essex & Suffolk Water Forums build on the Northumbrian Quadripartite Group, which was very successful at facilitating outcomes mutually acceptable to customers and other stakeholders at the price reviews in 2004 and The Forums, and associated stakeholder engagement arrangements, are designed to fulfil the requirements of Ofwat s customer engagement policy statement 1. The forums perform the role of the company customer challenge group specified in that document. The approach brings together organisations relevant to water and sewerage planning in our operating areas to help ensure water industry decisions take account of customers views, particularly on issues that may impact on standards of service or the level of customers bills. In performing this role the Forums will also recognise and take into account the legal obligations faced by the company (e.g. new drinking water quality and environmental standards). Customer research and consultation with other stakeholders, mostly conducted by Northumbrian Water Limited ( the company ), will be a key way for the Forums to understand stakeholders views and will be used to make sure they are reflected in decisions. A key role of the Forums will be to provide its views to Ofwat on the appropriateness of the company s engagement process and the extent to which consumers and other stakeholders views are reflected in its regulatory business plan proposals. FORUM STRUCTURE Northumbrian Water Limited operates as one company under one licence with operating areas in the North East (supplying water and sewerage services) and in Essex and Suffolk (supplying water services). This being the case, the company must provide only one business plan to Ofwat covering both operating areas. This is relevant to how the Forums will operate. The Northumbrian Water Forum (to be known as the NWF ) will deal with matters applicable to the northern operating area of the company in the North East of England. Likewise, the Essex and Suffolk Water Forum (to be known as the ESWF ) will deal with matters applicable to the southern operating area of the company in Essex and Suffolk. To simplify communications with Ofwat, the Northumbrian Water Forum the will have overall responsibility for reporting on the company's engagement approach and business plan taking full account of the findings of the Essex & Suffolk Water Forum. The Chair of the Essex & Suffolk Water Forum will be a permanent member of the Northumbrian Water Forum and will be responsible for ensuring the views of the Essex & Suffolk Forum are properly represented and taken into account in communications with Ofwat. 1 Ofwat (July 2011), Involving customers in price setting Ofwat s customer engagement policy statement Page 1 of 5

2 AIMS OF THE FORUMS The aims of the Forums are to: engage key organisations in planning the strategic direction for water management and sewerage services; facilitate open discussions on all aspects relating to the strategic management of water and sewerage in Northumbrian water s operating areas; and engage in the water price setting process and report to Ofwat on the company s consumer engagement and business plan. ROLE OF THE FORUMS 1. Lead to a better understanding by all interested parties of the main obligations, issues and priorities in the delivery of water and sewerage services. 2. Advise and challenge the water company as it strives for best practice when planning its stakeholder engagement and research with its customers to gain an understanding of the main obligations, issues and priorities that need to be addressed. 3. Advise and challenge the water company to develop customer supported, long-term strategic business plans that will deliver the agreed outcomes. These include meeting statutory quality obligations, meeting outcomes based on customers priorities and willingness to pay, as well as being a good deal for the customer. 4. Provide a way to discuss and, where possible, resolve conflicting priorities as they arise, including an understanding of the costs and benefits of any proposals ensuring customer views are taken into account. These actions should include advising and challenging the company and other regulators to consider: the opportunities for using innovative or sustainable means of delivering the required or desired outcomes; the scope, justification and cost-effectiveness of the preferred delivery mechanism; and phasing delivery or outcomes to maximise the affordability and acceptability of the company s overall business plan. 5. Provide a report to Ofwat on the company s engagement process and the company s business plan. 6. Discuss the longer term planning to meet aspirations for drinking water quality, environmental water quality and customer service. 7. Inform the policy and decision making of water companies on key issues that affect customers water bills or services at price reviews and for issues such as compulsory metering, social tariffs and on surface water drainage concessions. 8. Provide a mechanism to raise any issues and increase mutual understanding among group members. Page 2 of 5

3 9. Facilitate an open, no surprises approach to water and sewerage-related issues. 10. Monitor the delivery of the five-year asset plans, and challenge where appropriate. MEMBERSHIP OF THE FORUMS The Chairs of the Forums must be agreed by all core members and be independent of the company. The Northumbrian Water Forum to comprise of the following core members who have a key interest or statutory remit in the water sector: Proposed Chair: Andrea Cook (as an independent person*) Consumer Council for Water (CCWater): Barbara Leech (lead person for CCWater Northumbria) Drinking Water Inspectorate (DWI): Milo Purcell (lead person for DWI). Environment Agency (EA): Ian Hodge (lead person for EA). Natural England (NE): Ruth Bull (lead person for NE). The Confederation of British Industry North East (CBI North East): Sarah Green (lead person for CBI North East). Association of North East Councils (ANEC): Melanie Laws (lead person for ANEC). North East Chamber of Commerce (NECC): James Ramsbotham (lead person for NECC). Northumbrian Water Limited (NWL): Heidi Mottram, (lead person for NWL), Ceri Jones, Graham Neave, Ken Oswald (secretary) * Andrea Cook to be appointed as an individual and will not have a specific advocacy role for consumers. The consumer advocacy role with be fulfilled by other members of the Forum. The Essex & Suffolk Water Forum to comprise of the following core members who have a key interest and statutory remit in the water sector: Proposed Chair: Dame Yve Buckland (as an independent person*) Consumer Council for Water (CCWater): Steve Grebby (lead person) Drinking Water Inspectorate (DWI): Jacqui Atkinson (lead person for DWI) Environment Agency (EA): John Russon (lead person for EA) Natural England (NE): Gareth Dalglish (lead person for NE) Suffolk Chamber of Commerce: Iain Dunnett (lead person for Suffolk CC) Essex Chamber of Commerce: Robert Leng (lead person for Essex CC) National Trust: Richard Powell (lead person for National Trust) Northumbrian Water Limited (NWL): Heidi Mottram (lead person for NWL), Ceri Jones, John Devall, Ken Oswald (secretary) Members may bring other colleagues to the meetings with the agreement of the chair where expert input is required. Page 3 of 5

4 The Forums, if necessary, will consider inviting other organisations or interested parties to support relevant agenda items and discussions applicable to their area of expertise. However, in the majority of cases Northumbrian Water working with advice from the Forum will need to ensure that all of those stakeholders with particular needs (e.g. Age UK, Citizens Advice) are fully engaged and consulted with during the process and their views made known to the Forums. Ofwat will be kept informed (as and when the Forums deem appropriate) on significant issues and invited to attend meetings when they wish as an observer. ROLE OF EACH MEMBER Members of the Forums will be responsible for: ensuring suitable, senior level representation of their organisation to enable meaningful discussion of strategic issues at Forum meetings providing timely and accurate information to aid Forum discussions communicating and coordinating any actions arising from the Forums on that organisation. Organisations will be asked to lead on certain subjects at meetings, appropriate to their respective areas of expertise. OUTPUTS FROM MEETINGS The papers, actions and minutes from the Forum meetings will be published on the Northumbrian Water s websites. The Northumbrian Water Forum must produce a report to Ofwat alongside the company s business plan on: (a) The company s engagement process the effectiveness of, or any concerns with, the company s engagement with its various customers and with the local customer challenge group (taking account of the characteristics of good engagement set out in chapter 3 of Ofwat s customer engagement policy statement 2 and any further advice Ofwat provides to the group); and whether the level of engagement and assurance is proportionate to the materiality of the company s business plan proposals. (b) The company s strategy and business plan whether the plan is consistent with the delivery of strategy; whether the company has actively considered the opportunities for more innovative and sustainable approaches to delivering the required or desired outcomes; whether the company s longer-term strategy and business plan is an appropriate response to customers views; whether the company s business plan strikes a reasonable balance between the views of different customers and stakeholders, highlighting any areas where particular segments of current or future customers are likely to have outstanding concerns; whether the company has explored the range of cost-effective solutions and phased delivery of its various outcomes to maximise acceptability to customers; and 2 Ofwat (July 2011), Involving customers in price setting Ofwat s customer engagement policy statement Page 4 of 5

5 whether the company s overall final business plan appears likely to be acceptable to a majority of customers, highlighting any areas of concern. GOVERNANCE The chairs of the Forums will ensure the company is challenged effectively, to give proportionate assurance to Ofwat. Members will need to comply with the non-disclosure agreement attached to the terms of reference. Northumbrian Water will provide secretariat and administrative support and costs. Northumbrian Water will host the meetings. Members will be reimbursed for their travel expenses to and from the Forum meetings and any other reasonable expenses incurred, where required. The Forum s work programme and approach will be agreed with its members. Agendas and other materials will be provided in a timely and accessible way. Minutes will be kept and made publicly available after being signed-off by the organisations at the meeting. TIMEFRAME OF MEETINGS Meetings should be convened when a need arises to discuss important policy developments. The Forum will agree its need for and schedule of meetings. A schedule of meetings will be set out as far as possible in advance though this may need to be amended or added to as the process unfolds. During price reviews, there will be key stages when the Forum will need to meet. The key meetings are likely to be: to give input as the local water company develops its consumer engagement and research plans; to assess and make suggestions on consultation materials, research questionnaires and supporting other material; to review the findings of the consultation and research; to challenge the scale, scope and delivery of obligations and to challenge the overall business plan, where necessary; and to agree a joint report to Ofwat on how the water company has interpreted customers views in its business plan, whether the plan is a good deal for customers and whether it meets statutory quality requirements. Page 5 of 5