Scenario Planning Case Study

WATER CUSTOMERS in the southeast plan a campaign of non-payment across the region in protest at what they say is a deteriorating service. ‘We've had price rises year on year and all these new customers. What do they do with the money?’ said Mrs Vera Cross, the campaign’s coordinator. ‘So I won’t be paying my bill, and I’m talking to my neighbours about it as well.’ Mrs Cross has lived in the southeast all her life in the same riverside house. But in the last year alone, she’s had to put up with three weeks’ loss of water supply and two incidents of sewer flooding. Now she’s had enough and is trying to sell up—but no buyer can get a mortgage.

Wealddown Water, the local supplier, has prospered from migration into the southeast, but now appears to blame its own customers for the difficulties. ‘Ten years on we've seen double the growth expected in 2004. So we have not been able to provide the amount of water people want, we’ve had interruptions and poor quality water,’ admitted Sir Richard Fairweather, chief executive of Wealddown Water.

Despite its increasing customer revenues, Wealddown Water has few friends in the City. ‘Investors don’t need to pick the water business, and certainly not this company,’ noted Mr James Wideboy, an analyst. ‘Its reputation is in tatters. For a risk-averse sector, this one’s far too risky.’ Other lenders also want out as the company’s investment rating slides.

The company says its predicament has been made worse by recent hot, dry summers, which have led to water restrictions during the last three years, and insists it has done nothing wrong. ‘We have a water resources plan, and we've worked to it religiously, and it’s all been implemented and approved by the regulators, and yes, now there's increased flooding and everything else. It is clearly very serious because we as a company want to provide an excellent service to our customers,’ said Mr Fairweather. ‘It’s the overall planning in the country. That's what's gone wrong.’

But national agencies disagree with this assessment. The new chief regulator, Mr Rod Irons, complains: ‘I’m receiving multiple complaints in respect of this company in the southeast of England about these issues entirely to do with population growth. What I don’t understand is why this has come as a surprise.’ OFTAP has referred the matter to those responsible for setting price limits in the past. ‘They’ve explained to me that population growth is self-financing, and that the resource plan was fully funded within the price limit, so there should not be a problem at all with this rate of growth. So I'm left with little alternative other than to consider severe financial penalties which I'll have to impose in the next price limit.’

Mr Frank Fish of Environs, the national environmental agency, also blames water company mismanagement. ‘We've banged on time and time about water efficiency and demand management, and they haven't heeded our advice. All they want is new resources. If they could manage at all, they could manage the rising demand quite easily. Lanzarote can manage on four inches of rainwater a year, so why can't we manage on 23 or 24 inches a year?’ Meanwhile, the environment suffers. Another six beaches in the southeast were closed to bathers this summer, and serious pollution incidents have doubled. Environs now accuses Wealddown Water of squandering its customer income to pay its ever increasing fines rather than invest where it’s needed in maintenance of high-tech plant and staff training. ‘This is like the railways 10 years ago—excuse, excuse, excuse.’

Wealddown’s Mr Fairweather now welcomes a holistic approach that takes into account broad factors such as population shifts, climate change, planning and housing. ‘They are all factors which needed to be built in, looking back. We should have had a better case, talked more to government, the planners, and all the appropriate bodies to make sure the country got what was wanted, because it is not just a water company issue.’

Mr Fish agrees. ‘We've got all these piecemeal solutions. For example, we're seeing developers put in balancing reservoirs at individual sites. If somebody had had the foresight we'd actually have comprehensive solutions to these problems.’