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L PRESENT: Independent Chair: Andrea Cook For North East Chamber of Commerce (NECC): James Ramsbotham For Consumer Council for Water (CCWater): Barbara Leech For Drinking Water Inspectorate (DWI): Milo Purcell For Confederation of British Industry (CBI): Liz Mayes For Environment Agency (EA): Dominic Shepherd For Association of North East Councils (ANEC): Andy Robinson For Youth Advice Service and Citizens Advice Bureau (YAS and CAB): Jon Johannsson For Northumbrian Water (NWL) Ceri Jones, Graham Neave, Ken Oswald, Ros Shedden, Ivan Jepson (agenda item 4 only), Colum Goodchild and Lucy Denham (for item 5.c only) APOLOGIES: For Northumbrian Water (NWL): Heidi Mottram For Natural England (NE): Ruth Bull For Environment Agency (EA): Ian Hodge For Confederation of British Industry (CBI): Sarah Green For Association of North East Councils (ANEC): Melanie Laws For Youth Advice Service and Citizens Advice Bureau (YAS and CAB): Janine Browne For NW Corporate Responsibility Advisory Group (CRAG): Norma Hope NOTES AND ACTIONS 1. Welcome, Introduction of new members and apologies Andrea Cook (AC) welcomed everyone to the third meeting of the Northumbrian Water Forum (the Forum). She confirmed two new members, Mary Coyle (Vice Chair of NHS Northeast) and Janine Brown (YAS and CAB). Mary will be attending from the December Forum and Jon Johannsson was attending for Janine Browne for the current meeting. It was agreed that the membership would be kept under review as the process progresses. AC noted that four independent members, namely Ruth Bull, Melanie Laws, Ian Hodge and Sarah Green had sent their apologies, that Andy Robinson was attending in place of Melanie Laws and Dominic Shepherd was attending for Ian Hodge. She also noted that Norma Hope (the member representing the NW CRAG) has retired and Sarah Green will represent the CRAG as well as the CBI until the new CRAG Chair is in place and can be invited to become a Forum member. AC commented on the diversity of the work to be carried out by the Forum and suggested that some issues could be well served by Forum members working in small working groups focusing on their areas of expertise. Notes & actions of last meeting held on 14 March 2012 Actions from the last meeting were reviewed. The record in the table at the end of these notes has been updated with progress. Completed actions are shaded grey these will be deleted as the minutes are prepared for the next meeting.



Statutory programmes AC commenced this item by indicating that the Water Forum understood what the company was expected to deliver under the statutory programme but it would challenge costs and look for more cost effective solutions where possible. She expected this to be consistent with the regulators own approaches, with all parties working to identify a sensible programme of improvements with the minimum impact on bills.

Drinking water quality Milo Purcell presented the DWI perspective. See also attached presentation slides. This commenced with a brief description of the regulatory environment in which the DWI operates. Drinking water quality had improved tremendously since privatisation due to the companies work and consumers funding. Protection of Public Health and maintenance of public confidence is very important and in these respects great steps forward have been made since the 1980s when drinking water quality was poor and public confidence was low. The expectation is 100% compliance but DWI are realistic about the pace of achieving the last fractions of improvements there is the issue of diminishing returns/high costs. Companies must, however, continue to address risk. The DWI does not specify what companies need to include in Business Plans, it is there to assist companies to arrive at good decisions. Companies should assess where work is required, based for example on risk assessments, and then consult with the DWI. Water Forums have a legitimate role in challenging proposals, including on the timing of delivering an obligation. The Forum asked if there was comparator data for water quality; Milo Purcell agreed to provide this. Action The outcome the company should strive for is clean, safe drinking water. The drinking water quality programme will be driven by existing obligations. Three examples provided were: the drive to achieve 100% compliance and this entails addressing legacy issues (e.g. dirty water, lead) dealing with changing circumstances, such as raw water deterioration due to pesticides mitigation of newly identified or residual risks, as customers expect the company to reduce failures New obligations can arise from changes to the Drinking Water Directive or from new national requirements. However, it was thought that there will be no material new obligations for the PR14 period. For lead, the Government have not supported removal of all lead pipes and significant expenditure to meet this obligation was not expected. However, if customers expressed a desire to pay to remove lead this could be agreed with the DWI. If companies wanted to go further than Ministers guidance, DWI would consider this subject to issues of affordability. Ensuring a sustainable level of capital maintenance is important for managing drinking water quality. There was discussion over what is truly optional from a drinking water quality perspective, Milo Purcell felt: The level of true discretionary spend is low; however consumers can significantly influence prioritisation and pace of improvements; and Willingness to pay research is inadequate on its own to elicit views on non-discretionary spend and so other types of engagement may better inform business planning. Ken Oswald indicated that NWLs customer research strategy was many faceted and included other approaches as well as willingness to pay.

Environment headlines Natural England and Environment Agency will make a presentation on the possible environment statutory programme at the December meeting. However, Dominic Shepherd of the EA was able to give the Forum the headlines of work to date to identify statutory obligations. The EA do not envisage a large statutory programme for NWL. Areas of work identified: Secure water supply: this could involve further groundwater supply work (Till Fell Sandstone) and some work relating to Heavily Modified Waters. Environmental water quality: no deterioration, moving towards good status under the Water Framework Directive and zero serious pollution incidents. In the order of 39 investigations and 23 water bodies where NWL are responsible for or can contribute to improvement. Possible schemes for phosphate, ammonia and freshwater fish may be required. Improvements to Bathing Waters: Spittal bathing water failing under the revised Bathing Water Directive plus five others potentially at risk. Resilient water industry: the key in this area of work is working in partnerships to provide sustainable integrated solutions to flooding problems. Dominic Shepherd said there is a change in approach for PR14 to be signalled. Required improvements to the water body will be indicated rather than identifying schemes at particular treatment works. This fits with an outcomes approach and NWL will have more flexibility to address these with innovative and more efficient solutions. For environmental improvements there will be two key questions: 1. Is the standard achievable? 2. Is it affordable? This will apply to all programmes. The Forum welcomed this approach and noted that the introduction of cost/benefit criteria for the statutory programme provides potentially more scope for the Forum to review and challenge. Stakeholder process see also paper provided in pack Ivan Jepson led discussions on the wider stakeholder process. The proposal was for principles of the stakeholder consultation to be used: not as a replication of the customer consultation; but as a method of extending stakeholder input to the process (in effect extending the Forum) thus providing a wider, richer view for the Forum and NWL to take into consideration. Ivan also proposed that: a list of stakeholders would be finalised; each stakeholder would then be assigned to a Forum member; the initial approach to stakeholders would be made by email by Forum members to warm them up and encourage them to take part; and then the approach to consult with the stakeholders would then be made by the Forum Chair, as a direct request in the form of a letter. Decision The Forum agreed with the principles of the use of the consultation. Challenge The Forum challenged the proposal that stakeholder liaison should be fronted by the Forum (with the approach to stakeholders being made through the Forum Chair) as this could compromise the Forum independence; the Forum proposed that the approach should be made directly by NWL. Decision: NWL accepted that the approach to stakeholders should l come directly from the company, although it welcomed a contribution to the letter and event from the Forum explaining its role. Where possible, the Forum members agreed to take steps to encourage their associated wider stakeholders to participate. NWL agreed to draft a letter which would be sent out to wider stakeholders and to send out to the Forum members to review. Action NWL and Andrea Cook



The Forum members agreed to review the draft stakeholder list and feed back to NWL. Action Forum members and NWL NWL agreed to finalise the stakeholder list and also to produce a draft for the warm up email for the Forum members. Action NWL Barbara Leech agreed to inform the chair of the Essex & Suffolk Water Forum of this challenge and decision. Action Barbara Leech Customer research

a) Update on programme so far Ken Oswald gave an update on the customer research programme. The main qualitative phase of the programme to identify customers (domestic and business) priorities for future services had been completed and the results presented to the Forum. This had informed the development of the stated preference willingness to pay research questionnaires and choice experiments. The cognitive testing of the willingness to pay approach had been completed. This did not identify any material issues but did lead to tweaks to the approach. The results were sent to Prof. Willis who had minimal comment. Extensive pilot testing of the willingness to pay approach was underway and the members of the Forum who expressed an interest in taking part would be contacted in the near future. Prof. Willis would be invited to comment on the outcome of the pilots. Results from the research were expected in December 2012. The company was also proposing qualitative research into affordability/social tariffs, discretionary environmental improvements, leakage and transferred drains and sewers this was next on the agenda. b) Affordability and social tariffs see also paper provided in pack Ken Oswald explained the need, in guidance from Defra, for NWL to see if there is broad support from customers for a social tariff and/or other affordability measures. The Forum agreed that there is a high level of deprivation in the North East. The Forum agreed that a sub-group will work with NWL on the social tariff customer consultation, Barbara Leech and Jon Johannsson agreed to work on this group. Mary Coyle is also be approached. The Forum discussed the concept of social tariffs and the following points were raised: Traditionally customers have not supported social tariffs. There could still be no support, even with the proposed approach. Should a water company be tasked to do something which may be a responsibility of government is it an appropriate role? It will be challenging to come up with a consensus view who to support and how much cross-subsidise there should be. Challenge There was some challenge over the Forums involvement in social tariff work, however it concluded that social tariffs could well be part of the overall affordability picture for PR14 and the companys business plan. Decision It was therefore agreed that the Forum would engage with the company on the social tariff research and the Forum would decide in due course what impact this would have for PR14. Agreement The Forum agreed that deliberative research was an appropriate method for exploring customers appetite for social tariffs. The Forum recognised that NWL has many consultations underway, some within PR14 and some not and therefore a graphic is needed to show how they interact and to give a full flavour of all of the customer research which the company engages in. Action NWL c) Discretionary environmental expenditure, leakage and private drains and sewers see also paper provided in pack Colum Goodchild gave a presentation on proposed customer research into environmental expenditure, leakage and private drains and sewers.

Proposals for discretionary environment improvement customer research were discussed and the following points made: There is a need for quantification in terms of the costs (and bill increases) and what will be achieved by discretionary environmental expenditure. NWL should only ask questions on things that can actually be achieved. NWL must be clear that they cant ignore the answers they get. If customers say the environment is a luxury, the budget for these works should not increase. This research will offer a snapshot in time, specific to this price period and economic conditions Decision The Forum support the proposed research. There are some projects (e.g. drinking water catchments) where there is potential for long-term improvements for these NWL could present a matrix of benefits to customers, e.g. doing X environmental work will add longer term benefits to the quality of drinking water the customer needs to see the relationship between the environment and the product/service they receive. NWL need to be clear how they will measure success. What performance measures will be used to feed back to customers if they choose to support any of the proposed works? The participants should use this in their decision making. NWL should find out which environmental areas customers value most and which are their priorities. The Forum supported giving the working group the freedom to determine the exact configuration of the research NWL should also consult with NGOs and Ruth Bull of NE. Milo Purcell said DWI, Natural England and the Environment Agency are looking at how they can support long-term catchment management where benefits may not be immediate. For the discretionary environmental research a working sub-group is to be formed (suggestions for proposed members - Barbara Leech, Ruth Bull and Leonore Frear [EA not a Forum member] were suggested).

Proposals for private drains and sewers (PDS) customer research were discussed and the following points made: NWL should ask customers what should our strategy be? what level of service are you expecting? The Forum was concerned NWL are asking customers questions about something they dont know about this has implications for what NWL will get out of the research. NWL said that it can educate them in the groups before asking questions about PDS. Challenge The Forum had reservations in terms of PDS and what NWL will get out of the research and thought that the PDS research does not sit comfortably with the environmental research. NWL to reconsider its approach to PDS customer research in light of Forum challenges. Action NWL

Proposals for leakage customer research were discussed and the following points made: Leakage was recognised as an emotive subject for customers. Graham Neave expressed concern about how NWL describe leakage it is an emotive issue and the severity of the pictures of leaks presented to customers will be important. NWL will also need to contextualise the costs. The Forum agreed that customers have a poor understanding of current policy/rates and are intolerant of leaks.

For the leakage customer research a working sub-group has been formed with proposed members - Barbara Leech and Simon Ross (Environment Agency not a Forum member).

Working sub-groups 6. Andrea Cook asked that all members of the Forum be offered the opportunity to join any of the sub-groups. Action NWL Next steps: consideration of PR14 programme and Forum required business

The following items were proposed for discussion at the December meeting: Statutory programmes - the Environment Agency and Natural England will jointly present their views. CCWater - Barbara Leech will provide an overview of CCWaters role Forum work planning - at the previous meeting Milo Purcell indicated that it would be useful to expand on the Forum terms of reference to identify the areas the Forum will need to take a view on. The Forum and the company could then identify the information required to inform the Forums views. NWL have produced a draft paper setting out its views on the key areas it believes the Forum needs to take a view on. This will be discussed. Reporting to Ofwat - Andrea Cook reminded members that the Forum will be expected to produce a written report to Ofwat. This report must be written by a person who is conversant with the water business and the audience (Ofwat) but also appropriately independent. It was therefore agreed that Andrea would pursue the option of this role being fulfilled by Ben Haywood-Smith, who had been an Ofwat Reporter for a number of companies. If this is successful Ben would l be invited to future Forum meetings. PR14 governance - NWL will outline their PR14 governance framework proposals. Ofwat is due to publish its PR14 draft methodology in the Autumn; NWL will produce and circulate a briefing paper focussed on what the Forum needs to know once this is available. Action NWL It was noted that there has been a lot of movement in diary dates and NWL was asked to confirm all dates with Forum members. It was proposed that meetings in 2013 should be viewed as full day meetings. Action NWL

SUMMARY OF ACTIONS Description All future meeting notes are to be approved remotely by email and a copy provided to Sonia Brown, Alison Cullen and Andrew Day at Ofwat in a timely manner. Completed for minutes of the 14/06/12 and process in place Invite Ofwat company representative (Andrew Day) to future Forum meetings Completed Andrew Day has list of dates we will keep in touch with him to let him know as he may wish to attend when important decisions are to be discussed. An appendix to the non disclosure agreement to be added and forum members to sign and return a copy of the final agreement to Jill Wisniewski Some agreements have not been returned: NWL to ensure all new members understand agreements. Forum members to return their signed agreements if they have not done so. Consideration of the information needed from stakeholders and how it will use the information (both from the questionnaire and workshop) in its business planning processes. Completed see agenda item 4 Comments on the draft stakeholder questionnaire to be provided and for the final version to be signed off by Forum members. Completed see agenda item 4 Consideration of how the Water Forum can broaden its visibility and independence. Completed see agenda item 4 The development of an independent Water Forum website is to be considered where online questionnaires could be administered. A link to a mock-up of the site to be circulated for comment Local Authorities and more NGOs to be added to the stakeholder consultees list. Completed see agenda item 4 Identification of any groups involved with resilience issues to be added to the stakeholder consultees list. Completed see agenda item 4 Consideration on the role the media has to play in the process. Watching brief to be considered as we progress Consideration of how the following 3 issues can be factored into the development of the approach: 1) How information collected will be used 2) How can Forum members become involved 3) How can the Forum be positioned separately and independently of NWL? Completed see agenda item 4 Treasury assumptions on RPI to be provided. Completed CCWater to lead on reviewing customer research but all members would be consulted and free to comment. NWL to highlight areas of particular interest to forum members. Put into action for the Willingness to Pay Research this approach was successful and is to be kept in place Information on SIM performance and an analysis of customer unwanted contacts to be provided to forum members. Completed Responsibility NWL









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Forum members to provide, where possible, by email an initial view on what the priorities for outcomes should be at PR14. No views received but this is now superseded by an outcomes discussion at the Willingness to Pay Research Dissemination event th on the 29 January and an Outcomes event in late April. Recent comparative industry performance data to be shared with Forum members. Completed A paper is to be drafted on the projected position by the end of the current price control period. Paper and presentation ready to present an the Induction Day on th 15 January 2012 Review and comment to be provided on the pilot choice experiments. Pilot is underway Accent are shortly to contact the forum members Information to be shared with NWL on the statutory programme in advance of the??? October 2012. th DWI presented on 28 November th EA/NE programmed for December 14 meeting Note that and early heads-up on the EA ambitions were shared th with the Forum on 28 September Appropriate induction for Forum members to be arranged (including possibly site visit and dinner around the next meeting). th Induction planned for 15 January October 2012 Water Forum meeting to be arranged. th Completed (meeting held on 28 September) Water Forum actions required to fulfil terms of reference - a draft paper is to be produced setting out NWLs views on the key areas it believes the Forum needs to take a view on. This is to be discussed at the October 2012 meeting. th Underway document will be discussed at the December 14 meeting Diary dates - confirm all dates with Forum members. Water quality - comparator data to be provided to the Forum. Stakeholder process letter - draft stakeholder consultation letter and review. Stakeholder process - initial contact finalise list, draft email. Stakeholder process - Northumbrian Water Forum discussion to be shared with Essex & Suffolk Chair. Customer and stakeholder consultation overview a graphic to be prepared showing all forms of customer and stakeholder consultation and research and their relationships (PR14 specific and other, e.g. tracking surveys, social tariffs). Private drains and sewers research reconsider all aspects of this research (purpose, type, inclusion with environmental research). Customer research sub-groups all Forum members to be offered the opportunity to join any of the sub-groups. Ofwat draft methodology brief to be prepared and circulated to Forum members.