Confidence and assurance: Process, controls and assurance of … · business plan addresses the test. The key report undertaken during finalisation of the programme is T9007. This

Confidence and assurance: Process, controls and assurance of our business plan Chapter 10: Supplementary document

Document Reference: S9001

This document provides the detail on the specific processes, controls and assurance that has been applied to each element of our business plan. It also provides a full list of the independent assurance reports that have been undertaken to support the business plan and provides a reference showing where these reports are located within the submission.

United Utilities Water Limited

Chapter 10: Supplementary Document - S9001

www.unitedutilities.co.uk

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Contents Executive Summary ................................................................................................................................................ 3 1 Background and context ................................................................................................................................ 3

1.1 Overview and conclusions ..................................................................................................................... 4 1.2 Resultant confidence and assurance ..................................................................................................... 5

2 Process and assurance to support each component of the plan ................................................................... 6 2.1 Overview ............................................................................................................................................... 6

2.1.1 IAP Test area 1 - Engaging customers ............................................................................................... 9 2.1.2 IAP Test area 2 - Addressing affordability and vulnerability ........................................................... 10 2.1.3 IAP Test area 3 – Delivering Outcomes for Customers ................................................................... 14 2.1.4 IAP Test area 4 - Securing long-term resilience .............................................................................. 16 2.1.5 IAP Test area 5 - Targeted controls, markets and innovation ........................................................ 17 2.1.6 IAP Test area 6 - Securing cost efficiency ....................................................................................... 25 2.1.7 IAP Test area 7 - Aligning risk and return........................................................................................ 30 2.1.8 IAP Test area 8 - Accounting for past delivery ................................................................................ 33 2.1.9 IAP Test area 9 – Securing confidence and assurance .................................................................... 35

3 List and details of independent assurance reports ...................................................................................... 43

This document provides the detail on the specific processes, controls and assurance that has been applied to each element of our business plan. It also provides a full list of the independent assurance reports that have been undertaken to support the business plan and provides a reference showing where these reports are located within the submission.

2 Copyright © United Utilities Water Limited 2018



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Executive Summary • We have confidence in all areas our business plan

o We have undertaken a robust process to develop each area of our business plan, utilisingindependent specialist support, where appropriate.

• We have applied a comprehensive assurance framework to the submissiono We set out our plans for the assurance of the PR19 early submissions and the PR19 business plan

in our Final Assurance Plan, published on our website in March 2018.o We have implemented the risk based, three lines of assurance approach set out in this plan and

have provided proportionate assurance to all areas of our plan• The details and results of this confidence and assurance process were presented to and reviewed by the

UUW Board, with the full board signing a comprehensive Board Assurance Statement to support ourAMP7 business plan.

1 Background and context This supplementary document supports Chapter 10 Confidence and assurance, of our business plan, and provides additional detail on:

• The specific work that we have undertaken to provide confidence in and to assure each area of our plan(Section 2)

o Providing detail on the specific process, controls and assurance applied to each element of theplan to demonstrate that it fully complies with all aspects of Ofwat’s PR19 methodology.

• The results from and links to the independent assurance reports, which have been undertaken to supportthe plan (Section 3)

o Providing a list of the independent assurance reports that have been undertaken to support thebusiness plan and reference to where these reports can be found within our submission.




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1.1 Overview and conclusions

We have sought to develop and publish a high quality business plan. This has been supported by robust and comprehensive processes that, where relevant, have been developed alongside independent specialists, to provide confidence that the plan contains stretching performance targets and efficient expenditure projections and is also operationally and financially deliverable. We have then applied a comprehensive assurance framework to ensure that the plan has appropriately addressed the expectations of a high quality plan as set out within the PR19 methodology.

Following consultation we set out our approach to the assurance of our 2017/18 regulatory reporting including both the early PR19 submissions and the AMP7 business plan submission in our 2018 Final Assurance Plan, published on our website in March 2018.

The framework that we have applied to determine the governance and assurance for our business plan, builds on the lessons learned from a variety of other regulatory programmes, such as PR14 and our preparations for the opening of the business retail market. With the approach being adapted from the assurance framework that is applied to our Annual Performance Report and other regulatory reports, for which we received a rating of Self Assurance from Ofwat in both 2016 and 2017.

The findings from these confidence and assurance reviews were presented to and reviewed by the UUW Limited Board, who signed the Board Assurance Statement included within our AMP7 business plan.

For additional transparency, a list of the independent assurance reports is set out in Section 3 of this document. Copies of these assurance reports have been included as supplementary documents to the relevant section of the plan.

As a consequence of the rigour that we have applied to the development, challenge, governance and assurance of our plan we are confident that:

• The data and information provided within the plan is consistent and accurate; • We have demonstrated that our business plan provides wider assurance that we are listening to

customers and proposing to deliver services they want and can afford; • We have ensured that the business plan will enable the company to meet its statutory obligations, both

now and in the future; • We have ensured that the plan will deliver operational, financial and corporate resilience over the next

control period and in the longer term; and that • We have developed and published a plan and supporting publications which have been designed to be

transparent.




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1.2 Resultant confidence and assurance

The assurance framework that we have applied has ensured that we have confidence in the process that we have adopted to develop our proposals in each area of the plan and that this process has been subject to robust assurance.

The diagram below summarises the independent reviews undertaken to provide evidence to support our plan in terms of the IAP tests and questions.

Figure 1: Third party support for confidence and assurance

The diagram has two inner layers showing the IAP tests and IAP questions surrounded by two outer layers. The first of which sets out the key external experts that we have worked with to develop our proposals for each area of the business plan and provide confidence that the plan is robust and deliverable.

The outer most layer sets out the key independent assurance providers that we have utilised to review this process and ensure that the resulting plan is high quality and has fully and effectively addresses each area of the methodology and each IAP test and question.

A summary of how we have addressed each IAP test question is set out in the Section 2 of this document, with a list of the independent assurance reports included in Section 3.




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2 Process and assurance to support each component of the plan

2.1 Overview

This section provides a summary of the specific work that we have undertaken to provide confidence and assurance in each area of our business plan.

The section is structured around the IAP tests, as set out within Appendix 13 of Ofwat’s PR19 final methodology. For each question within each test the tables set out the following:

• How we have addressed the test in our business plan; o Setting out the process that we put in place to ensure that we have fully addressed the

relevant areas of the methodology covered by that IAP test, • The checks, controls and other activities that were put in place to provide confidence in our plan;

o Highlighting the independent review that has been undertaken to provide additional confidence that the process we have adopted is robust,

• The assurance that we have undertaken; o Highlighting the independent assurance that has been implemented to confirm that our

business plan has fully addressed the requirements of the methodology; and • A cross reference to the documentation in our PR19 submission that provides more detail on how our

business plan addresses the test.

The key report undertaken during finalisation of the programme is T9007. This summarises the cross programme assurance performed during the process and provides an overall summary of the programme used to support the Board Assurance Statement and confirms all actions were completed.

The table below lists all of the assurance reports used to support each section of our business plan.




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Test Reference Provider Topic Report Date Actions Raised Status

1 T9008 Deloitte Customer Engagement Approach 29/05/2018 3 All actions addressed

2 T9003 Deloitte Affordability 15/03/2018 4 All actions addressed

3 T9014 Deloitte ODIs and PCs Phase 1 20/02/2018 20 All actions addressed


4 T9019 Deloitte Resilience 18/04/2018 5 All actions addressed

4 T9032 Deloitte Viability Statement 15/08/2018 8 All actions addressed

4 T9034 ARUP Resilience in the Round July 2018 No actions reported

4 T9035 Jacobs United Utilities’ Approach to Asset Health 19/06/2018 No actions reported

5 T9017 CH2M/ Jacobs Bioresources RCV 27/09/2017 4 All actions

addressed

5 T9021 Deloitte Water and Bioresources Strategy and Bid Assessment Framework 01/08/2018 33 All actions

addressed

5 T9018 Deloitte Water Resources RCV 05/12/2017 8 All actions addressed

5 T5001 CH2M/ Jacobs Draft WRMP 13/11/2017 No actions reported

5 T5002 Jacobs Revised draft WRMP 23/07/2018 No actions reported

6 T9010 Deloitte Efficiency and Innovation 14/03/2018 14 All actions addressed

6 T9011 Deloitte End to end Totex Plan 23/05/2018 11 All actions addressed

6 T9020 Deloitte Cost adjustment claims 22/3/2018 19 All actions addressed

6 T9016 Deloitte Opex Modelling 11/05/2018 12 All actions addressed

6 T9039 Deloitte Enhancements 26/07/2018 21 All actions addressed

6 T9004 Deloitte AMP7 Statutory Obligations 13/04/2018 7 All actions addressed

6 T9023 Deloitte Water and Wastewater Cost Modelling Stage 1 1 16/05/2018 19 All actions

addressed

6 T9029 Deloitte Water & Wastewater Cost Modelling - Part 2 13/08/2018 12 All actions

addressed

1 T9023 was an interim review and was superseded by T9029 and has therefore not been provided




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6 T9024 Arcadis Cost assessment Phase 1 and 2 August 2017 13 All actions addressed

6 T6002 Mott McDonald Stage 1 Costing Methodology 02/11/2017 2 All actions

addressed

6 T6006 Mott McDonald Stage 2 Cost Curve Benchmarking 05/02/2018 No actions reported

6 T6007 Mott McDonald Stage 3 Estimating Assurance 19/02/2018 No actions reported

6 T9037 Indepen Residential Retail Cost Assessment Modelling 22/08/2018 16 All actions

addressed

7 T9012 Deloitte Financial Modelling Phase 1 2 12/02/2018 10 All actions addressed

7 T9013 Deloitte Financial Modelling Phase 2 (including IFRS) 20/08/2018 11 All actions

addressed

7 T9009 Deloitte Derivation of Bill impacts 11/05/2018 3 All actions addressed

7 T9022 Deloitte Taxation 15/05/2018 27 All actions addressed

7 T7001 EY Risk, Reward and Resilience at PR19 17/08/2018 No actions reported

7 T7003 Goldman Sachs

Goldman Sachs Report - Final Numbers 17/08/2018 No actions reported

8 T9028 Jacobs Legacy Reconciliation 25/06/2018 No actions reported

9 T9005 Deloitte Cross Programme Review 13 14/12/2017 10 All actions addressed


9 T9007 Deloitte Cross Programme Review 3 (Final Review) 21/08/2018 2 All actions

addressed

2 T9012 was an interim review and was superseded by T9013 and has therefore not been provided 3 T9005 and T9006 were interim reviews and were superseded by T9007 and has therefore not been provided




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2.1.1 IAP Test area 1 - Engaging customers

IAP test 1 Sub test EC1: Our customer engagement and participation is of high quality and has been incorporated into our business plan effectively

How we have addressed the test in our business plan.

• We have gained a greater understanding of customers’ expectations than ever before,underpinned by a comprehensive and structured engagement programme.

• We have used a combination of innovative techniques, including behavioural insights to shapeimproved services and future investment, and data science to help prioritise what is importantfor customers.

• We have undertaken over 90 separate pieces of research that meet and often exceed theprinciples of customer engagement, providing rich and varied insight to support a triangulatedapproach.

• Extensive reach into different types and classes of customers, including those hard-to-reach:over 140,000 residential and business customers participated.

• Engagement has shaped the plan and led to significant changes to long term proposals, withearly implementation in AMP6 where possible.

• Improving CSI and SIM scores show benefits of customer engagement with detailed customersegmentation driving personalised communication.

• Our approach has been scrutinised and influenced by our independent customer challengegroup, YourVoice, providing robust challenge which made a difference.

Checks, controls and other activities undertaken to provide confidence in our plan.

• Our customer research programme has been developed with leading independent experts inthe field including Boxclever, Frontier Economics, DJS research, Accent Research, Eftec, McCannManchester, Verve and others. The research covered several research disciplines such asbehavioural economics, valuation techniques and trials and experiments.

• The way we have triangulated the range of views obtained has been independently reviewed byICF, with the application of these triangulated views throughout the plan having been reviewedby Deloitte.

• YourVoice scrutinised our engagement approach, presenting robust challenge, and we tookaccount of its views. It developed an independent report setting out its views on the quality ofour engagement with customers in developing the business plan. Its findings were presented tothe UUW Board and are published on our web site.

• In 2016, we published in the ‘Marketplace for ideas’ a thought leadership contribution onresearch to industry thinking. This set out an enhanced framework for engagement andparticipation, including innovative ways to give customers and stakeholders the opportunity toshape their current and future water and wastewater services. Examples are provided inChapter 2 of our business plan.

• We were ranked top for service to retailers of the nine English WASCs according to research bywater.Retail, scoring particularly highly for dealing with emergencies.

• We are the first company in the sector to publish a customer-facing performance report whichachieved the ‘Crystal Mark’ for Plain English.

Assurance undertaken.

• Deloitte assured our approach to customer engagement and how it has been used in thedevelopment of our business plan – see third party report T9008.

• Our business plan and supplementary documentation has been subject to a robust assuranceframework, as described in section 10.3 of our business plan, which includes comprehensivemanagement checks and controls to confirm the accuracy of data and information presented inthe submission documentation.

• UUW Corporate Audit completed risk-based assurance over the implementation of thosemanagement controls and checks.

• All recommended actions from these assurance activities have been addressed.• Both Deloitte and UUW Corporate Audit reported findings from their assurance activities to

UUW Board prior to the board’s approval of our business plan.




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More information. • Our customer research programme and how it has been used in the development of our business plan is set out in Chapter 2 of our business plan.

• More detail on our customer engagement and research approach can be found in supplementary document S1002.

• A summary of each customer research/engagement report can be found in supplementary document S1001.

2.1.2 IAP Test area 2 - Addressing affordability and vulnerability

IAP test 2 Sub test AV1: How well has the company demonstrated that its bills are affordable and value for money for the 2020-25 period?


• We have sought to understand the impact our business plan proposals have on customer affordability and value for money, both in AMP7 and over the longer term by focusing on three key customer segments:

o The ‘average’ customer o Low to middle income households with indications of financial stress4 o Customers where there is evidence that water bills are unaffordable

• We have also considered customer views on whether our overall business plan proposals offer value for money.

• We have implemented a number of efficiency initiatives, which have reduced the expenditure within our business plan, when compared to our previous plans.

• We have also adopted Ofwat’s proposed WACC, which has reduced the financing costs of the programme, when compared to our previous plans.

• We have carefully assessed our PAYG rates to ensure that the plan strikes the optimum balance between affordability and financeability.

• The step change in cost efficiency that we are proposing in our plan and the reduction in the cost of capital have helped to allow us to develop a business plan, which will deliver significant improvements in operational performance and customer service but will allow average bill levels to reduce by 10.5%.

• We have undertaken detailed customer research to understand the value that customers place on the different services that we provide.

• Based on surveys with customers in December 20175 82% of customers believe bills are affordable, with 18% stating they find paying bills challenging6. This is consistent with analysis that indicates around 18% of households in the North West are in water poverty.

• We presented proposed AMP7 bill impacts to residential customers, alongside a description of proposed service improvements. The substantial majority of customers have told us that they believe service and bill proposals are acceptable7. 82% of customers found our overall proposals to be acceptable8.

4 For the purposes of designing support and assistance schemes we have used the Resolution Foundation definition for “low to middle income” as households with income less than the national median, but greater than the lowest 10% and who receive less than one-fifth of their income from means tested benefits. https://www.resolutionfoundation.org/app/uploads/2016/09/Hanging-On.pdf 5 T1028 - Acceptability testing for PR19 stage 1 6 Defined as customers that stated that they sometimes / usually / always struggle to pay for water and sewerage services 7 T1029 - Acceptability testing for PR19 stage 2 - household results 8 Based on acceptability of ‘Plan A’ proposals, which tested average nominal residential bills of £451, £11 greater than final business plan proposals. This is as a result of including the full bill impact of the Manchester and Pennines Resilience project in AMP7 bills. In practise it is proposed that full bill impacts for M&PR will not be realised until 2029/30.


https://www.resolutionfoundation.org/app/uploads/2016/09/Hanging-On.pdf



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• We have consulted with both ‘YourVoice’ and the Independent Affordability and VulnerabilityPanel about the affordability impacts of our plans for both average customers and financiallystressed customers. Their views have helped inform our proposals, and have directly led to anumber of changes to our future plans. For example feedback from the IndependentAffordability and Vulnerability Panel has led to an increased focus on preventative action to helpstop customers falling into debt.

• YourVoice have been actively involved throughout the development of the business planincluding a review of the proposed PAYG rates.

• The acceptability testing that we have undertaken has been developed with BoxcleverConsulting and reviewed by YourVoice.


• The assurance undertaken to support the development of the expenditure projections andfinancing proposals within the plan are set out against the IAP tests 6 and 7.

• Deloitte have undertaken deep dive reviews into our Customer Engagement Approach and ourapproach to affordability – see third party report T9008.

More information. • Details of our discussions with YourVoice on engagement are set out in chapter 2, section 2.11 for a discussion on YourVoice engagement

• Full details of how we have engaged with customers, including on the overall acceptability ofthe plan, are set out in section 3.3.1 of our business plan.

IAP test 2 Sub test AV2: How well has the company demonstrated that its bills will be affordable and value for money beyond 2025?


• Direct assessment of longer term affordability can be difficult, but based on a range ofimportant indicators we believe future bills should broadly maintain levels of affordability andvalue for money.

• In generating bill forecasts for the years 2025-2030 we have considered a range of factorsincluding changing wholesale totex requirements and cost efficiencies, retail cost pressures, andpossible changes in the average cost of capital. We have also included the impact of UnitedUtilities Performance Commitments out to 2030.

• Over AMP8, we expect bills to remain broadly flat on an underlying basis, but for total bills toincrease in real terms due to projected increases in the allowed cost of capital, continuedtransition to a CPIH based RCV, and the impact of the Manchester and Pennines ResilienceDirect Procurement for Customers project9.

• Levels of capital investment and totex are forecast to be broadly stable between AMP7 andAMP8, with small increases in some areas, for example, on assets planned to reach the end oftheir lives during AMP8. We also expect growth in household numbers to drive pro rataincreases in residential retail costs.

• Taken together with anticipated growth in new residential connections our central forecast isfor average residential bills to remain broadly stable, increasing by only c.£9 across AMP8. Inaddition completion of the Manchester and Pennines Resilience (M&PR) project will add afurther c.£7 to average bills between 2024/25 and 2029/30.


• Our proposed longer term projections have been reviewed alongside the projections for the2020 to 2025 period and subject to a similar challenge and review process.

9 We have used Ofwat’s financial model to calculate customer bills. We have some reservations over the AMP8 tax allowance calculated by the financial model. This appears to be overstated by c.£8 – £17m p.a. in AMP8 compared to our expectations. This translates to a c.0.5 – 1.0% increase to customer bills.




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• The assurance undertaken to support the development of the expenditure projections and financing proposals within the plan are set out against the IAP tests 6 and 7.

• Deloitte have undertaken deep dive reviews into our Customer Engagement Approach and our approach to affordability – see third party report T9008.

More information. • Full details of how we have engaged with customers, including on the overall acceptability of the plan, are set out in section 3.3.1 of our business plan.

IAP test 2 Sub test AV3: To what extent has the company demonstrated that it has appropriate assistance options in place for those struggling, or at risk of struggling, to pay?


• Affordability is a key issue nationally and is a particularly pronounced issue in the North West of England, which faces some significant challenges in terms of vulnerability and affordability. As such it is particularly important to offer customer assistance.

• To ensure that customers who are struggling to pay have easy and effective access to appropriate assistance options, we have developed a range of customer assistance schemes that are proving to be very effective in helping customers in financially vulnerable circumstances.

• To demonstrate our commitment in this area we have developed a specific performance commitment, called ‘Priority Services’.


• YourVoice have been actively involved throughout the development of the business plan with a focus on assistance options.

• The Government’s Indices of Multiple Deprivation 2015 has been used to confirm that we have one of the largest populations of economically deprived households in the country with higher than average unemployment.

• Data compiled by Public Health England, has been used to confirm that the North West is also below national averages for several other key indicators of deprivation, spanning not just financial, but also educational, physical and mental health indicators. .

• Our approach in this area has been recognised by several independent award schemes and customer feedback on our approach is extremely positive

• We have reviewed our current approach and future proposals with the “Customer Advisory Panel.”

• The checks and controls applied to the performance commitment ‘Priority Services’ are set out in support of IAP test 3.


• Deloitte undertook an independent review of our bad debt management approach. A major element of the review was to assess UUW’s approach to helping customers who face affordability challenges.

• Our AMP7 Business Plan and supplementary documentation has been subject to a robust assurance framework, as described in section 10.3 of our business plan, which includes comprehensive management checks and controls to confirm the accuracy of data and information presented in the submission documentation.

• UUW Corporate Audit completed risk-based assurance over the implementation of those management controls and checks.

• All recommended actions from these assurance activities have been addressed. • Both Deloitte and UUW Corporate Audit reported findings from their assurance activities to

UUW Board prior to the board’s approval of the Business Plan.

More information. • Full details of our assistance options are set out in o Chapter 3 of our business plan o Bad Debt Capabilities supplementary document S6013 o Affordability and vulnerability operational response supplementary document S2001 o Evidence of the Customer Advisory Panel reviews are set out in section 3.5.2 of the

Residential Retail Business Plan – see supplementary document S6010 • More information can be found about the performance commitment ‘Priority Services’ in

section 5.7.4 of our business plan.




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IAP test 2 Sub test AV4: To what extent does the company identify and provide accessible support for customers in circumstances that make them vulnerable, including proposing a bespoke performance commitment related to vulnerability?

How we have addressed the test question in our business plan.

• Like others within the sector, United Utilities had historically managed an Extracare databasewhich sought to identity customers with specific needs, such as those undergoing dialysis, andto provide support to them when required.

• Lessons learned following an incident at Franklaw Wastewater Treatment Works in 2015 led usto recognise that there were many more customers with a variety of needs who required moresupport than were on the register. The lack of information about customers’ circumstancesmeant we were not easily able to quickly inform many vulnerable customers about the need toboil their tap water or to help manage the impact this was having on them.

• We have now radically re-thought and reformed our approach to supporting vulnerablecustomers, both in terms of our business-as-usual service offerings and our critical supportduring service disruption. This revised approach has helped us reform our vulnerability supportservices to an industry leading standard, and means we are better able than ever before toprovide extra operational support to those that need it most, especially during servicedisruptions.

• We felt it important to make the service as accessible as possible to those who might need itand the first step towards that was to re-name this as Priority Services to be consistent withsimilar support offered by the energy sector. Feedback from the third sector also told us thiswould make it easier for customers and organisations who are supporting people (such as AgeUK or Citizens Advice Bureau) to find and direct those who could benefit from the supportavailable.

• The refreshed service proposition also recognises that there are a range of reasons why peoplemay find themselves in vulnerable circumstances, and seeks to provide targeted support to theright customers at the right time.

• To demonstrate our commitment in this area we have developed a specific performancecommitment, called ‘Lifting Customers out of water poverty’.


• In creating and developing a very different service proposition, we took lessons learned andbegan a comprehensive process of engagement with recognised third sector organisationsfocused on supporting those in vulnerable circumstances. Organisations such as Age UK,StepChange, the British Red Cross, Mind and Citizens Advice Bureau helped us design and putin place the measures and support that customers would value most.

• To provide insight on how best to engage with customers in vulnerable circumstances in April2017 we formed an independent Customer Advisory Panel. Acting as a voice for thosecustomers who have traditionally found it difficult to raise concerns, the panel is playing a keyrole in ensuring that we deliver leading services. Our proposals in this area have been reviewedand approved by this panel.

• YourVoice have been actively involved throughout the development of the business plan with afocus on assistance options.

• The checks and controls applied to the performance commitment ‘Lifting Customers out ofwater poverty’ are set out in support of IAP test 3.


• Deloitte undertook an independent review of our bad debt management approach. A majorelement of the review was to assess UUW’s approach to helping customers who faceaffordability challenges.





More information. • More information can be found on the performance commitment ‘Lifting Customers out of water poverty’ in section 5.7.5 of our business plan.

• Bad Debt Capabilities supplementary document S6013.• Affordability and vulnerability operational response supplementary document S2001.




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2.1.3 IAP Test area 3 – Delivering Outcomes for Customers

IAP test 3 Sub test OC1: How appropriate, well-evidenced and stretching are the company’s proposed performance commitments and service levels? Sub test OC2: How appropriate and well-evidenced is the company’s package of outcome delivery incentives?


• Our approach in setting performance commitments, targets and incentives is designed to: o Ensure that we are measuring performance and setting targets on all aspects of service

which are important to customers and stakeholders o Set stretching targets, prioritising improvements based on customer research o Set financial incentives to ensure that we are incentivised to deliver against our stretching

targets; any outperformance can only be achieved by delivering beyond what we currently believe we can achieve; and incentive rates reflect customer valuations.

• We have significantly developed our performance commitments to: o Reflect experience in AMP6 with our current performance commitments o Include an increased emphasis on long-term delivery and on working with customers to

deliver an improved service. • Our performance commitments and targets are based on a strengthened understanding of

customers’ expectations, and are designed to drive changes in our own culture and approach to meeting customers’ needs.

• The final performance commitments reflect the full range of customer research and we believe that YourVoice broadly supports the proposed set of commitments, as set out in its separate report.


• Independent third-party experts reviewed and provided feedback on the performance commitments on a number of occasions as they developed.

• ICF was jointly commissioned by United Utilities and YourVoice to provide independent assurance of our approach to triangulating different forms of customer research/data which we used to estimate the value of service performance to customers.

• UUW Board reviewed and approved the performance commitments provided in the early submission in May 2018 and this was supported by a Board Assurance Statement (C0011). The board has subsequently approved the performance commitments in our business plan.

• We began discussions with YourVoice in August 2017 and have incorporated its feedback on the customer research projects, the triangulation of these results to produce customer valuations, and the targets which we have set.


• Deloitte undertook a specific assurance review of the performance commitments prior to the early submission in May 2018 – see supplementary document T9014.

• Subsequently, Deloitte reviewed evidence that performance targets are stretching and that management has confirmed the deliverability of the plan to achieve those performance targets – see supplementary document T9015.

• Our business plan and supplementary documentation has been subject to a robust assurance framework, as described in section 10.3 of our business plan, which includes comprehensive management checks and controls to confirm the accuracy of data and information presented in the submission documentation.




More information. • A full description of our approach can be found in chapter 5 of our business plan. • Further details of all ODIs is set out in supplementary document S3001.




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IAP test 3 Sub test OC3: How appropriate is the company’s focus on service performance in its risk/return package?


• We have reviewed our overall ODI package to ensure that there is an appropriate balancebetween risk and return, and that the impact of ODIs is sufficient to encourage serviceimprovement and protect customers if we fall short of targeted performance.

• For each ODI we have estimated the potential upside and downside (P10 and P90). Adding upthe upsides and downsides, the total range over five years is +£416m to -£410m. This would havea total bill impact of +/-£21. It represents a range of +/- 1.9% return on equity.

• Within this range, for asset health measures, the range is -£44m to +£42m, i.e. +/- 0.2% returnon equity.

• The overall RORE range of the notional company is +0.4% to +8.6%, with service performancetherefore forming a significant proportion of this range.

• We have developed proposals to share outperformance with customers in the case that ODIpayments (or other impacts upon AMP7 returns) turn out to be much higher than the expectedRoRE range (the Resilient Communities Initiative).


• Independent third-party experts reviewed and provided feedback on the performancecommitments on a number of occasions as they developed.

• UUW Board reviewed and approved the performance commitments in our business plan. • We began discussions with YourVoice in August 2017 and have incorporated its feedback on the

customer research projects, the triangulation of these results to produce customer valuations,and the targets which we have set.

• The RORE range of the notional company of +0.4% to +8.6% is broadly aligned to the -0.3% to+9.4% indicative range provided by Ofwat in its final methodology.


• Deloitte reviewed evidence that performance targets are stretching and that management hasconfirmed the deliverability of the plan to achieve those performance targets – seesupplementary document T9015.





More information. • Details on the balance of risk and return in our ODIs are set out in section 5.14 of our business plan.

• Details of how this fits within the overall risk and reward facing the plan are set out in section 9.7of our business plan.




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2.1.4 IAP Test area 4 - Securing long-term resilience

IAP test 4 Sub test LR1: We have used the best available evidence to objectively assess and prioritise the risks and consequences of disruptions to our systems and services and engaged effectively with customers on the risks and consequences. Sub test LR2: We have used the best available evidence to objectively assess the full range of mitigation options and selected the solutions that represent the best value for money over the long term, and have support from customers.

How we have addressed the test questions in our business plan.

• We take an organisation-wide, integrated approach to identifying and appraising all of the diverse risks and their interdependencies that can impact the resilience of our service delivery. As such, delivering resilience is embedded throughout our business plan.

• We have a comprehensive, integrated, forward-looking, objective and quantitative risk assessment process. It aligns to the International Risk Management Standard (ISO 31000) and links to our Wholesale Risk and Asset Planning process, which in turn aligns with the International Standard for Asset Management (ISO55000). Through these processes we align the identification of risks and issues, identification and monitoring of strategic performance requirements with the prioritisation of investment and operational management activities.

• Key risks identified from this process include high impact, low likelihood events such as the failure of our major aqueducts, impounding reservoirs and acts of terrorism, alongside more frequently occurring disruption such as sewer flooding.

• We have extensively and creatively engaged with customers to ensure we understand their needs even better than in the past. They have repeatedly told us that they expect us to provide a service that is secure, safe and reliable so that supplies can be maintained and the environment protected, even in extreme conditions.

• Customers continue to place a high priority on protection from flooding and storm overflows from our wastewater treatment works and sewerage network. Through our acceptability testing and specific research on Manchester and Pennines resilience, customers have shown their active support for our proposals.

• Our assessment of our financial resilience is that we set the benchmark as the frontier company in the sector, providing the highest levels of protection to stakeholders. We attribute our financial strength and resilience to two key factors: subjecting ourselves to the rigour and scrutiny that comes with being a publicly listed company and our responsible and long term approach to financial risk management.

• In developing a resilient plan we have followed the seven resilience planning principles. • We outline our processes and provide a number of examples in chapter 4 of our business plan

and in supplementary reports referenced in the chapter. • In the examples we show how we have considered a breadth of intervention options (including

redundancy, resistance, reliability and response and recovery options) and selected a best value plan from the options. This includes innovative approaches to risk mitigation (technology, behaviour change, partnerships and co-creation), but our starting point is always to consider working smarter through operational changes to improve resilience before resorting to investment.

• Our resilience plan also complies with guidance relating to resilience in the WISER and DWI guidance for PR19. Supplementary report S6005 sets out all of the obligations and expectations identified, and how we believe they will be achieved.

• Our resilience plan is embedded in our approach to managing our business and our range of ODIs, for the benefit of customers and the environment. In AMP6 we have stretched ourselves to deliver a step change in resilience. In AMP7 we will deliver resilience mostly through prioritising within existing budgets. The key exception is our resilience scheme for water services to populations in Manchester and the Pennines which is the subject of a cost adjustment claim due to the unique nature of that project. This scheme has been subject to extensive customer and stakeholder engagement.


• The board is engaged in the oversight of the company’s PR19 business planning and indeed the United Utilities Corporate Responsibility Committee has noted the significance of resilience and climate change to PR19 planning.

• Regular engagement between the board and the Chair of YourVoice has ensured that the board has been kept fully appraised of customer engagement on resilience priorities.




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• The board has also been regularly updated on the improvements made in the Priority Servicespackage, designed to help protect the most vulnerable customers. There are regular reviews and debates on the risk profile of the group and how best to meet their needs.

• There is a rigorous process for reporting and assurance which takes place regularly as part of thecompany’s annual reporting process.

• The Risk Management Framework was developed in close partnership with Arcadis and itsimplementation assured by UU Corporate Audit.

• We have undertaken a thorough assessment of our long-term viability as part of our businessplan and based on this, the board has provided a high quality 7 year viability statement.

• Independent third-party experts have also been engaged to review and provide feedback as ourbusiness plan has developed.


• Independent reviews conclude that we are leading the industry in our approach to risk,resilience and asset health in many areas: Independent Resilience in the Round Review, Arup,July 2018; Review of United Utilities’ Approach to Asset Health, Jacobs, June 2018

• Deloitte assured our approach to Corporate and Operational Resilience which has beenincorporated into our Business Plan.

• Deloitte also provided assurance over the financial risk assessment undertaken to enable theboard to provide its Viability Statement.





More information. • A full description of our approach can be found in chapter 4 of our business plan.

2.1.5 IAP Test area 5 - Targeted controls, markets and innovation

IAP test 5 Sub test CMI1: How well does the company’s business plan demonstrate that it has the right culture for innovation which enables it, through its systems, processes and people, to deliver results for customers and the environment from innovation?


• Innovation is a core corporate value at UU. We have fostered a strong innovation culture, whichunderpins our drive to deliver more for less, backed by a solid innovation delivery model.

• Over the last few years innovation has contributed significant positive change and a shift inbusiness performance, with United Utilities now in the upper quartile against many of ouroperational and customer service metrics.

• Innovation is key to unlocking the potential for delivering new and better services and a criticalenabler to affordability by exploiting opportunities for efficiencies. Innovation can also provideresilience and significant mitigation against future risks such as population growth and climatechange.

• Innovation is often focused on technology change, but for UU it means a lot more. Innovation is away of life at United Utilities and is one of our company’s 3 core values, alongside customerfocus and integrity.

• Delivering on customer priorities and environmental outcomes requires a dynamic and agileinnovation strategy and delivery model that allows us to focus on the right things in the shortterm and provide added resilience in the long term.

• Our innovation strategy goes beyond the traditional water industry approach of technology andregulatory change, by thinking globally, seeing beyond water industry boundaries and connectingwith frontier innovators.

• We have drawn insight from global leaders in systems thinking including; aerospace, mining andoil and gas, our technology roadmap has been based on global disrupters including Nike andGoogle.

• Our Innovation lab had a global reach over 13 countries with 49 out of the 80 applicants from thestart-up community yet to break into the sector.




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• The five key elements of our innovation strategy are backed by a robust six step process for delivery. This combines together with our key innovation enablers to create our Innovation Model - see section 6.3.1 of our business plan.

• This model allows us to exploit innovation as a welcome and inevitable disruptor in the delivery of our plan. The people, process and systems that sit behind it are part of ongoing continuous improvement to ensure that our innovation capability is constantly enhanced.


• We have actively sought to engage as broadly as possibly to identify potential innovations that could help to deliver our commitments more effectively.

• In 2016 we employed Accenture, a leading global digital technology and operations company, to complete a global scan of digital innovation, looking outside the water sector for innovative solutions that would challenge and disrupt our thinking. The detailed findings identified key digitally enabled solutions in use elsewhere, and then scored and assessed those solutions on a risk/reward framework that considered mature, improving and newly emerging technologies in the context of the water industry.

• This digital research alongside cross sector benchmarking in systems thinking and our learning to date has pushed our systems thinking ambition even further, allowing us to create a detailed operating model and delivery framework for systems thinking.

• Our framework has been endorsed by a third party (Accenture) as showing “significant alignment with observed cross-industry good practice”.


• Deloitte has assured the overall approach to Innovation and how this has been reflected into the proposed business plan – see supplementary document T9010





More information. • A full description of our approach to innovation can be found in section 6.3 of our business plan. • Further detail is provided in our Innovation supplementary document – Innovation in action

S5001.




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IAP test 5 Sub test CMI2: How well does the company use and engage with markets to deliver greater efficiency and innovation and to enhance resilience in the provision of wholesale and retail water and wastewater services to secure value for customers, the environment and the wider economy; and to support ambitious performance for the 2020-25 period and over the longer term?


• We developed a deliberate and objective market testing programme. • We adopted our Market Engagement Methodology (MEM) in 2016 as a way to make sure

continual challenge is applied to how customer value and innovation is achieved across all of ouractivities, whether bought or made.

• The MEM is a systematic approach that operates a set of review and challenge gates, builtaround leading procurement practice, rules, systems and tools. It challenges not just how anyneed should be best aligned to the market but also who is best placed to undertake evidencebased market testing.

• This process is repeatable and, whilst presented in our 2020-2025 Business Plan specifically tochallenge value into AMP7, the MEM process is programmed to be fully administered on a two-year rolling cycle.

• We applied the MEM process to 100% of our cost base within AMP7. Sixty-four market testswere identified covering all price controlled activities.

• Applying this market leading approach in AMP6 has provided us confidence in our ability todeliver services to customers efficiently in AMP7 with the process now embedded in bestcommercial practice.

• In addition to MEM, we look much wider than this to secure benefits from engaging withmarkets across a range of other areas. Across our business we are constantly seeking ways todeliver value in terms of better service, improved resilience or lower costs.


• The Market Engagement Methodology (MEM) review and challenge gates, have been builtaround leading procurement practice, rules, systems and tools.

• We have developed the MEM approach by working with experts at the University of Salford andPwC.

• MEM has most recently been shortlisted for the 2018 CIPS Award for Best Process ImprovementInitiative.


• Deloitte has assured the overall approach to Innovation and Efficiency including use of marketsand how this has been reflected into the business plan – see supplementary document T9010





More information. • A full description of our approach can be found in section 6.4 of our business plan. • More detail and explanation of key market tests (MEM) can be found in supplementary

document S5002.




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IAP test 5 Sub test CMI3: To what extent has the company set out a well evidenced long-term strategy for securing resilient and sustainable water resources, considering a twin track approach of supply-side and demand-side options and integrating third party options where appropriate, to meet the needs of customers and the environment in the 2020-25 period and over the longer term?


• Our ambition is to ensure focus at all stages in the production of a reliable and resilient water supply to customers in the North West of England and, in the longer term, to customers beyond our current boundaries.

• Our overarching principle, focusses on continuing to improve water quality and sets our expectations that water quality is paramount no matter whether that comes from current suppliers in the North West of England or from other sources. Similarly, we expect to provide best quality water to other customers outside our boundaries.

• Approach to water trading – we aim to identify and use the most efficient water sources where possible. Taking water from third parties and supplying water to others, where it represents best value, is an activity that we currently undertake and we are seeking opportunities to do more in the future. We benefit from a robust water resources position, with appropriate additional spare capacity compared with the predicted demand requirements over the next 25 years to ensure long-term resilience. This enables us to continue to promote water trading with other companies as outlined in our WRMP. These are real, practical examples of our strategy in action where we are seeking to ensure that national water trading is at the forefront of our thinking. Through continued bilateral engagement and our new bid assessment framework, we will continue to actively explore such opportunities for water trading into and out of the supply region.

• Stimulating markets - we anticipate that our new bid assessment framework and procurement code will help stimulate markets further. We see a way that we can challenge the status quo and encourage active participation during AMP7 of better sharing of resources and approaches to demand management. Even further stimulation could come from greater incentives which we would welcome. In addition, proposals to establish the setting up of a Water Resources West group, along similar lines to groups in other parts of England, could provide further stimulus. The purpose of the group would be to ensure strategic oversight and co-ordination of water resources matters across the River Dee and River Severn catchments.

• Demand management - our approach is similarly far reaching. Recognising the importance of leakage reduction to customers, stakeholders and regulators, we are proposing a stretching leakage reduction target of 15% across the 2020-25 period and a further 10% reduction in AMP8. To deliver this, we will embrace new ways of working. Using demand management innovation from outside our existing detection and repair systems; and working with industry to understand the most cost effective approach to meeting this target. Our desire to implement this change is evident through our WRMP market engagement with third parties, which has sought out demand management techniques that offer us the chance to deliver these savings at the minimum cost to customers. The twin-track approach of existing and new leakage techniques will become part of our business strategy.


• The scope, delivery and risk management of the programme of work required to deliver the draft Water Resource Management Plan has been undertaken by a central programme team, managed through delivery and steering groups, who ultimately report progress to the Strategy Steering Group (chaired by the Chief Executive) and to the United Utilities Water (UUW) Board.

• The UUW Board has been actively engaged in reviewing the development, conclusions and proposed strategy for the draft plan, and will continue to be engaged through to the final WRMP.


• CH2M assured the Water Resources Management Plan across the development and sign-off of our draft plan and revised plan published at the end of August 2018 – see third party documents T5001 and T5002

• Deloitte assured the approach to the Water Resources strategy against the requirements defined within Ofwat’s methodology – see third party document T9021.






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More information. • A full description of our approach can be found in section 6.6 of our business plan.

IAP test 5 Sub test CMI4: We have a well evidenced long term strategy for bioresources, integrating an assessment for delivery of bioresources services by third parties for the 2020-25 period and over the longer term.


• Over the next five years our Bioresources focus is to deliver optimised and efficient service to ourWastewater Network Plus business and be their supplier of choice. We will increase theperformance and efficiency of our existing sludge treatment capacity and close higher costfacilities, by optimising asset throughput in the end-to-end production line, exploring innovativeapproaches and using markets where they are more efficient.

• We have established an agile business structure and work processes in a separate Bioresourcesbusiness unit and implemented a commercial relationship with Wastewater Network Plus. Wemeasure sludge at the boundary and provide transparent costs which are reflective of the serviceprovision and provide a level playing field with third parties.

• Beyond 2025, we expect the understanding of the bioresources market to have developed significantly. The bioresources business could operate independently from the wastewaterbusiness and be in full competition with the wider waste market.

• We will continue to support the development of markets through data and information sharing,participation in trading platforms and encouraging third parties to deliver services.

• We expect the market to mature and sludge treatment services to increase over time, beginningwith small volume short term trades and co-ordination of planned outages of sludge treatmentcentres across company boundaries. As sludge production increases and assets reach the end oftheir useful life, there will be greater opportunities for the market to provide sludge treatment orjoint capacity through commercial arrangements. We are actively exploring innovations inbioresources treatment, including opportunities for resource recovery and recycling. These coverall aspects of our innovation model including data management and collaboration, we areworking with both academic and start-up communities to deliver novel, cost beneficial solutions.These will be tested through our innovation process and our bioresources strategic planning tool.

• The maintenance focus in 2020-25 will target investment on sustaining and then improvingexisting asset performance in order to improve productivity and mitigate key risks with regard toprocess safety, compliance and service resilience, all at an efficient price.

• Our focus is delivering our service at the most efficient cost. We will continue to use a mix ofdigestion technologies, reducing liming in Cumbria and generating energy from more sludge. Wewill maximise the value from our existing assets, most notably, Manchester Bioresource Centre.This is our largest site with opportunities to maximise energy revenue from electricity and gasmarkets and the possibility of re-purposing some assets to use for co-located waste digestion.Where sites are less efficient, sludge will be diverted to alternative facilities whilst we explorealternative market opportunities to generate value from the assets. This could be throughundertaking co-digestion, asset sales or rental to third parties.

• In response to customer research and stakeholder feedback, we will make a significant movetoward 100% recycling of biosolids to agriculture, conforming to the Biosolids Assurance Scheme,as the lowest cost and most sustainable disposal route. This will allow us to suspend day-to-dayincineration operations. We will retain incineration capability as this enables us to manage therisk of significant periods of insufficient agricultural land availability.

• Our performance commitments have been developed to incentivise us to focus on areas thatmatter most to customers.


• In preparation for 2020 we have worked closely with Wastewater Network Plus to define ways ofworking to ensure we maintain an efficient and effective end-to-end production line and a clearcommercial interface, through a new Client Services function. This will focus on ensuringWastewater Network Plus has the appropriate capability in order to fully define its requirementsand drive Bioresources to be client focused service provider delivering an efficient service.




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• Specific market testing has been undertaken which included a benchmarking activity to compare costs within our strategic modelling tool; understanding what a competitor would do; and testing our transformation activities.

• We worked with an external consultant to develop an industry leading comprehensive model, in line with RAG 5, to allow us to accurately price both long and short-term trading opportunities

• We are working with academic and start-up communities to deliver innovative, cost beneficial solutions for bioresources treatment.

• We engaged a recognised industry subject matter expert to provide independent review of the Bioresources Strategy, as it developed, and their feedback has been incorporated into our business plan.


• Deloitte assured the Bioresources Strategy against the requirements laid out in Ofwat’s Final Methodology – see third party document T9021.






IAP test 5 Sub test CMI5: How appropriate is the company’s proposed pre-2020 RCV allocation between water resources and water network plus and between bioresources and wastewater network plus, taking into account the guidance and/or feedback provided?


• We have proposed credible RCV allocations to support the price control separations and our allocations are aligned with Ofwat’s competition and charges objectives and fully reflect Ofwat’s feedback.

• For our Water Resources early submission in January 2018, our allocation was based upon an economic value approach. We have retained this approach because we consider that an approach based on MEAV would not be in customers’ interests or in the interests of economic efficiency and promotion of effective competition. An MEA based approach would also create significant incidence effects for some customers, without any underlying justification.

• For our Bioresources early submission in September 2017, our approach was based upon potential new entrants’ modern equivalent asset value (MEAV). Our general approach is unchanged but we have improved our proposals to reflect Ofwat feedback to companies in February 2018 and updates since the submission such as the assets allocated to bioresources.


• We have been actively involved in supporting the development of the methodologies for allocating RCV between the four wholesale price controls.

• As part of the programme of consultation supporting Ofwat's initial Water 2020 initiative, we prepared a paper setting out our views on the best approaches to upstream pricing.

• In response to Ofwat's December 2015 consultation on its approach to regulating wholesale services from 2020 and beyond, we produced a number of papers to contribute towards the debate. These cover the indexation of price controls, future approaches to the RCV, the development of access pricing, approaches to customer engagement and considerations for the development of a price control for sludge.

• We engaged a recognised industry subject matter expert to provide independent review of the Water Resources RCV allocation, following initial feedback from Ofwat, and we discussed our proposals directly with Ofwat.

• Our business plan reflects Ofwat’s feedback and feedback from the independent review.




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• Jacobs assured our initial Bioresources RCV submission. • Deloitte assured our initial Water Resources RCV submission. • As a part of its final assurance review, Deloitte performed a follow up on the actions relating to

the Water RCV report. • Our business plan and supplementary documentation has been subject to a robust assurance

framework, as described in section 10.3 of our business plan, which includes comprehensive management checks and controls to confirm the accuracy of data and information presented in the submission documentation.




More information. • A description of our approach to RCV allocation can be found in section 6.9 of our business plan. • Details of the Water Resource RCV allocation approach are set out in supplementary document

S5004. • Details of the Bioresources RCV allocation are set out in supplementary document S5005. • The way that we have incorporated the bioresources adjustments into Table WWS12 is set out in

the table commentary.

IAP test 5 Sub test CMI6: To what extent has the company produced a company bid assessment framework for water resources, demand management and leakage services that demonstrates a clear commitment to the key procurement principles of transparency, equality/non-discrimination and proportionality and the best practice recommendations?


• UU is committed to encouraging open trading with third parties and ensuring this is done in a transparent, non-discriminatory and proportionate manner.

• Our bid assessment framework supports the bidding market for water resources, demand management and leakage services and provides greater transparency as to how third party bids/options are appraised.

• We plan to hold an annual supplier conference to encourage the engagement of third parties and provide current and legacy proposals to act as a guide for third parties in tailoring submissions.

• The Framework builds on existing processes and obligations such as water resources planning requirements, procurement principles, and competition obligations, with a focus on ensuring consistency and transparency.

• Set out within the Framework are details as to how a competitive tendering process will work and the principles, stages and requirements that UU and third parties will be required to follow.

• The Framework aims to complement the process we currently follow in creating and testing our Water Resources Management Plan (WRMP) by providing greater transparency on how third party bids/options are appraised and by inviting third parties to submit ideas, proposals and engage in dialogue with us about potential solutions.

• In addition to the WRMP process, we have sought to align our Framework to best practice procurement principles including the use of our dedicated Regulatory Procurement team to ensure all processes are run with the same diligence, transparency and efficiency as procurements run under the Utilities Contracts Regulations.

• We are keen to open up dialogue and hear from suppliers focused on the areas of water resources, demand management and leakage services and have created a dedicated website where interested third parties can read more about our Framework and the processes that underpin it, as well as: o Review existing potential opportunities; o Review previous awarded opportunities; o Ask questions and seek further information from United Utilities on water resources,

demand management and leakage within our company and our approach; o Find useful information for other potential bidding opportunities with United Utilities; o Find standard documentation and guides on completing tender returns; and o Propose ideas and potential innovations within a safe and confidential environment.




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• On completion of all processes, or upon evaluation of any submission, written feedback is given to each bidder so as to detail the reasons for the scores they achieved, as well as useful guidance for any bids they may wish to propose in the future.

• Wherever possible United Utilities looks to innovate both within our own company and our supply chain and as such we actively seek innovative ideas under the Framework.


• As the Bid Assessment Framework builds on existing processes, principles and obligations we have developed our framework in house, but had the process independently assured.

• The Bid Assessment Framework is aligned to the example provided within Ofwat’s PR19 final methodology (Appendix 8), which describes the process that Ofwat expects bid assessment frameworks to cover.


• Deloitte assured the Bid Assessment framework as part of the Water Resources and Bioresources Strategy review – see third party report T9021.






IAP test 5 Sub test CMI7: To what extent has the company clearly demonstrated that it has considered whether all relevant projects are technically suitable for direct procurement for customers? Where it has one or more such projects, to what extent has the company provided a well-reasoned and well-evidenced value for money assessment supporting its decision on whether or not to take forward each technically suitable project using direct procurement for customers?


• We are committed to utilising markets differently and more effectively and have assessed a comprehensive range of routes to market to improve both value and the customer experience.

• We have, through the use of direct procurement for customers (DPC), considered DPC for all potential AMP7 projects and assessed the value for money case for each relevant project. We have assessed our business in line with the guidance provided by Ofwat on DPC in the ‘Delivering Water 2020’ document complimented by the ‘DPC Project Guidance’ published in parallel by KPMG.

• We have utilised our Market Engagement Methodology (MEM), shortlisted for award in June 2018 by the Chartered Institute of Procurement and Supply, in understanding how DPC could be used to deliver value for customers.

• The MEM process tests each capital delivery project for the most critical elements expected of DPC candidate projects including their expenditure, complexity and attractiveness of finance options, whilst also covering all elements of design, build, operate and maintain in the assessment. Additionally, the process challenges other aspects of each project such as internal capability, market maturity, and opportunities to deliver value through market innovation, risk appetite, frequency and urgency, all to ensure that the most appropriate and best value route to market is identified.

• Utilisation of this process led to the identification of a single DPC project, ‘Manchester and Pennines Resilience’ (M&PR), with our three largest other projects deemed more suitable for traditional procurement.

• The project approach and costs were endorsed by Deloitte and Mott MacDonald and UU’s proven track record in delivering complex procurements provides further assurance.

• United Utilities developed a Preliminary SOC document in line with HM Treasury guidelines. This document focuses on the identified DPC candidate, developing the 5 Case Models, and applies further tests such as those raised in the PA Consulting review.




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• All candidate DPC projects were assessed against both the DPC Project Guidance published by KPMG, and by using UUW’s Market Engagement Methodology (MEM)

• The development of the DPC proposals for the M&PR project has been managed through a Steering Group with oversight by UUW Strategy Steering Group chaired by the CEO.

• Recognising the scale of the underlying need and risk to United Utilities’ business, we created a team which included 3rd party experts from: o Jacobs - brought delivery experience from other large infrastructure projects such as

Birmingham Resilience and the Dublin water supply schemes o Servelec - brought extensive expertise with respect to the water resource modelling carried

out with respect to the customer consequence and water resource mass balance o Wood (formerly Amec Foster Wheeler) - carried out the environmental appraisals and the

development of the water resources management plan o Wardle Armstrong - brought insight into water resources within the coal mine aquifers and

assisted with the borehole local water appraisal option. o DJS Research - carried out the independent customer engagement and research.

• YourVoice, along with social & economic policy research experts from Sheffield Hallam University, was actively involved in challenging and shaping the customer research.


• The development of proposals for M&PR project have been subject to extensive assurance at a number of levels: The risk and need assessment has been reviewed by Ainsty Risk Consulting; the options and process to decide on the preferred option has been reviewed by Vivid Economics; the costs have been reviewed by Murphy, Costain and Mott Macdonald – see supplementary document UUW_WN1_7.

• Deloitte, as part of its review of cost adjustment claims, reviewed the assurance approach to the M&PR project – see third party report T9020.



• All recommended actions from these assurance activities have been addressed. Both Deloitte and UUW Corporate Audit reported findings from their assurance activities to UUW Board prior to the board’s approval of our business plan.


2.1.6 IAP Test area 6 - Securing cost efficiency

IAP test 6 Sub test CE1: How well evidenced, efficient and challenging are the company’s forecasts of wholesale water expenditure, including water resources costs? Sub test CE2: How well evidenced, efficient and challenging are the company’s forecasts of wholesale wastewater expenditure, including bioresources costs?


We are proposing a very stretching plan, with substantial cost reductions in comparison with previous AMP periods, whilst also committing to meet significant improvements in service. Our AMP7 cost proposals are lower than our costs in AMP5 - this has been achieved through: • Savings from our committed focus on gaining benefits from innovation, in particular our

adoption of Systems Thinking as a long-term strategy – this has been supported and encouraged by the opportunities provided by the outcomes and totex regime.

• Savings from better engagement with markets in procuring services. This includes comprehensive market testing of our costs via our Market Engagement Methodology (MEM), and also sought to use Direct Procurement for Customers where appropriate.

• Savings from better challenge to needs – both internally and with quality regulators – to ensure that we only spend when needed, and on the most efficient and effective solutions

• Our Wholesale totex plan of £5.4bn for AMP7, alongside our plan to reduce annual Residential Retail costs substantially to £98m by the end of AMP7, will be very stretching for us to deliver,




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given the efficiency savings assumed (16% reduction in Wholesale costs and a 33% reduction in Residential Retail costs since AMP5) and the significant improvement in committed performance levels. However, we believe this represents the minimum efficient cost we require to deliver these performance commitments, provide resilient services to customers and the environment, and to meet our legal and regulatory obligations to the EA, DWI and other regulators.

• In order to meet our challenging AMP6 final determination, we needed to transform as a business so we set ourselves ambitious and stretching goals to meet and exceed customer, regulatory and shareholder expectations. We have made a series of changes in how we manage our totex plan to generate savings, including: o Programme optimisation: we utilised a number of strategic levers to achieve a fully

optimised programme of work, including competitive tender and batching, a more collaborative approach between our capital delivery partners and internal teams to streamline activities, new processes and design for manufacture and assembly (DfMA), as well as embracing the digital world through building information modelling (BIM).

o Change in delivery model - from an alliance based model to design & build model has enabled a reduction in indirect construction costs.

o Future concept of operations (FCO): a phase of our Systems Thinking programme. Our aim is to improve the visibility of the company as a system, by identifying the interconnection between people, processes, systems and data and the creation of our integrated control centre (ICC) underpins this. This vision will enable us to optimise the way in which we operate our business and has already delivered savings in AMP6.

o Challenging scope: including the introduction of a risk and value (R&V) assessment across all our major projects. When we decide projects are necessary, we only do what we need to do, that our decisions are based on strong evidence, and the value of our business and customers is clear.

As we look towards AMP7, some of our key initiatives include: • Market Engagement Methodology (MEM) – through the adoption of our MEM process we are

able to strive for a better supply chain and procurement strategy to leverage maximum value from the market to ensure best value for customers. Through our MEM testing, we have identified savings that have been embedded into our AMP7 programme.

• Improved PR19 processes and systems - these enable us to robustly challenge costs across our wholesale businesses. The implementation of the R&V assessment was applied during the development of our PR19 programme. All requirements were put through this process. Our plan includes the delivery of greater volumes of work in AMP7 than were undertaken in AMP6 for the same level of expenditure.

• Improved pricing for AMP7 – we have continued to drive down our opex costs by leveraging our buying power in key markets through the use of longer term commercial contracts and have entered into long-term power purchase agreements with renewable energy suppliers to mitigate some of the electricity market pricing risk and secure supply of essential products.

• Further innovation – we have worked hard to create and sustain an innovation culture within the wholesale business and this is reflected by our recently established innovation lab. Based on our track record for delivering innovation benefits in AMP6 as described above, we anticipate we will deliver a further savings in AMP7 which have been baked into our AMP7 costs alongside the sustainable benefits delivered in AMP6.

• Benchmarking of support functions – in order to validate the efficiency of our capital costs, we have undertaken benchmarking of our indirect support costs against external market data from our CDPs. We believe that a 10% indirect cost allocation represents an efficient level of overhead on the capital programme. Recognising that the overall programme is smaller in size in AMP7, we have challenged our business support costs to ensure these remain appropriate for the size of the organisation and future ways of working. As such, we are forecasting support cost savings across AMP7. Despite factoring in this saving, due to the large reduction in the proposed capital programme and the relatively fixed nature of a proportion of our support costs, there remains a differential which will result in a growth in our opex costs and we will find other cost efficiencies to offset this growth.

• Pension contributions – The group participates in two major funded defined benefit pension schemes, the largest by far being the United Utilities Pension Scheme (UUPS), and these schemes are closed to new employees. In order to ensure pension contributions are sustainable in the long term, during AMP6 we negotiated changes to the UUPS effective from 1st April 2018.




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The outcome is that the majority of active members in the defined benefit sections of the UUPS will transition to a hybrid section incorporating both defined benefit and defined contribution elements. This transition is a consequence of an increase in future service costs and is intended to reduce the overall costs and risk to the group, whilst balancing the interests of employees by maintaining an element of defined benefit pension provision.

• Beyond the overall wholesale cost challenges described above, costs have been challenged in each of the Price Controls and the UUW Business Plan includes examples of specific activities designed to make cost savings in those individual areas.


• We undertook a series of internal and external assurance checkpoints to ensure that our costs have been appropriately challenged, particularly in relation to our major capital projects.

• Our internal checkpoints were undertaken via the wholesale programme management function, ensuring that all needs articulated within the plan have been thoroughly challenged through a structured governance process, and that costings are representative within the industry and have been challenged through a risk and value process designed to ensure that costs placed into the programme are robust.

• We have also benchmarked our costs externally, outside of the water sector. This has been delivered in part via our MEM market testing process (described above).

• We have developed a suite of wholesale cost models, along with a modest number of cost adjustment claims, which we propose that Ofwat use for industry cost assessment at PR19. This assessment, see section 7.6.1 of our business plan sets out our assessment of efficient costs and shows that the costs proposed in our business plan are efficient in comparison with other water companies. The output from the modelling assessment exercise indicates an efficient and stretching cost allowance for UUW’s wholesale business which is higher than our totex proposal, supporting our view that we have submitted a very challenging cost plan, delivering more for less for customers.

• In addition, we have undertaken external efficiency benchmarking through Deloitte. This assessed the ranges of achievable efficiency savings that have been realised in other markets and concluded that our efficiency improvements planned for AMP7 compare favourably with the delivery of further efficiencies in other sectors.


• We have commissioned a broad range of assurance activity from a range of 3rd party specialist assurance providers including:

• Arcadis review of our Needs Identification & Challenge Process – see third party report T9024 • Mott McDonald review of the estimating process, including review of cost curves and

triangulation – see third party reports T6002, T6006, T6007. • These reviews were undertaken at an early stage and were intended to identify actions which

could be enacted to improve the quality of our business plan. • Deloitte conducted a broad set of reviews which provided assurance over the efficiency of our

business plan: o Efficiency & Innovation – see third party report T9010 o End to End Totex Approach – see third party report T9011 o Opex Modelling – see third party report T9016 o Cost Adjustment Claims – see third party report T9020 o Water & Wastewater Cost Modelling - see third party report T9029 o AMP7 Statutory Obligations – see third party report T9004.





More information. • A full description of our approach can be found in section 7 of our business plan.




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IAP test 6 Sub test CE3: How well evidenced, efficient and challenging are the company’s forecasts of retail expenditure, including bad debt costs?


• We have adopted a similar approach to the wholesale business (see table above covering tests CE1 and CE2), to formulate and embed efficient cost into our proposed Residential Retail totex plan for the 2020-25 regulatory period.

• We have developed our cost requirements through a robust and challenging bottom-up process, with particular focus on customer priorities/expectations and managing bad debt. We have then compared our cost requirements against econometric models and also benchmarked our costs externally.

• We have taken substantial steps since AMP5 to reduce costs and improve debt collection. This has resulted in our annual retail totex coming into line with assessed industry averages.

• The substantial further cost reductions in our business plan represent a material commitment to achieving future operational efficiencies and bad debt reduction.

• This additional cost reduction will help UU move beyond an average cost position, and instead allow us to demonstrate that our proposed level of expenditure in AMP7 is efficient.


• As set out in the Board Assurance Statement our proposed expenditure projections have been subject to detailed and high level challenge and review and to support this review we have undertaken a number of targeted challenges on key elements of our proposed costs.

• As an additional cross check we have used our understanding of Ofwat’s retail cost models to validate that our AMP7 cost proposals are at an efficient benchmark.

• Given the strong evidence base from PR14 suggesting socioeconomic deprivation is a significant cost driver, United Utilities engaged Reckon LLP to assist our understanding of how bad debt and deprivation affect retail costs.

• Deloitte has benchmarked our operational processes against the very best debt management practice - see third party report T6008.

• StepChange provided an analysis of UU Customers in comparison to its wider client base to support our bad debt analysis/plans – see third party report T2001.


• Deloitte conducted a broad set of reviews which provided assurance over the efficiency of our business plan: o Efficiency & Innovation – see third party report T9010 o End to End Totex Approach – see third party report T9011 o Opex Modelling – see third party report T9016 o Cost Adjustment Claims – see third party report T9020.









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IAP test 6 Sub test CE4: To what extent are cost adjustment claims used only where prudent and appropriate, and where they are used, are cost adjustments well evidenced, efficient and challenging?


• After careful consideration, we have proposed a five well evidenced cost adjustment to reflect the unique characteristics of operating in the North West, which we believe may not be fully captured in the econometric models.

• All of our claims are supported by customer research, which indicates that they can be incorporated within a plan that is affordable, financeable and acceptable.

• These claims are briefly outlined below and the detail for each claim can be found in supplementary documents S6016 to S6020. o One claim is for the costs of delivering one of the industry’s first direct procurement for

customers. This is an unusual project and one would not expect this to be predicted by any model of efficient costs. This project relates to the resilience of water services to customers in the Manchester and Pennines areas of our region. We have proposed costs for initial design and planning during the period 2020 to 2025, to ensure that the solution meets the requirements of DWI and other stakeholders, with construction and financing provided by a competitively appointed provider.

o We have lodged three further claims for wholesale price controls to reflect higher costs of providing services due to adverse regional circumstances in the North West (for age and number of reservoirs, combination of exogenous factors impacting surface water run-off and biosolids distance to land bank).

o In respect of Residential Retail, we have made one claim relating to uniquely high levels of deprivation in the North West

• The supplementary documents provide robust justification for each claim, including the need for the cost adjustment, why the cost is efficient, why it is deemed the best option for customers and how customers are protected.


• Through AMP6, we have constructively engaged with Ofwat on the development of cost assessment models focusing in particular on wholesale wastewater and domestic retail, where we believe that the models used for Price Review 2014 were most in need of improvement. We have published three reports that make a series of recommendations o Arup and Vivid Economics, June 2017, ‘Understanding the exogenous drivers of wholesale

wastewater costs in England & Wales’ – see third party report T6001 o Arup and Vivid Economics, February 2018, ‘Use of econometric models for cost assessment

at PR19’ – see third party report T6005 o Reckon, May 2017, ‘Capturing deprivation and arrears risk in residential retail cost

assessment’ 10. • The expected coverage of Ofwat’s cost models and the cost adjustments claims that we may

propose to make, relative to them, have been the subject of reviews by internal and externally sourced experts including Arup, Vivid Economics, Jacobs and Indepen.


• Deloitte reviewed our cost adjustment claims at the point of early submission – see third party report T9020.

• Deloitte also conducted two reviews of our water & wastewater cost modelling - the basis on which we have determined the need for us to submit the wholesale related cost adjustment claims – see third party report T9029.




10 https://www.unitedutilities.com/globalassets/z_corporate-site/about-us-pdfs/looking-to-the-future/depriviation-and-arrears-risk-in-hh-retail-cost-assessment-100517.pdf


https://www.unitedutilities.com/globalassets/z_corporate-site/about-us-pdfs/looking-to-the-future/depriviation-and-arrears-risk-in-hh-retail-cost-assessment-100517.pdf

https://www.unitedutilities.com/globalassets/z_corporate-site/about-us-pdfs/looking-to-the-future/depriviation-and-arrears-risk-in-hh-retail-cost-assessment-100517.pdf



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More information. • A full description of our approach to cost adjustment claims can be found in section 7.7 of our business plan.

2.1.7 IAP Test area 7 - Aligning risk and return

IAP test 7 Sub test RR1: We have based the separate costs of capital that underpin each of our wholesale price controls, and the net margin that underpins our residential retail price controls, on those Ofwat state in their early view.


• We commissioned Ernst and Young LLP (EY) to undertake an independent assessment of what an appropriate Weighted Average Cost of Capital (WACC) would be for the industry. EY provided us with a plausible WACC range, including the various sub-elements of the WACC.

• We have assessed the sufficiency of Ofwat’s early view WACC against the independent assessment provided by EY.

• We have assessed the financeability of both the notional and actual company using the mid-point of Ofwat’s early view WACC guidance.


• The WACC assessment undertaken by EY has provided us with an independent basis upon which to review the sufficiency of Ofwat’s early view WACC.

• Our financeability assessment ensures that our base plan is financeable based upon the mid-point of Ofwat’s early view WACC assumption.


• Goldman Sach’s has reviewed the conclusions of our financeability assessment to provide the Board with assurance that the business plan is financeable on both a notional and actual company basis.





Cross reference to where more detail can be found.

• EY’s assessment of WACC is provided in third party document T7002. • Our assessment of Oftwat’s early view on WACC is provided in section 9.4.2 of our business

plan. • Our Financeability assessment is provided in supplementary document S7003. • The Goldmans Sachs assurance letter to the Board is provided in third party report T7003.

IAP test 7 Sub test RR2: We have demonstrated a clear understanding and assessment of the potential risks in our RoRE assessment, including the effect of the risk management measures it will have in place, across each of the price controls.


• We have an established, mature and robust risk management framework in place that has been assessed as being best practice as set out in section 4.4.4 of our business plan.

• This has provided us with a deep understanding of the risks we face as a business, enabling us to ensure that we have adequate mitigations in place to minimize the likelihood and impact of these risks taking place on customers and all stakeholders.

• Our PR19 risk assessment process has ensured board involvement throughout, providing strategic direction and approval over the balance of risk and returns, to deliver the best service for customers.




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• The process undertook an assessment of the risks that could impact the delivery of our business plan. Against each of these gross risk exposures, we assessed the risk management mitigations in place that reduce the likelihood or impact of these risks taking place. The net risk exposures were modelled to generate high and low scenarios. The impact of the various regulatory mechanisms were finally overlaid to determine the impact on investor returns (RORE assessment).

• In addition to the above, our mature and robust risk management process (“Risk Management Framework”) has incorporated and considered the impact of our business plan on the risks we face, allowing the Board to assess these risks and the effect of mitigations it has in place.


• We have used our well-established and robust risk management process to enable the Board to understand the impact of our business plan on the risks we face.

• We developed a standard approach to our PR19 risk assessment process with the aim of providing a robust and standardized assessment of risk from across the business. Our approach included: clear guidance materials, standard risk and return assessment templates and expert panel reviews.

• Internal expert panel reviews ensure that through a series of iterative challenge reviews; balanced, well-evidenced, unbiased and consistent risk assessments were made.


• Our advisors Ernst & Young LLP have independently assessed that our base case RORE and range are within an appropriate range required by investors (see supporting EY letter T7001)





More information. • For more information on our assessment of risk please see 9.7 of our business plan. • More information on our well-established and robust risk management process is provided in

4.4.4 of our business plan.

IAP test 7 Sub test RR3: The UUW Board Assurance statement contains a clear statement that its plan is financeable on both an actual and a notional basis? With this statement being based upon robust supporting evidence.


• The UUW Board Assurance Statement states that “The Board has assessed the financeability of the business plan under both the notional and actual capital structures and has reviewed the supporting independent assurance undertaken”. This has been supported by our internal PR19 financeability assessment and the Goldman Sachs assurance letter – see third party report T7003.

• Our PR19 financeability assessment process has ensured board involvement throughout, providing strategic direction and approval over the balance of financeability and affordability of our plan.

• Our PR19 financeability assessment followed Ofwat’s proposals on financeability as set out in the final methodology. Financial ratios for the appointed business produced from the Ofwat financial model were assessed against thresholds required to meet our targeted credit ratings and returns were assessed against EY recommended WACC and cost of equity ranges.


• Our business as usual internal financial ratio calculations from our internal financial model were compared to Ofwat’s financial ratio calculations from Ofwat’s financial model. Calculation issues in Ofwat’s financial model were dealt with by proposing additional financial ratios in our business plan financial ratio submission and basing our assessment on those ‘proposed’ ratios.

• Thresholds have been based on recently published rating agency reports. • Goldman Sachs have independently identified relevant thresholds for their letter.




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• Goldman Sachs has reviewed certain financial information that feeds in to our financeability assessment to provide the Board with assurance that the business plan is financeable on both a notional and actual company basis – see third party report T7003.





More information. • The Board Assurance Statement is provided in document C0011. • Our Financeability assessment is provided in supplementary document S7003. • The Goldmans Sachs assurance letter to the Board is provided in third party report T7003.

IAP test 7 Sub test RR4: Our PAYG and RCV run-off rates are well evidenced and are demonstrably consistent with customers’ expectations, both now and in the longer term.


• The starting point has been to calculate the natural PAYG and RCV run-off rates for AMP7. We calculated the PAYG rate as the rate at which operating costs and IRE (Infrastructure renewals expenditure) are incurred each year. We calculated the RCV run-off based on CCD (current cost depreciation) or the economic use of our assets.

• Our financeability assessment has concluded that in assessing the gap between revenue requirements on a cost recovery building block basis and those on our view of financeability, advancing £102m through the PAYG lever is most appropriate.

• In addition, we considered the impact on the notional company of stress testing using Ofwat’s common scenarios and concluded that without the PAYG advancement the notional company would not be sufficiently resilient.

• To mitigate the value of this advancement, we have also re-profiled revenues to “flatten” the profile of key ratios over AMP7, and hence minimize the required level of PAYG advancement.

• No adjustments have been made to RCV run-off rates. • We have undertaken customer research to ensure that our proposals are supported by

customers.


• The financeability assessment that we have undertaken corroborates both the amount of revenue advancement required in order that the notional company is just financeable and why PAYG advancement represents the most appropriate tool to address financeability constraints.

• Stress testing the notional company under Ofwat’s highest impacting “combined” scenario to assess the adequacy of its financial resilience.


• Our customer research supports the advancement of revenue through the PAYG lever to address financeability constraints.

• Goldman Sachs has reviewed certain financial information that feeds in to our financeability assessment to provide the Board with assurance that the business plan is financeable on both a notional and actual company basis – see third party document T7003.

• Deloitte have undertaken a deep dive review of the derivation of bill impacts – see third party report T9009.








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More information. • More support for our natural PAYG and RCV run-off rates are presented in data tables Wr4, WN4, WWN6 and Bio5.

• For more information and support in the advancement of revenue through the PAYG lever, see section 9.5.5 of our business plan.

• Our Financeability assessment is provided in supplementary document S7003. • The Goldmans Sachs assurance letter to the Board is provided in third party report T7003.

2.1.8 IAP Test area 8 - Accounting for past delivery

IAP test 8 Sub test PD1: How well has the company given evidence for its proposed reconciliations for the 2015-20 period, and has it proposed adjustments by following the PR14 reconciliation rulebook methodology?


• The data used to populate the data tables and models for this submission was been derived from three main sources: o Actual data for the first three years of the AMP6 period: this data has been subject to

detailed assurance processes as set out within each year’s APR o Predicted data for the remaining two years of the AMP6 period: this data has been subject to

level 1 (Executive director) review and sign off and has been subject to independent review o Historic data from AMP5 or previous periods: this data has already been determined by

Ofwat and has been used without any subsequent adjustments within this submission • The data for the final two years has been based upon predicted performance. Assumptions for

the final two years have been developed on a bottom up basis and have been developed to be consistent with historic performance or expenditure levels, but taking account of ongoing plans and proposed future interventions. The predicted performance levels have been reviewed and endorsed by the director accountable for delivering the performance or expenditure levels.

• All adjustments have been made by following the PR14 reconciliation rulebook methodology.


• The methodology used to undertake the analysis and the checks and controls that have been put in place to confirm that this data has been transposed and analysed correctly has been fully documented, with these documents and supporting data being subject to detailed internal governance and review processes.

• The information within the submission has also been subject to an independent review undertaken by UU Corporate Audit.


• The actual data for the first three years of the period, has been subject to a detailed three lines of assurance approach set out in each year’s Annual Performance Report.

• The scope of the UUW Technical Auditors (Jacobs) review of the 2017/18 regulatory reporting process (RR18) was extended this year to review the forecast data for the remaining two years of the period.

• The PR14 reconciliation submission and the results of the assurance process were reviewed at the June 2018 UUW Board meeting, which endorsed the submission and approved the signature of a supporting Board Assurance Statement (C0011).





More information. • Details of our proposed reconciliations are set out in chapter 9 of our business plan.




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• The summary and assurance of our 2017/18 regulatory reporting is published within our 2017/18 Annual Performance Report11.

• Our PR14 reconciliation early submission can be found on our website12.

IAP test 8 Sub test PD2: How well has the company performed, and is forecast to perform, over the 2015-20 period and, taking into account this overall performance, how well has it put measures in place to ensure that it maintains confidence that it can successfully deliver its PR19 business plan?


We set out how we have performed and are forecast to perform over the 2015-29 period in our 2018 Annual Performance Report, which has been expanded to provide a five year view of performance in addition to the single year view, which we have provided in prior years. In building our AMP7 business plan we have taken account of key lessons from AMP6 • Wholesale totex – UUW has undergone a step change in cost efficiency over the last five years.

On an outturn basis and like for like basis, we expect to outperform the final AMP6 cost assumption by £100m.

• Our AMP7 plan reflects these efficiencies with our AMP7 cost projections being informed by a rigorous approach to cost benchmarking which has made extensive use of market testing.

• Performance commitments and outcome delivery incentives –In total and across all our AMP6 performance commitments we expect to avoid the penalties that were predicted at the PR14 FD. Although we have failed to meet our target for some performance commitments, for example our water quality service index. In setting our targets for AMP7, we have ensured actions are in place to address any AMP6 underperformance and taken a stretching and ambitious approach. Targets have been carefully calibrated to customer preferences and we have complied with Ofwat guidance in relation to common ODI definitions and targets.

• Customer Service – We have been successful in improving customer service over the last five years. The first SIM survey placed us bottom of the league table. In AMP5 we managed to improve sufficiently to avoid a financial penalty. In AMP6 we expect to receive a financial reward. External benchmarks also show significant improvement and we believe that this places us in a strong position to deliver for customers during AMP7 and beyond.

• Retail cost to serve – Retail cost to serve has been reducing from an average of £51 per customer in 2014/15 to £38 per customer in 2017/18, with a reduction in bad debt from £78m in 2014/15, to £50m last year and forecast of £35m/year at the end of AMP7. We have costed our AMP7 plans thoroughly and believe that the costs assumed in our plan are broadly consistent with upper quartile performance.

• Capital Delivery – During AMP6 we have been able to meet all our NEP5 commitments and are on track to deliver the Thirlmere to West Cumbria transfer over one year ahead of schedule. These achievements provide good evidence that we can continue to deliver the capital projects included within our AMP7 plan.

• Environmental and quality regulation - We have delivered industry leading environmental performance in AMP6. We are one of only two companies to achieve a 4*, industry leading rating from the Environment Agency, three years in a row. We have had extensive engagement with both the EA and DWI in the formation of our AMP7 plan. This means that we submit a plan with the support of the quality and environmental regulators, an excellent understanding of the requirements and having already determined how we can deliver the outputs at the most efficient cost.

Checks, controls and other activities

• Details of the checks, controls and third party support that we have undertaken to support: o Our wholesale totex projections - are set out in section 2.1.6 above .

11 2017/18 regulatory reporting published within our 2017/18 Annual Performance Report: https://www.unitedutilities.com/globalassets/z_corporate-site/about-us-pdfs/apr/united-utilities-annual-performance-report-2017---2018.pdf/ 12 Our PR14 reconciliation early submission: https://www.unitedutilities.com/corporate/about-us/our-future-plans/looking-to-the-future/


https://www.unitedutilities.com/globalassets/z_corporate-site/about-us-pdfs/apr/united-utilities-annual-performance-report-2017---2018.pdf/

https://www.unitedutilities.com/globalassets/z_corporate-site/about-us-pdfs/apr/united-utilities-annual-performance-report-2017---2018.pdf/

https://www.unitedutilities.com/corporate/about-us/our-future-plans/looking-to-the-future/

https://www.unitedutilities.com/corporate/about-us/our-future-plans/looking-to-the-future/



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undertaken to provide confidence in our plan.

o Our performance commitments and outcome delivery incentives - are set out in section 2.1.3 above.

o Our customer service - see sections 2.1.2 and 2.1.5 above. o Retail cost to serve - are set out in section 2.1.6 above. o Capital Delivery - are set out in section 2.1.6 above. o Environmental and quality regulation - are set out in section 2.1.9 below.


• Details of the assurance undertaken to confirm the robustness of the processes to support: o Our wholesale totex projections - are set out in section 2.1.6 above. o Our performance commitments and outcome delivery incentives - are set out in section 2.1.3

above. o Our customer service - are set out in sections 2.1.2 and 2.1.5 above. o Retail cost to serve - are set out in section 2.1.6 above. o Capital Delivery - are set out in section 2.1.6 above. o Environmental and quality regulation - are set out in section 2.1.9 below.




More information. • Details of the lessons we have learned from our performance during the 2015-20 period and that we have used to demonstrate that we will be able to successfully deliver our AMP7 business plan are set out in chapter 9 of our business plan.

2.1.9 IAP Test area 9 – Securing confidence and assurance

IAP test 9 Sub test CA1: To what extent has the company’s full Board provided comprehensive assurance to demonstrate that all the elements add up to a business plan that is high quality and deliverable, and that it has challenged management to ensure this is the case?


• The full UUW Board has signed a comprehensive Board Assurance statement, which confirms that it has ownership of the strategy and long-term direction of this business plan and has progressively reviewed and challenged the company executive and management to ensure that evidence and assurance has been provided to demonstrate that all the elements add up to a plan that is high quality and deliverable.

• The UUW Board has been actively involved in defining the nature of the assurance undertaken on the plan and in reviewing the findings from the assurance that has been undertaken to validate and support the plan.

• Our AMP7 Business Plan and supplementary documentation has been subject to a robust three lines of assurance framework, as described in section 10.3 of tour business plan, which includes comprehensive management checks and controls to confirm the accuracy of data and information presented in the submission documentation.

• A detailed requirement tracking exercise was undertaken to confirm that we have a specific deliverable within the plan that will meet all of Ofwat’s expectations of the plan.

• Each deliverable has been allocated to an executive sponsor who was responsible for the management, risk assessment and assurance of their deliverables.

• Each deliverable was risk assessed to determine the minimum level of governance and assurance.

• A risk based three lines of assurance approach was applied to each deliverable within the plan. 1st line assurance • All data within the submission is subject to first line assurance. Methodology statements were

produced, which documented the checks and controls that were applied, each check was recorded to confirm the nature of the review and challenge that had been applied and any risks or issues that had been highlighted.




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• The data and method statements are reviewed and signed off at up to level 1 manager level. • Each executive sponsor signed a detailed evidence pack to confirm that the assurance for all of

the deliverables that they were accountable for had been completed, to support the Boards decision to sign the assurance statement.


The key components of the second line assurance are that:

• The assurance framework was developed by the central PR19 Assurance workstream, who also managed the implementation of the third line assurance and action tracking, provided central oversight of the application of the risk assessment process and provided oversight and confirmed the adequacy and delivery of the 1st line assurance.

• Internal technical reviews were undertaken on medium risk deliverables. These peer reviews were undertaken by independent teams with equivalent technical knowledge.

• Three programme wide gateway reviews were undertaken (bronze, silver, gold), at key stages during the development of the plan. These reviews assessed the progress and the quality of the deliverables. The gold review are being used by each executive sponsor to confirm that their deliverables within each test area have been fully completed and all assurance actions have addressed.

• UU Corporate Audit undertook reviews of the programme at three key stages: An initial review of the scope of the assurance activity; targeted reviews of deliverables during the development of the plan and three final reviews to confirm that the assurance had been completed in line with the original assurance plan.

• UUW Corporate Audit completed risk-based assurance over the implementation of the management controls and checks.

• A final report confirming that all actions have been addressed was presented to the August Board.


• Details of the assurance undertaken to confirm the robustness of the processes are summarised below: o Existing assurance providers have been utilised for data that is common with business as

usual submissions, such as the Annual Performance Report; o Specialist providers have been used for technical work such as capital cost efficiency, or

analysis of the impacts of deprivation upon our retail cost base; and o A central assurance provider (Deloitte) undertook “deep dive” reviews of higher risk areas,

together with three cross programme reviews: An initial review to confirm that all required activities are in place, an intermediate review to confirm progress and a final review to confirm that all issues from the previous cross programme reviews and deep dives had been addressed.

• All recommended actions from these assurance activities were addressed prior to board sign-off.

• Deloitte reported findings from their assurance activities directly to UUW Board prior to the board’s approval of the Business Plan.

• In addition YourVoice has been undertaking a detailed independent review of key areas of the plan and presented their thoughts to the UUW Board and published its independent report on the business plan in September.

More information. • Fully signed Board Assurance Statement can be found in document C0011.

IAP test 9 Sub test CA2: To what extent has the company’s full board been able to demonstrate that its governance and assurance processes will deliver operational, financial and corporate resilience over the next control period and the long term?


As part of the signed UUW Board Assurance statement the Board confirmed that the plan will deliver operational, financial and corporate resilience over the next control period and in the longer-term.

United Utilities maintains high ethical standards of business conduct and corporate governance. We comply fully with the principles and the spirit of the UK Corporate Governance Code and Ofwat’s principles on Board Leadership, Transparency and Governance, with a UU Code on Board leadership, transparency and governance, being published on our web site each year.




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The Board has established governance, accountability and assurance processes which are designed to ensure that the company behaves as a responsible business, with our business principles being published and clearly referenced on our website.

We recognise that operational, financial and corporate resilience are inter related and need to be considered together to reinforce the overall resilience of the business.

We are a financially resilient company, we publish an annual long term viability statement, and have reviewed the potential range of future potential outcomes to support a viability assessment of our AMP7 business plan. This financial resilience means that we have been able to invest an additional £250m during the current period to address long term resilience issues, rather than being incentivised to constrain our expenditure to PR14 assumptions.

We use a sophisticated approach to assess, manage and report risks, with this process being aligned to ISO 9001. We have a well-established governance structure to review the nature and extent of the risks that the company faces and to review the effectiveness of the risk management processes. As part of this we utilise a wholesale risk and resilience board, with a focus on long-term resilience. The process is supported by a central database, tools, templates and guidance to drive consistency and is designed to ensure that we have the information, systems, process, governance and capability to make effective long term decisions about the management of risk to services.

We have developed the systems and processes required to consider our systems as a whole and to take into account the relationship between different aspects of our business, as well as external factors, in understanding the risks to operational resilience across our full asset base.

We have also put the lessons in place following incidents, such as Franklaw to ensure that we have the capability, (skills, leadership and systems) to be able to ensure that we can avoid, cope with or recover from disruption. We believe that these processes were proved to be effective in the freeze thaw event that occurred earlier in 2018.


• The checks and controls undertaken to demonstrate that our governance and assurance processes will deliver operational, financial and corporate resilience over the next control period and the long term are set out in the template for IAP test 4 above.

• The results of the first and second line reviews of resilience were presented to the UUW Board to support their decision to sign the Board Assurance Statement (C0011).


• Details of the assurance undertaken to demonstrate that our governance and assurance processes will deliver operational, financial and corporate resilience over the next control period and the long term are set out in the template for IAP test 4 above




UUW Board prior to the board’s approval of our business plan. • The results of the third line assurance of resilience were presented to the UUW Board to

support their decision to sign the Board Assurance Statement (C0011).

More information. • Fully signed Board Assurance Statement and Viability Statement can both be found in document C0011.

IAP test 9 Sub test CA3: To what extent has the company’s full board provided assurance that the company’s business plan will enable customers’ trust and confidence, through appropriate measures to provide a fair balance between customers and investors (which include outperformance sharing, dividend policies and any performance related element of executive pay) and high levels of transparency and engagement, on issues that matter to customers (which extends to their ability to understand corporate and financial structures and how they relate to its long-term resilience)?




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As part of the signed UUW Board Assurance statement the Board confirmed that “We have committed to a balanced approach to dividends, gearing and benefit sharing which builds on our responsible track record “ and that “We have committed that where dividend payments or gearing are much higher than expected in the plan there will be a benefit sharing arrangement which will see customers benefit from either lower bills, further targeted financial support and/or grants for community schemes”..”

The statement also sets out that “This package should build confidence among stakeholders that the company remains committed to a significant and meaningful sharing of benefits with customers in the event that the business significantly outperforms the regulatory contract and that the company will maintain its track record of delivering fairly and responsibly in this area”.” • During AMP7 we are planning to enhance our current responsible approach to gearing,

dividends, executive pay and benefit sharing.

CommUnity Share. • We are making a new commitment “CommUnity Share”, which as well as providing a

guaranteed level of base funding will also provide matching financial benefits if our dividends or gearing rise above stretching thresholds.

• Spend related to this initiative is outside regulatory mechanisms and any bill reduction or financial support would not be rebalanced onto customers, with decisions on how funding is applied being made in consultation with customers and stakeholders, overseen by YourVoice.

Benefit sharing, dividend and gearing policies. • At normal levels of gearing (60-70% Net Debt/RCV): • We are committing £71m to financial assistance schemes over AMP7. • We expect to pay a base dividend equal to 70% of nominal allowed equity returns. • We may pay a further distribution by way of dividends of up to 2% of RORE. This may reflect

current or past outperformance. • Distributions in excess of this amount will be matched 1:1 with customer benefits through

discounted bills, targeted financial assistance or funding of community projects through CommUnity Share.

• This is in addition to any reinvestment which may be made on a voluntary basis through the normal regulatory mechanisms.

• If gearing were to rise above 70%, we will share half the financial benefits of high gearing with customers through contributions to CommUnity Share.

• If gearing were to fall below 60%, then the base dividend could increase to the greater of 100% of nominal allowed equity returns or profit after tax.

• Outperformance dividends would not be paid in circumstances where the company was known to be in material breach of statutory obligations.

• Outperformance dividends in excess of 2% of RORE would not be made where the company was materially failing to meet its performance targets, unless the dividend was accompanied by investment aimed at improving that position.

Alignment of executive pay with performance. • The process for reviewing the Directors’ Remuneration policy, including performance pay

criteria, will be accelerated compared to the usual three-year cycle, to ensure that our approach continues to be transparent and that incentive measures remain relevant and demonstrate a substantial link to stretching performance delivery for customers.

• The new policy will reflect a comprehensive assessment of performance-related pay arrangements with a view to increasing the weighting of customer-focused measures.

The new policy will apply from the beginning of AMP7 and will be fully disclosed as part of our annual reporting.


• As our proposals in this area set out how we plan to operate as a business during the AMP7 period, the most effective checks and controls on these proposals are our historic track record

• Track record of fair financing - As a responsibly financed company, we have taken a long term approach to financial stewardship and have chosen not to undertake financial engineering which would have exposed customers to high levels of gearing or which would have led to excessive dividend payments. Where there has been outperformance the benefits have been




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shared between investors and customers to a greater extent than required by the regulatory contract. o Gearing: During AMP5 and AMP6 UUW has targeted gearing in the 55%-65% range, with a

central target of 60%. This is consistent with Ofwat’s notional company assumption of 60% at PR09 and PR19, and was below Ofwat’s notional company assumption of 62.5% at PR14.

o Dividends: Across AMP6 UUW has continued the dividend policy which commenced during AMP5, which was to pay a base dividend of 5% of the equity portion of the RCV. Payments above that level were only made where there was demonstrable outperformance.

o Benefit Sharing: Across AMP5 and AMP6, UUW has voluntarily committed over £500m of reinvestment for the benefit of services to customers and the environment. In doing so, the company chose to reinvest for the long term, rather than paying additional dividends, building confidence that we were taking a long term view of investing in the region.

• Transparency and engagement - As a FTSE 100 company we demonstrate high standards of transparency and corporate governance in relation to executive pay, complying with The Large and Medium-sized Companies and Groups (Accounts and Reports) (Amendment) Regulations 2013, the FCA Listing Rules and the UK Corporate Governance code. In line with legislation, shareholders have a binding vote on the company’s directors’ remuneration policy (‘policy’) and are consulted when changes to policy are proposed. The current policy was approved at the July 2017 AGM.

• We are one of only two WaSCs where as much as 60% of annual bonus is based on customer focused measures

• Of companies disclosing details of long-term incentive plans, we are one of only three companies with a clear and material customer-focused component as a core metric.


• Details of the assurance undertaken to confirm the financial viability of the company over the longer term are set out in the template for IAP test 7 above




UUW Board prior to the board’s approval of our business plan. • The results of the third line assurance of resilience were presented to the UUW Board to

support their decision to sign the Board Assurance Statement (C0011).

More information. • Fully signed Board Assurance Statement and Viability Statement can both be found in document C0011.

• Details of our measures to provide a fair balance between customers and investors, are set out in chapter 9, Aligning risk and return, of our business plan.

IAP test 9 Sub test CA4: To what extent has the company’s full board provided comprehensive assurance to demonstrate that the business plan will deliver – and that the board will monitor delivery of its outcomes (which should meet relevant statutory and licence obligations and take account of the UK and Welsh Governments’ strategic policy statements)?


As part of the signed UUW Board Assurance statement the Board confirmed that “the business plan will enable the company to meet its statutory and licence obligations, both now and in the future.

We have actively worked with our quality regulators to understand and - where appropriate - challenge their expectations for the AMP7 period and the longer term.

The delivery of key obligations has been incorporated into our suite of performance commitments and outcome delivery incentives”.

As a regulated water and wastewater company UUW is subject to a number of obligations, which can be considered as falling in two categories:




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• Fixed obligations either defined by legislation - such as the Water Industry Act 1991 - or defined through the Instrument of Appointment; or

• Periodic delivery obligations defined through the price review, or related cyclical processes, such as the performance commitments and the quality enhancement programmes.

Each year the UUW Board signs a Risk and Compliance statement, published as part of the Annual Performance Report. This statement describes the systems and processes that are used to demonstrate that UUW has complied with its relevant statutory, licence and regulatory obligations. These systems and processes will be refreshed to ensure that the Board is able to continue to sign this statement throughout the AMP7 period.

We have worked with the quality regulators to understand and - where appropriate - influence the required quality enhancement programmes. These requirements have been embedded within our performance commitments and reflected within our expenditure proposals.


• The checks and controls undertaken to demonstrate that our governance and assurance processes will deliver operational, financial and corporate resilience over the next control period and the long term are set out in the template for IAP test 3 above.

• UUW Board reviewed and approved the performance commitments provided in the early submission in May 2018 and this was supported by a Board Assurance Statement. The board has subsequently approved the performance commitments in our business plan including changes made following feedback received from Ofwat in July 2018.


• Deloitte undertook a specific deep dive review on “AMP7 Statutory Obligations”. All identified actions were fully addressed prior to submission of the plan.

• Details of the assurance undertaken to demonstrate that that the business plan will deliver – and that the board will monitor delivery of its outcomes are set out in the template for IAP test 3 above.

• Details of the assurance undertaken to demonstrate that our expenditure proposals are efficient and deliverable are re set out in the template for IAP test 6 above.




More information. • Fully signed Board Assurance Statement can be found in document C0011. • More information can be found in supplementary document S6005 AMP7 Statutory Obligations.

IAP test 9 Sub test CA5: To what extent does the company have a good track record of producing high-quality data, taking into account the company's data submission, assurance process and statement of high quality, and our 2018 assessment of the company under the company monitoring framework?


• In building our business plan we have taken account of key lessons from AMP6 and have worked hard to introduce robust assurance processes to enable us to have a high level of confidence in our systems and processes used in order to arrive at our data submission.

• We have used a similar approach for PR19 to the approach that underpins our Annual Performance Report.

• This framework utilises a targeted risk assessment process to determine the nature of the governance and the level of the assurance that has been applied to each component of the plan.

• We retained a self-assurance rating in Ofwat’s 2017 company monitoring framework and have learnt lessons from this in developing our business plan documentation.

Checks, controls and other activities

• We have reviewed and acted upon feedback from the company monitoring framework, and been able to fully address the areas where we were weaker. We continue to engage with and




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undertaken to provide confidence in our plan.

listen to customer views and as a result of this we continue to publish a suite of documentation, despite being rated in the self-assured category in 2017.

• The results of the first and second line reviews of our approach to assurance and driving to produce high quality data are presented to the UUW Board.


• Details of the assurance undertaken to confirm the robustness of the processes are set out, as follows: o We consult on and publish a draft followed by a final assurance plan. This sets out the

potential risks, strengths and weaknesses that we face in the following years regulatory reporting and on our approach to providing governance and assurance to manage these risks.

o Our AMP7 Business Plan and supplementary documentation has been subject to a robust assurance framework, as described in section 10.3 of our business plan, which includes comprehensive management checks and controls to confirm the accuracy of data and information presented in the submission documentation

o The strategy for data assurance and governance processes has taken proportionate but robust steps to deliver high quality data - The assurance framework that has been applied throughout the development of the business plan, has built upon the framework that we have developed and applied to our annual regulatory reporting. UUW Corporate Audit completed risk-based assurance over the assurance process.

o All recommended actions from these assurance activities have been addressed. o Both Deloitte and UUW Corporate Audit reported findings from their assurance activities

directly to UUW Board prior to the board’s approval of the Business Plan. o UUW Board reviewed and approved the approach and this was supported by the Board

Assurance Statement (C0011).

More information. • A fully signed Board Assurance Statement and summary of the assurance that has been applied to our plan can be found in supplementary document C0011.

• The list of independent assurance reports that have been undertaken to support our PR19 submission can be found in Section 3 of this document.

• Our Final Assurance Plan13 • Our Annual Performance Report14

IAP test 9 Sub test CA6: How consistent, accurate and assured are the company’s PR19 business plan tables, including the allocation of costs between business units, information on corporation tax, and the assurance and commentary provided?


• We have applied the same approach to populating and reviewing the tables for the AMP7 business plan that we apply to our Annual Performance Report data. This means that all tables have line owners and a risk based governance and review process which ensures all tables are reviewed and signed off by appropriate tiers of management including Level 1 manager where appropriate. For example, all financial tables were reviewed and signed off by the Group Controller.

• Business plan data tables were populated to support the Bronze, Silver and Gold iterations of the business plan to allow issues to be identified at an early stage and queries raised where necessary or management and independent resources targeted effectively.

• We have been allocating costs between business units within our APR for a number of years and have applied the same approach for our PR19 tables taking due account of any differences in RAG guidance.

• Information on corporation tax has been developed by the tax team working with the business operations and engineering teams to ensure the tax categorisation of the expenditure reflects the anticipated volumes of work within AMP7.

13 https://www.unitedutilities.com/corporate/about-us/performance/assuring-our-performance-2015-2020/ 14 https://www.unitedutilities.com/corporate/about-us/performance/annual-performance-reports-2015-2020/


https://www.unitedutilities.com/corporate/about-us/performance/assuring-our-performance-2015-2020/

https://www.unitedutilities.com/corporate/about-us/performance/annual-performance-reports-2015-2020/

https://www.unitedutilities.com/corporate/about-us/performance/annual-performance-reports-2015-2020/



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• The data within the tables reflects historic, current year and future projections. The data for current and prior years has been developed alongside the business teams accountable for in year reporting. The basis of future year projections have been reviewed with independent specialists as set out in the relevant section of the IAP template above.

• A detailed table commentary document has been developed and submitted.


• Details of the checks, controls and third party support that we have undertaken to support: • A central process was established to collate queries arising from the tables and submit to Ofwat

for guidance with all responses to queries published by Ofwat being logged centrally, sent to individual line owners to confirm that the guidance was reflected within their methodologies or to revise their methodologies appropriately.

• Tables were risk assessed and independent peer reviews were undertaken where necessary. • The process for capturing the APR and PR19 information was managed as a single process to

ensure a single source of data was utilised for all reporting and allow effective cross checks to be undertaken

• The data within the tables, models and documentation has been validated back to an assured source.


• The results of the first and second line reviews of resilience were presented to the UUW Board to support their decision to sign the Board Assurance Statement (C0011).

• Any required second line peer review and management review and sign off had occurred


• Details of the assurance undertaken to confirm the robustness of the processes are set out, as follows: o The information for prior year data was developed and reviewed by the relevant

independent assurers set out within our Annual Performance Report o The information for the remainder of the AMP6 period was reviewed by the UUW Technical

Auditor (CH2M) o The approach for populating the tables with information for AMP7 and future periods was

reviewed with Deloitte who also undertook deep dive reviews on high risk tables. • The first, second and third line assurance and actions had been completed and addressed. • All recommended actions from these assurance activities have been addressed. • Deloitte reported findings from their assurance activities directly to UUW Board prior to the

board’s approval of our business plan.

More information. • A fully signed Board Assurance Statement can both be found in document C0011. • A summary of the assurance that has been applied to our plan can be found in chapter 10 of our

business plan. • Data tables and table commentaries have been submitted to Ofwat.




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3 List and details of independent assurance reports This section lists all of the assurance reports used to support each section of our business plan and referred to in section 2 above.


1 T9008 Deloitte Customer Engagement Approach 29/05/2018 3 All actions addressed

2 T9003 Deloitte Affordability 15/03/2018 4 All actions addressed



4 T9019 Deloitte Resilience 18/04/2018 5 All actions addressed

4 T9032 Deloitte Viability Statement 15/08/2018 8 All actions addressed

4 T9034 ARUP Resilience in the Round July 2018 No actions reported

4 T9035 Jacobs United Utilities’ Approach to Asset Health 19/06/2018 No actions reported

5 T9017 CH2M/ Jacobs Bioresources RCV 27/09/2017 4 All actions

addressed

5 T9021 Deloitte Water and Bioresources Strategy and Bid Assessment Framework 01/08/2018 33 All actions

addressed

5 T9018 Deloitte Water Resources RCV 05/12/2017 8 All actions addressed

5 T5001 CH2M/ Jacobs Draft WRMP 13/11/2017 No actions reported

5 T5002 Jacobs Revised draft WRMP 23/07/2018 No actions reported

6 T9010 Deloitte Efficiency and Innovation 14/03/2018 14 All actions addressed

6 T9011 Deloitte End to end Totex Plan 23/05/2018 11 All actions addressed

6 T9020 Deloitte Cost adjustment claims 22/3/2018 19 All actions addressed

6 T9016 Deloitte Opex Modelling 11/05/2018 12 All actions addressed

6 T9039 Deloitte Enhancements 26/07/2018 21 All actions addressed

6 T9004 Deloitte AMP7 Statutory Obligations 13/04/2018 7 All actions addressed




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6 T9023 Deloitte Water and Wastewater Cost Modelling Stage 1 15 16/05/2018 19 All actions

addressed

6 T9029 Deloitte Water & Wastewater Cost Modelling - Part 2 13/08/2018 12 All actions

addressed

6 T9024 Arcadis Cost assessment Phase 1 and 2 August 2017 13 All actions addressed

6 T6002 Mott McDonald Stage 1 Costing Methodology 02/11/2017 2 All actions

addressed

6 T6006 Mott McDonald Stage 2 Cost Curve Benchmarking 05/02/2018 No actions reported

6 T6007 Mott McDonald Stage 3 Estimating Assurance 19/02/2018 No actions reported

6 T9037 Indepen Residential Retail Cost Assessment Modelling 22/08/2018 16 All actions

addressed

7 T9012 Deloitte Financial Modelling Phase 1 16 12/02/2018 10 All actions addressed

7 T9013 Deloitte Financial Modelling Phase 2 (including IFRS) 20/08/2018 11 All actions

addressed

7 T9009 Deloitte Derivation of Bill impacts 11/05/2018 3 All actions addressed

7 T9022 Deloitte Taxation 15/05/2018 27 All actions addressed

7 T7001 EY Risk, Reward and Resilience at PR19 17/08/2018 No actions reported

7 T7003 Goldman Sachs

Goldman Sachs Report - Final Numbers 17/08/2018 No actions reported

8 T9028 Jacobs Legacy Reconciliation 25/06/2018 No actions reported



9 T9007 Deloitte Cross Programme Review 3 (Final Review) 21/08/2018 2 All actions

addressed

15 T9023 was an interim review and was superseded by T9029 and has therefore not been provided 16 T9012 was an interim review and was superseded by T9013 and has therefore not been provided 17 T9005 and T9006 were interim reviews and were superseded by T9007 and has therefore not been provided


Documents

Confidence and assurance: Process, controls and assurance of … · business plan addresses the test. The key report undertaken during finalisation of the programme is T9007. This