The best service to customers

Wholesale outcome delivery incentive (ODI) composite


Definition

Net outperformance payment/(penalty) accrued across United Utilities’ 19 wholesale financial ODIs, more detail of which can be found in our Annual Performance Report.

Target

End the 2015–20 regulatory period with around £40 million cumulative net ODI outperformance payment.

Link to bonus/LTP

Bonus – direct LTP – direct

Status

Achieved/confident of achieving target

Performance

We delivered another strong performance against our ODIs this year, against our toughest targets to date. This reflects us delivering great service to customers and other stakeholders, and results in a net outperformance payment for the year.

  • 2019/20: £22.4 million outperformance payment (cumulative £43.9 million outperformance payment)
  • 2018/19: £19.2 million outperformance payment (cumulative £21.4 million outperformance payment)
  • 2017/18: £7.0 million penalty (cumulative £2.2 million outperformance payment)
  • 2016/17: £6.7 million outperformance payment (cumulative £9.2 million outperformance payment)

Service incentive mechanism (SIM) – qualitative


Definition

Ofwat-derived index based on quarterly customer satisfaction surveys, measuring the absolute and relative performance of the water companies. Each company receives a score in the range of zero to five, with five being the best attainable score.

Target

To move towards the upper quartile in the medium term.

Link to bonus/LTP

Bonus – direct
LTP – direct

Status

Achieved/confident of achieving target

Performance

We ended the four-year SIM measurement period to 2018/19 ranked as fourth water and wastewater company, earning an outperformance payment of £6 million. For AMP7 SIM is being replaced by C-MeX, which we reported against this year, ranking third water and wastewater company and fourth of 17 companies, achieving first place on the contactor element in the last two quarters.

Sector worst

Sector best

Service incentive mechanism (SIM) – quantitative


Definition

Ofwat-derived composite index based on the number of customer contacts, assessed by type, measuring the absolute and relative performance of the water companies. Each company receives a SIM point total, where the lowest score represents the best performance.

Target

To move towards the upper quartile in the medium term.

Link to bonus/LTP

Bonus – direct LTP – direct

Status

Achieved/confident of achieving target

Performance

As reported above, we ended the four-year SIM measurement period to 2018/19 ranked as fourth water and wastewater company overall, across qualitative and quantitative SIM. The new C-MeX measure does not separate out qualitative and quantitative measurements.

Sector worst

Sector best

At the lowest sustainable cost

Total expenditure (totex) outperformance


Definition

Progress to date on delivering our promises to customers within the cumulative 2015–20 wholesale totex final determination allowance.

Target

To outperform Ofwat's final determination totex allowance by £100 million over the 2015–20 regulatory period.

Link to bonus/LTP

Bonus – indirect
LTP – indirect

Status

Achieved/confident of achieving target

Performance

Our totex allowance for the 2015–2020 regulatory period represented a significant challenge compared with the costs we originally submitted as part of our business plan. We have closed the gap to our allowance as well as now outperforming it.

  • 2015–20: Outperformed the final determination allowance for its original scope by around £100 million over the 2015–20 regulatory period
  • Totex was a new measure for the 2015–20 period, hence no prior years' comparators

Financing outperformance


Definition

Progress to date on financing expenditure outperformance secured versus Ofwat's industry allowed cost of debt of 2.59 per cent real over the 2015–20 period.

Target

To beat Ofwat's industry allowed cost of debt.

Link to bonus/LTP

LTP – indirect

Status

Achieved/confident of achieving target

Performance

Our leading treasury management helped us lock in a low cost of debt, which has delivered significant financing outperformance for the 2015–20 regulatory period compared with the industry allowed cost.

  • 2015–20: Exceeded £450 million outperformance
  • 2010–15: Exceeded our £300 million target outperformance

Household retail cost to serve


Definition

Cost to serve in our household retail business compared with Ofwat's revenue allowance (including margin).

Target

To minimise costs compared with Ofwat's revenue allowance.

Link to bonus/LTP

Bonus – indirect
LTP – indirect

Status

Achieved/confident of achieving target

Performance

On an underlying basis we delivered a good performance in 2019/20, outperforming this year's revenue allowance (including margin) by around £13 million. This excludes an additional regulatory bad debt charge of £20 million associated with the higher risk of future non-payment of household customer bills as a result of Covid-19, which is an adjusted item as set out in Our performance in 2019/20.

  • 2019/20: £13 million outperformance on an underlying basis
  • 2018/19: £5 million outperformance
  • 2017/18: £9 million outperformance
  • 2016/17: £14 million outperformance
  • 2015/16: £10 million outperformance

In a responsible manner

Leakage – average annual leakage


Definition

Average annual water leakage from our network quantified in megalitres (Ml) per day.

Target

To meet our regulatory leakage target of 462.65 Ml per day for each year in the 2015–20 regulatory period, as set by Ofwat.

Link to bonus/LTP

Bonus – indirect

Status

Achieved/confident of achieving target

Performance*

In 2019/20 we have met our regulatory leakage target for the 14th consecutive year.

  • 2019/20: Met target
  • 2018/19: Met target
  • 2017/18: Met target
  • 2016/17: Met target
  • 2015/16: Met target
  • 2014/15: Met target

* Final figure for leakage will be reported in our Annual Performance Report, available on our website in July

Environment Agency performance assessment


Definition

Composite assessment produced by the Environment Agency (EA), measuring the absolute and relative performance of the 11 water and wastewater companies across a broad range of areas, including pollution.

Target

To be a first quartile performer (i.e. at least 4th) on a consistent basis.

Link to bonus/LTP

Bonus – indirect

Status

Achieved/confident of achieving target

Performance

In the EA's latest assessment, published in July 2019 for the 2018 year, we were awarded three stars (out of four) across a range of operational metrics, placing us joint second alongside four other companies. Our performance has earned industry-leading 4 star status in three of the last four years, in line with our target of being an upper quartile company on a consistent basis.

  • 2018: Joint 2nd
  • 2017: Joint 1st
  • 2016: Joint 1st
  • 2015: Joint 2nd
  • 2014: 2nd

Dow Jones Sustainability Index rating


Definition

Independent rating awarded using sustainability metrics covering economic, environmental, social and governance performance.

Target

To retain 'World Class' rating each year

Status

Achieved/confident of achieving target

Performance

We have a strong focus on operating in a responsible manner and are the only UK water company to have a World Class rating as measured by the Dow Jones Sustainability Index. For 2018/19, which is the latest year for which information is available, we achieved World Class rating for the 13th consecutive year.

  • 2018/19: 'World Class'
  • 2017/18: 'World Class'
  • 2016/17: 'World Class'
  • 2015/16: 'World Class'
  • 2014/15: 'World Class'