Investing in and paying for your water services from 2021: consultation

Determining The Investment Requirements

Scottish Ministers are required to set the investment objectives for the water industry in Scotland. It is important that these fully support the Government’s core purpose - to create a more successful country, with opportunities for all of Scotland to flourish, through increasing inclusive sustainable economic growth and the circumstances facing the industry in the medium to long term.

Draft Objectives for 2021-27 and beyond

Over the past year the Government has, together with Scottish Water, the regulators and customer representatives, worked to formulate a draft set of Ministerial Objectives. These are based on progress made to date, studies undertaken in the current regulatory period and known legislative requirements. This is attached at Annex C.

The draft statement of investment sets out Ministers’ policies in relation to the standards of service that must be delivered in the period 2021-27. In particular these set the priorities for investment in relation to customer service, standards of service, drinking water, the environment, flooding, climate change and security. This Statement largely builds upon the investment requirements for previous regulatory periods and challenges Scottish Water to maintain its trajectory of improvement.

It therefore sets objectives in the following areas

1. Standards of service – Scottish Water should maintain current levels of service.

2. Asset Maintenance – Scottish Water should develop an evidence-based strategy that will inform the long term capital maintenance needs of the industry.

3. Supporting Sustainable Economic Growth – Scottish Water should continue to invest in water, sewerage and drainage infrastructure to provide capacity to enable development .

4. Drinking Water - Scottish Water should maintain compliance with drinking water quality standards and plan to remove any remaining lead pipes in its network.

5. Environment - Scottish Water should maintain compliance with its current environmental licences and address risks of impacts on the environment from its assets.

6. Flooding/Surface Water Management - Scotland needs to focus on surface water management to address customer flooding, water quality issues, climate change and growth.

7. Security & Resilience – Scottish Water should develop strategies and plans to ensure that the resilience and security of networks and supplies are maintained and improved.

8. Climate Change, Adaptation and Mitigation - Scottish Water should understand the impacts of climate change on its assets and implement plans for adaptation measures necessary to protect services. It should also continue to invest in renewable energy where it is economic to do so and to develop strategies for delivering low carbon water and wastewater services.

9. Private Finance Initiative funded contracts - Scottish Water should develop plans to manage its PFI contracts to secure the best value for money for the future operation of these facilities.

Consultation question

6 Do the draft investment objectives outlined above and set out in Annex C identify all areas where investment will continue to be necessary?

The draft also places additional requirements on Scottish Water:

• to develop a long-term plan for the maintenance and replacement of its assets;
• to engage with SEPA on the need to control plastics entering the environment;
• to work with stakeholders to deliver improvements to storm water management; and
• to present plans to manage the three maturing PFI contracts.

Further detail on these requirements can be found in the Annex. At this stage the document is set at a very strategic level. Following consultation it will be developed into a statutory direction to Scottish Water and drive the preparation of detailed investment projects.

Consultation question

7 Do you agree that that Scottish Water should be directed to address these additional requirements?