United Utilities Group Plc · LSE:UU.
United Utilities — Investor Day (September 2018)
72 slides from United Utilities's investor day presentation, Sep 27, 2018
Slide 1: Capital Markets Event, United Utilities Group PLC
Capital Markets Event 27 September 2018 United Utilities Group PLC
Slide 2: Introduction
Steve Mogford Chief Executive Introduction United Utilities Group PLC • Capital Markets Event • 15 March 2018 Crummock Water
Slide 3: Building on sustainable high performance
Building on sustainable high performance Performing in AMP6 Ready to go for AMP7 Customer service All green and amber WINEP3 Service mark with distinction from UKICS schemes cost benefit tested Drinking water quality DWI support for schemes Top WaSC for Mean Zonal Compliance included in plan Most im
Slide 4: Efficiency in wholesale, efficiency in retail
Efficiency in wholesale, efficiency in retail We have stepped up to the efficiency challenge ahead of AMP7 7,000 180.0 160.0 33.1 6,600 53.8 445 140.0 6,200 £m £m 120.0 5,800 359 27.2 6,469 145.8 100.0 231 5,400 80.0 97.9 5,434 5,000 60.0 AMP5 Innovation Market Cost AMP7 2014/15 Input price Bad debt
Slide 5: ODI package balancing risk and reward
ODI package balancing risk and reward Appropriate balance of risk and reward ±2% RoRE (±c£410m) Potential impact of ODIs Encourage service improvement and protect Water quality customers if we fall short Water reliability Environment Derived from customer research covering all Supporting customers a
Slide 6: Agenda
Agenda Introduction & Summary Systems Thinking & Innovation Customer Service & Affordability Auditorium Auditorium Auditorium Simon Chadwick Kieran Louise Beardmore Steve Mogford Central Operations Brocklebank Customer Service Chief Executive Officer Director Head of Innovation and People Director 1
Slide 7: Systems Thinking & Innovation
Simon Chadwick Kieran Brocklebank Central Operations Director Head of Innovation Systems Thinking & Innovation 7
Slide 8: Innovation at United Utilities
Innovation at United Utilities Systems Thinking Innovation Recap on framework Innovation approach Case study Breakthrough innovation case study Digital acceleration of Systems Thinking Capital Markets Event Systems Thinking and Innovation 8
Slide 9: Systems Thinking
Systems Thinking Innovation in our operational strategy
Slide 10: An introduction to Systems Thinking capability
An introduction to Systems Thinking capability Traditional analysis focuses on the individual pieces of what is being studied Components of a system Systems Thinking focuses on how the things being studied interact with the other constituents of the system. Instead of isolating smaller and smaller p
Slide 11: Systems Thinking Capability Model
Systems Thinking Capability Model Maturity level characteristics 5 4 3 2 1 Traditional approach Early adoption Designated delivery Regionally connected Machine managed Artificially Intelligent Silo thinking Systems Thinking Systems Thinking Systems Thinking Systems Thinking Systems Thinking Customer
Slide 12: Systems Thinking Capability Maturity
Systems Thinking Capability Maturity 5 Operational Monitoring Example 4 3 2 1 Maturity level 1 Maturity level 2 Maturity level 3 Maturity level 4 Maturity level 5 Event led human driven Centralised view of Technology enabled, Machine led system Machine led system analytics discrete production line s
Slide 13: Accelerating delivery of Systems Thinking
Accelerating delivery of Systems Thinking Within our AMP7 plan we have proposed an innovative ODI to incentivise acceleration of Systems Thinking LEVEL 5 Re-assessed at PR24 - Maturity Accelerated improvement opportunity LEVEL 4 +£37m Level LEVEL 3 Accelerated improvement opportunity +£37m Reward Fo
Slide 14: Our Innovation Strategy
Our Innovation Strategy Kieran Brocklebank Head of Innovation
Slide 15: Innovation overview
Innovation overview Cheaper, faster, better, safer Our Strategy Accessing the Prototyping Working with Inspiring innovation breakthrough academia innovation ecosystem innovation New entrants Triage Dedicated team Stimulating research Employees Idea scouts Trial zones Applying research Value Innovati
Slide 16: First mover advantage
First mover advantage Maturing our Systems Thinking capability Breakthrough Treatment Technology
Slide 17: Breakthrough Results UV LED
Breakthrough Results UV LED There are two traditional approaches to treat water: • MERCURY UV: remove biological contaminants and Mercury UV Chemical dosing Typhon UV LED • CHEMICAL DOSING : remove OPEX OPEX OPEX compounds that produce Start up times are slow High dosing costs Low energy costs taste
Slide 18: Typhon UV LED Collaboration
Typhon UV LED Collaboration 24 12 months Pilot plant scale months Full scale implementation Lab scale Treatment for 6,000,000 Treatment for 30,000,000 Treatment for 5 litres/day litres/day litres/day Collaborative working Proven for biological and taste and smell at large scale – a real scientific b
Slide 19: The Future of Typhon UV LED
The Future of Typhon UV LED Benefits from the world’s first installation of UV LED A £280k whole life cost saving vs traditional UV solutions • 22% decrease vs traditional treatment • Opex saving, from reduced energy consumption and maintenance The future efficiency and performance possibilities are
Slide 20: Innovation Lab
Innovation Lab Encouraging new entrants Accelerating technology development
Slide 21: A reminder on the Innovation Lab
A reminder on the Innovation Lab The first ever Innovation Lab in the water sector, designed to access the innovation ecosystem Our 5 problem areas 1500 suppliers 80 applied 55 new to UU Connected water Proactive Predictive asset Safe and healthy Future of and customer customer actions maintenance w
Slide 22: Hear from one of our suppliers
Hear from one of our suppliers Capital Markets Event Systems Thinking and Innovation 22
Slide 23: Lab Results
Lab Results Maturing our Systems Thinking capability A.I. for Water Network Management
Slide 24: Innovation Lab Results: A.I. for water network management
Innovation Lab Results A.I. for water network management One of our Innovation Lab partners developed a unique Traditional Industry A.I. tool to manage utility Modelling Approaches infrastructure. They joined the lab after struggling Deterministic model with Self-learning: auto-corrects to get good
Slide 25: How HARVI generates recommendations
How HARVI generates recommendations Step 1 Step 2 Step 3 Build machine Feed real-time Optimise system based learning models data to models on model simulations OSI PI Twitter CMMS Extract historical Learn temporal APIs hydraulic and and spatial chemical data correlations between data Netbase Weather
Slide 26: Area 1: Oldham
Area 1: Oldham Reservoir Distribution network Treatment End users Pumps works Schedule pumps Proactively Predict demand manage hydraulics and alarms HARVI Capital Markets Event Systems Thinking and Innovation 26
Slide 27: Oldham Return On Investment
Oldham Return On Investment The business case is good The benefits are wider than The scalability and flexibility just direct energy savings provide further opportunities Water network Area 1: Oldham Energy Costs Pump optimisation energy saving Regional rollout (33 areas) Baseline annual Up to £10m
Slide 28: Summary
Summary • The previous case studies are examples of those that ‘Accenture considers UUW to be leading the contribute to the £445m of innovation savings water sector in executing a system thinking • The holistic approach of Systems Thinking continues to unlock approach in the way they operate their f
Slide 29: Any questions?
Any questions?
Slide 30: Water Service Performance
Martin Padley Director of Water and Scientific Services Water Service Performance
Slide 31: AMP6 - enhancing our resilience
AMP6 - enhancing our resilience Capital Markets Event Water Service Performance 31
Slide 32: Our transformation programme
Our transformation programme People Processes Targeted investment Mandatory Quality Training Systems Thinking: 3R approach: Visualisation and control Prioritising customer restoration Industry leading technical training & development Engineer led HazRev and NetRev Largest UK water industry fleet of
Slide 33: Evolving our risk based investment approach
Evolving our risk based investment approach HazRev is a very successful AMP6 innovative engineering led During AMP7 we will extend the HazRev approach to approach, reducing risk and optimising totex solutions at Water Networks (NetRev) – delivering multiple customer, Water Treatment Works quality, i
Slide 34: Interruptions – AMP7 strategy
Interruptions – AMP7 strategy Continuation of successful ways of working • Use of enhanced ASV fleet – the largest in the industry • 3Rs has successfully reduced the impact of water supply interruptions to customers Targeted investment • NetRev – understanding and effectively managing network risk •
Slide 35: Interruptions – real life case study
Interruptions – real life case study UU’s “3R” operational innovation in practice Flow Pressure Systems Thinking Spatial Analysis Central real time performance data Central spatial impact assessment (2,549 properties affected), dispatch of field staff Capital Markets Event Water Service Performance
Slide 36: Interruptions – real life case study
Interruptions – real life case study UU’s “3R” operational innovation in practice Respond Restore Repair Benefits Field mobilisation, ASV injection points Repair completed in risk assessments completed identified, ASVs dispatched and parallel with restoration £3.3m water restored to 2,525 Net ODI pe
Slide 37: Leakage – AMP7 strategy
Leakage – AMP7 strategy Continuation of successful ways of working • Additional and insourced leakage detection • Extension of sniffer dogs in rural situations Traditional approach Well understood but labour Targeted investment intensive and low productivity • Installation of acoustic loggers within
Slide 38: Leakage – our plan
Leakage – our plan Fast track deployment of new techniques Satellite technology Pressure management 3x more efficient - preventative Acoustic loggers Customer side leaks and 4-5x more efficient gas injection Capital Markets Event Water Service Performance 38
Slide 39: Taste and smell – AMP7 strategy
Taste and smell – AMP7 strategy Continuation of successful ways of working • Water Transformation Programme • Process consistency driver – HazRev • Integration between laboratory, operational science and water teams Targeted investment • Enhanced chlorine control dosing and monitoring, using chlorin
Slide 40: Delivering an integrated plan
Delivering an integrated plan ODI Drinking Water is ODIs: Reliable Supply ODI Natural Environment Safe and Clean Looking After Low Pressure Interruptions Environment Compliance Mechanism Abstraction Unplanned Treatment the Water Reservoirs Improving Resilience Resilience Incentive to Supply Incident
Slide 41: Any questions?
Any questions?
Slide 42: Wastewater Service Performance
Keith Haslett Director of Wastewater Network Plus Wastewater Service Performance
Slide 43: Environment Compliance – AMP6 approach to leaders in the sector
Environment Compliance – AMP6 approach to leaders in the sector Examples of some of our best practice solutions that helped us on our journey to 4* leading company status Achieved 4 star rating for the past 3 years Large investment of £1bn on our wastewater treatment facilities Upskilling of our peo
Slide 44: Our journey to centralised Systems Thinking
Our journey to centralised Systems Thinking 2015 2018 AMP7 Remote site Amalgamated Smart, technology driven based tours area control centralised system control centre hubs £48 million investment in AMP6 Capital Markets Event Wastewater Service Performance 44
Slide 45: AMP7 strategy to environmental compliance
AMP7 strategy to environmental compliance Treatment work Spill Pumping station performance performance performance Process automation Event duration monitoring project Signature monitoring Signature monitoring Real time monitoring Understanding our assets and how they perform end to end Risk managem
Slide 46: Wastewater Network Operating Model
Wastewater Network Operating Model Evolving the model to meet AMP7 commitments Our vision: Pyramid of Intelligence: Private Sewers Wastewater Network WwNM Ways of AMP7 Proper Network more proactive, Transfer: new operating Management (WwNM) Working and Management less reactive model transformation p
Slide 47: Network – AMP7 Strategy
Customer Network – AMP7 Strategy Engagement Enhanced Flood Targeting Resilience AMP7 Integrated Drainage Area Strategy (IDAS) Network Strategy SuDS DWMP & IDAS Flood resilience Operating Model Enhanced targeting Potential impact of ODIs Pollution incidents Operating model Sewer blockages Internal fl
Slide 48: Integrated Drainage Area Studies
Integrated Drainage Area Studies • 18 Integrated Drainage Area Studies completed IDAS Areas • 41 Catchments identified to complete IDAS studies • Coverage will be 77% of our population • Risk based approach using network performance data • Understanding 3rd parties to feed situational awareness and
Slide 49: Our approach to managing our Wastewater network
Our approach to managing our Wastewater network
Slide 50: Any questions?
Any questions?
Slide 51: Customer service
Louise Beardmore Louise Beardmore CustomerService Customer Service and and People PeopleDirector Director Customer service
Slide 52: Customer Service Strategy
Customer Service Strategy Great Service Costs Less Our clear household retail strategy continues into AMP7, delivering new services and capabilities now and in the future… Reducing costs …and at the same time we are responding to the unique Improving demographics of our region. Service Capital Marke
Slide 53: Improving Service
Improving Service Step change in performance Capital Markets Event Systems Thinking & Innovation
Slide 54: Leading Service
Leading Service Data matching and visualisation Reduction in Dissatisfaction Geographic data on New capabilities are core to our network and property improved levels of customer service locations matched to • 34% reduction in stage 1 customer contact • 64% reduction in stage 2 records allow for swif
Slide 55: Driving Priority Services offering for our customers
Driving Priority Registrations remain There are now more Launched industry Services offering for strong and embedded within core customer than 50,000 Priority Services customers pilot with Electricity North West to share our customers and touchpoints registered priority services data the utility sec
Slide 56: SIM Performance
SIM Performance 2017/18 saw us deliver big customer service improvements against the WASCs. Encouragingly we are significantly ahead of the other two listed companies. Now expecting a reward for AMP6 SIM performance. SIM WaSC positioning 2017/18 UU SIM score vs Industry average 90.0 86.9 88.00 88.1
Slide 57: Leading on service beyond the water sector
Leading on service beyond the water sector SIM Qualitative + Quantitative Step change in ranking and Service Mark is a national standard performance trending performance recognising an organisation’s significantly above industry average + 5.1 point increase in achievement in customer service, 12 mon
Slide 58: Reducing Costs
Reducing Costs Significant reduction in operational costs and bad debt Capital Markets Event Systems Thinking & Innovation
Slide 59: Achieving Cost to Serve targets
Achieving Cost to Serve targets Reducing Cost to Serve continues to be a Cost to Serve - £ per customer 55 significant area of focus. In the last four years we have effectively reduced Cost to Serve per 50 customer from over £50/Hh to £38/Hh. 45 £ 40 Driving down Cost to Serve 35 £31 We have put in
Slide 60: Driving down operational costs
Driving down Our Mobile App now operational costs More than 750,000 customers now registered for our online customer enables customers to report a leak portal, My Account. Customers can report a As customers increasingly choose automated leak on the go, both channels we are focused on ensuring these
Slide 61: Tackling customer bad debt
“We have concluded United Utilities has a mature bad debt function Tackling customer with deep knowledge of the water industry and its associated challenges... Key debt management activities are in place and well developed. We have therefore concluded that UU’s approach is bad debt substantially in
Slide 62: Our proposals to address the affordability challenge
Our proposals Regional Levels of Deprivation to address the 1% most 5% most 10% most 20% most deprived deprived deprived deprived affordability United Utilities 41% 32% 27% 21% challenge Anglian Northum- 8% 13% 7% 11% 8% 11% 9% 11% brian The North West faces some specific affordability challenges. S
Slide 63: Our proposals go further on affordability support
Our proposals go further on affordability support We will continue to increase the reach of our financial assistance schemes, with an enhanced focus on Number of customers on Financial Assistance Schemes alleviating water poverty. compared to FD assumption 200,000 Number of customers 150,000 100,000
Slide 64: Our industry leading approach to affordability support
Our industry leading approach “Weight off our shoulders” to affordability support “Guy was brilliant, really helpful” “Lovely, absolutely brilliant, We have fundamentally changed our approach to help Increased reach of Specialist so nice, helpful” those on low to middle assistance schemes advice on
Slide 65: New propositions supporting low and middle income households
New propositions supporting low and middle income households Lowest Bill Guarantee Take a Break Helping customers overcome concerns about metering New payment break scheme to help low income households manage day to day household budgets Developed a busting the We currently offer Payment Breaks myth
Slide 66: Promoting efficient use of water
Promoting efficient Home Usage Reports use of water Mobilising to go live with our new home usage reports this year. We plan to utilise the latest in live consumption reporting and insight from Digitally focused behavioural economics to help us achieve Per Capita Consumption targets Behavioural scie
Slide 67: Well placed for the next AMP
Well placed for Service Cost Innovation the next AMP Since 2014/15 we have reduced regulatory bad debt Highest digital presence with 43% of customer by £25m/yr contacts automated Improving service and reducing costs Industry Leading for customers today and our future New payment break customers The
Slide 68: External recognition for our great performance
External WOW! Best rising star - Victoria Chester from our Cash Collection recognition contact centre in Whitehaven 100 Club - 30 of our Field staff won the 100 Water Team of the Year U&T Awards WINNER September 2018 for our great award as they have received over 100 personal nominations each direct
Slide 69: What Customers Think of The Plan
What Customers Think of The Plan Capital Markets Event Systems Thinking & Innovation
Slide 70: Any questions?
Any questions?
Slide 71: Summary and Q&A
Steve Mogford Chief Executive Summary United Utilities Group PLC and Q&A • Capital Markets Event • 15 March 2018 Crummock Water
Slide 72: Cautionary statement
Cautionary statement This presentation contains certain forward-looking statements with respect to the operations, performance and financial condition of the group. By their nature, these statements involve uncertainty since future events and circumstances can cause results and developments to diffe
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