SECONDMEETINGOFTHENORTHUMBRIANWATERFORUM 11.3015.

30,THURSDAY14thJUNE2012,PITYME,DURHAM MEETINGNOTES

PRESENT: IndependentChair:AndreaCook ForNorthEastChamberofCommerce(NECC):MarkStephenson ForConsumerCouncilforWater(CCWater):BarbaraLeech ForDrinkingWaterInspectorate(DWI):MiloPurcell ForNaturalEngland(NE):RuthBull ForConfederationofBritishIndustry(CBI):SarahGreen ForEnvironmentAgency(EA):IanHodge For Northumbrian Water (NWL): Heidi Mottram, Ceri Jones, Graham Neave, Ken Oswald, Jill WisniewskiandIvanJepson(agendaitem4only) ForAccent:ChristineEmmerson(agendaitem6only)

APOLOGIES: ForAssociationofNorthEastCouncils(ANEC):MelanieLaws ForNWCorporateResponsibilityAdvisoryGroup(CRAG):NormaHope ForNorthEastChamberofCommerce(NECC):JamesRamsbotham NOTESANDACTIONS 1. Welcome,Introductionofnewmembers,apologies&disclosureofinterests AndreaCookwelcomedeveryonetothe2ndmeetingoftheNWF.Shenotedthattwo independentmembers,namelyMelanieLawsandNormaHopehadsenttheirapologiesandthat MarkStephensonwasattendinginplaceofJamesRamsbotham(NECC). AndreaCookaskedForummembersiftheyhadanyconflictsofinteresttodeclare.MiloPurcell indicatedthat,whilsthehadnopersonalconflictsofinterest,furtherdownthelinehis responsibilitiestotheDWIcouldconflictwithhisroleasamemberoftheForum.However,he hopedanyissuescouldbediscussedandworkedthroughastheyarise. AndreaCookaskedforummemberstoconsiderwhenitwouldbeappropriatefortheForumto discussthePR14statutoryQualityprogrammesandwhetheraspecialdayshouldbearranged todiscussthis.MiloPurcellcommentedthattheDWIhadalreadybeguntospeaktocompanies onaonetoonebasisandthat,inthesummer,DefrawouldpublishaStatementofObligations followedbySocial&EnvironmentalGuidancelaterintheyear.IanHodgenotedthatwhilstthe finalNationalEnvironmentProgramme(NEP)wasnotdueuntilJanuary2016,theEnvironment AgencywouldreleaseitsinterimpositionsatvariouspointsintherunuptoPR14andmost wouldbeavailableindraftformintimeforPR14.RuthBullnotedthatNaturalEnglandisguided bytheEnvironmentAgencystimescalesandtheywouldworkwiththeEnvironmentAgencyto speakasonevoice.Thisissuewasfurtherdiscussedunderagendaitem9. Notes&actionsoflastmeetingheldon10February2012 ThenotesoftheinauguralmeetingoftheNWFwereapprovedbymembers.Action:Allfuture meetingnotesaretobeapprovedremotelybyemailaheadofsharingwithotherstakeholders. NWListoprovideacopyofmeetingnotestoSoniaBrown,AlisonCullenandAndrewDayat OfwatinatimelymannerbutonlyafterthesehavebeenapprovedbytheForum. ItwasagreedthereshouldbeastandinginvitationtoAndrewDaytoattendfutureforum meetingsasanobserver.Itwasnotedthatitisimportantthattheforumistransparentingoing aboutitsbusinessandOfwatarekeptinformedastheprocessunfolds.Action:NWLtoinvite Ofwatcompanyrepresentative(AndrewDay)tofutureForummeetings. 1

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Confirmfinalnondisclosureagreement&signoffprocess Thefinalnondisclosureagreementwasapprovedbymemberssubjecttoanappendix(provided byCCWater)beingattachedonthebindingregulationsoftheFreedomofInformationAct2000 andtheEnvironmentalInformationRegulations2004.Action:NWLtoattachtheappendixtothe nondisclosureagreementandrequestForummemberstosignandreturnacopyofthefinal agreementtoJillWisniewski. FeedbackfromOfwatcustomerengagementworkshops&discussionofimplicationsforNWL Forums KenOswaldandAndreaCookprovidedfeedbacktoForummembersontherecentworkshops whichOfwathadheldforcompanyrepresentativesandForumchairstodiscussworkshops customerengagement. TherewasaconcernregisteredbyForummembersthatimportantinformation,forinstanceon pensionsandthecostofcapital,mayarrivelateintheprocesswhichmayhindertheForums abilitytocommentoncustomersacceptabilityofthebusinessplan. Forummembersagreedthatitwasnotreasonabletoexpectthemtocommentontechnical aspectsandcostingsinthebusinessplansubmission. Discussionofproposedstakeholderengagementarrangements(papercirculatedinadvanceof themeeting) IvanJepsondescribedthepaperinoverview. WhilsttheForumwascomfortableinprinciplewiththeproposalsinthepaperitwasnotedthat morethoughtisneededonhowthedifferentelementsofcustomerandstakeholderresearchwill cometogetherandbeevaluated.Action:NWLtoconsidertheinformationitneedsfrom stakeholdersandhowitwillusetheinformationinitsbusinessplanningprocesses. ItwasalsonotedthatForummembersneedtobeacentralpartofthestakeholderengagement processesandtobeactivelyinvolvedintheplanninganddevelopmentoftheapproach,including thesignoffofthestakeholderquestionnaire.Action:Forummemberstoprovidecommentson thedraftstakeholderquestionnaireandforthemtoagreethefinalversionbeforeitisissuedto stakeholders. Itwasagreedthatthereneedstobesufficientseparationofthecompanyandtheworkofthe Forumtobroadenitsvisibilityandindependence.Action:AlltoconsiderhowtheForumcan broadenitsvisibilityandindependence.Action:ThedevelopmentofanindependentWater Forumwebsiteistobeconsideredwhereonlinequestionnairescouldbeadministeredandother Forumrelatedinformationlodged. MiloPurcellnotedthatlocalauthoritiesandsomeNGOsweremissingfromthestakeholder consulteeslistandsuggestedthatitneedtohaveastrongerNorthEastregionaldimension. Action:NWLtoconsiderandaddress. IanHodgenotedthatgroupsinvolvedwithresilienceissueswerecurrentlymissingfromthe stakeholderconsulteeslistandthatsomeexistinggroups,forexample,FloodCommittees, wouldbeusefulcontacts.Action:NWLtoconsiderandaddress. SarahGreennotedthatonestakeholdermissingfromthelistwasthemedia.Action:Allto considerwhatpossiblerolethemediahastoplayintheprocess. HeidiMottramnotedthat3themeswereemergingfromthediscussionsonstakeholder engagement:1)Howinformationcollectedwillbeused2)HowcanForummemberscanbecome involved3)HowcantheForumbepositionedseparatelyandindependentlyofNWL.Action:NWL tofactortheseissuesintothedevelopmentofitsdetailedapproach. Qualitativecustomerresearchresultspresentation&discussion ChristineEmmersonfromAccent(anindependentmarketresearchcompany)gavea presentationontheresultsfromthequalitativephaseofresearch(i.e.focusgroupsfordomestic customers&teledepthinterviewsforbusinesscustomers)fortheNorthEastregion.

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Forummemberscommentedthattherewerenorealsurprisescomingfromtheresearch undertakensofarandprioritiesconsistentwithpreviousresearchwereemerging,forexample, sewerfloodinganddiscolouredwater. ForummembersBarbaraLeechandIanHodgeandpeerreviewerProfessorKenWillishad attendedspecificFocusGroups. ProfessorKenWillishadprovidedhisinitialthoughtsonthequalitativeresearchinanEMailto NWL:ThepresentationbyAccentyesterdaywasexcellent:theirqualitativestudywasvery professionalandprovidedarichsetofinformationtocarryforwardintothedesignofthe quantitativestageofthestudy.Hehasbeenrequestedtoprovideaformalreport. BarbaraLeechofferedCCWatersservicesinreviewingandcommentingonfuturecustomer researchmaterial,forexample,WTPquestionnairesonbehalfoftheforum.Action:Itwas agreedthatCCWaterwouldtaketheleadonreviewingcustomerresearchbutallmembers wouldbeconsultedandabletocomment.NWLtohighlightareasofparticularinteresttoForum members. AndreaCookcommentedthatresearchneedstoconsiderhowtodealwiththebillincreases associatedwithstatutoryobligationsandRPI.SheofferedtoshareTreasuryassumptionsonRPI withForummembersandNWL.Action:AndreaCooktoprovideTreasuryassumptionsonRPI. Action:ItwasagreedthatNWLwillprovideForummembersinformationonSIMperformance andananalysisofcustomercontactstoaidunderstandingofthekeyareasofconcernsfor customers. Ofwatsfuturepricelimitsprinciples&contexttoPR14(papercirculatedinadvanceofthe meeting) CeriJonesprovidedanoverviewofthepaper.ItwasnotedthatOfwatsapproachwascomplex withlotsofdetailstilltoberesolved,particularlyaroundanumberofnewincentivemechanisms proposed.ForthefirsttimetherewouldbetwobindingpricecapsatPR14,oneforretailandone forwholesale. Itwasnotedthatinthefuturebusinessesarelikelytohaveachoiceofretailerandretailerswill becomeunregulatedentities.SarahGreenofferedtoworkwithbusinessesandNWLsothat issuesandimplicationsareunderstood. AndreaCookcommentedthatthepaperwasusefulbackgroundinformationbutremindedthe Forumtofocusonitsprincipalareasofinterestwhichcentreonthecostimplicationsofthe changesforbothdomesticandbusinesscustomers. Forumsviewsofprioritiesforlongtermoutcomes(NWLshortpresentation&discussion) KenOswaldgaveashortpresentationonOfwatsstatedOutcomesapproachandasked membersforaninitialviewonwhattheythoughtprioritiesforoutcomesforPR14were,taking intoaccountthequalitativeresearchinformationpresentedbyAccent. Membersfelttheywerenotabletoprovideanimmediatecommentontheprioritiesfor outcomesatthemeeting,however,itwasagreedthatanycommentswouldbesharedbyemail. Action:ForummemberstoprovidebyemailtoNWL,wherepossible,aninitialviewonwhatthe prioritiesforoutcomesshouldbeatPR14. BarbaraLeechofferedtoprovidesomeinformationoncomparativeindustryperformanceto memberstopromptdiscussion.Action:CCWatertoproviderecentcomparativeindustry performancedatatoforummembers. NWLagreedtoprovideapaperonwherethecompanyexpectstobeattheendofthecurrent pricecontrolperiodtohelppromptdiscussion.Action:NWLtodraftapaperontheprojected positionbytheendofthecurrentpricecontrolperiodandshareitwiththechairbeforewider circulationwithForummembers. Itwasalsoagreedthatmoreinformationontheindustry,NorthumbrianWaterandregulation wouldhelpForummembers(andespeciallyindependentmemberswhoarenotpartofthewater industry)toparticipatemoreeffectivelyindiscussions.Action:AForummembersworkingdinner andsitevisitwouldbeorganisedandinductionforthosememberslessfamiliarwiththewater industryistobearranged,possiblyaroundthenextmeeting. 3

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Nextsteps:considerationofPR14programme&forumrequiredbusiness

KenOswaldoutlinedthecurrentPR14programme(includingthecustomerresearchtimetable) andfutureproposedwaterforummeetings. Action:MarkStephenson,RuthBullandIanHodgekindlyofferedtoparticipateandcommenton thechoiceexperimentstobeusedintheWillingnesstoPaypilotstudyandreportbacktothe Forum. ForummembersagreedontheneedforafurthermeetingtobearrangedinOctober2012to discussenvironmentalandwaterqualitystatutorydrivers.Action:TheDWIandtheEAagreedto shareinformationwithNWLonthestatutoryprogrammeinadvanceoftheOctobermeetingso thecompanyhastimetoconsidertheimplicationsandisabletoprovidearesponseatthe meeting.Action:NWLtoarrangeaconvenientdateforaForummeetinginOctober2012to discussstatutorydriversforinvestment. MiloPurcellindicatedthatitwouldbeusefultoexpandontheForumtermsofreferenceto identifytheareastheForumwillneedtotakeaviewon.TheForumandthecompanycouldthen identifytheinformationrequiredtoinformtheForumsviews.Action:NWLtoproduceadraft papersettingoutitsviewsonthekeyareasitbelievestheForumneedstotakeaviewon.Thisis tobediscussedattheOctober2012meeting. SUMMARYOFACTIONS Description Responsibility 1 Allfuturemeetingnotesaretobeapprovedremotelybyemailanda NWL copy provided to Sonia Brown, Alison Cullen and Andrew Day at Ofwatinatimelymanner 2 InviteOfwatcompanyrepresentative(AndrewDay)tofutureforum NWL meetings 3 An appendix to the non disclosure agreement to be added and NWL/ALL forum members to sign and return a copy of the final agreement to JillWisniewski 4 Consideration of the information needed from stakeholders and NWL how it will use the information (both from the questionnaire and workshop)initsbusinessplanningprocesses 5 Comments on the draft stakeholder questionnaire to be provided FORUMMEMBERS andforthefinalversiontobesignedoffbyForummembers 6 Consideration of how the Water Forum can broaden its visibility ALL andindependence 7 The development of an independent Water Forum website is to be ALL consideredwhereonlinequestionnairescouldbeadministered 8 Local Authorities and more NGOs to be added to the stakeholder NWL consulteeslist 9 Identification of any groups involved with resilience issues to be ALL addedtothestakeholderconsulteeslist 10 Considerationontherolethemediahastoplayintheprocess ALL 11 Considerationofhowthefollowing3issuescanbefactored intothe NWL developmentoftheapproach:1)Howinformationcollectedwillbe used2)HowcanForummembersbecomeinvolved3)Howcanthe ForumbepositionedseparatelyandindependentlyofNWL 12 TreasuryassumptionsonRPItobeprovided CHAIR 13 CCWatertoleadonreviewingcustomerresearchbutallmembers CCWATER/NWL wouldbeconsultedandfreetocomment.NWLtohighlightareasof particularinteresttoforummembers. 14 InformationonSIMperformanceandananalysisofcustomer NWL unwantedcontactstobeprovidedtoforummembers 15 Forummemberstoprovide,wherepossible,byemailaninitialview FORUMMEMBERS onwhattheprioritiesforoutcomesshouldbeatPR14 4

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MARK STEPHENSON/RUTH BULL/IANHODGE InformationtobesharedwithNWLonthestatutoryprogrammein IAN HODGE/MILO advanceoftheOctober2012 PURCELL AppropriateinductionforForummemberstobearranged(including NWL possiblysitevisitanddinneraroundthenextmeeting) October2012WaterForummeeting tobearranged NWL AdraftpaperistobeproducedsettingoutNWLsviewsonthekey NWL areasitbelievestheForumneedstotakeaviewon.Thisistobe discussedattheOctober2012meeting

Recentcomparativeindustryperformancedatatobesharedwith Forummembers Apaperistobedraftedontheprojectedpositionbytheendofthe currentpricecontrolperiod Reviewandcommenttobeprovidedonthepilotchoice experiments

CCWATER NWL/CHAIR