Performance data for water, energy and telecoms
Technical annex to Strategic Investment and Public Confidence October 2019
Performance data for water, energy and telecoms
2
The National Infrastructure Commission used a wide variety of evidence inputs to the Strategic Investment and Public Confidence study. Performance data for the water, energy and telecoms sectors was a crucial part of the evidence base. This data helped the Commission understand how the sectors are performing across a range of industry and consumer outcomes, how these have changed over time, and how the UK system compares to other countries.
As explained in the section 2.4 of the main report, the Commission believes that transparent monitoring and assessment of sector performance by regulators is vital if they are to be effectively held to account by Parliament and the general public.
This technical annex uses a framework for performance data that the Commission have found helpful for understanding outcomes across the sectors and setting them in historical and international context. This framework is based on the Commission’s performance measures for infrastructure.
Data includes outcome measures such as volumes and capacity, efficiency, resilience, service quality, quality of user experience, environment, prices and bills. These measures are important for understanding whether the system is delivering on outcomes that matter for quality of life, competitiveness and economic growth.
In addition, the framework includes financial data such as capital expenditure (investment), operational expenditure and the cost of capital for companies operating in the three sectors. These are inputs, rather than outcomes that are experienced by consumers directly. Nevertheless, the legitimacy of these sectors depends on the public being able to see how the money that they pay through bills is being spent. As inputs, these are also likely to be useful leading indicators of future outcomes.
Where possible, the performance data has been presented as a time series. Institutional and technological changes may alter the desirable levels over time, and methodological changes to statistics can make exact comparisons difficult. Nevertheless, historical context is important to understand whether or not performance has improved.
The data is presented without commentary, which is covered in the main report. Explanatory footnotes are provided for information.
The Commission is grateful to stakeholders, particularly Ofwat, Ofgem, Ofcom, Office for National Statistics, Environment Agency, Consumer Council for Water, Drinking Water Inspectorate and London Economics, who helped identify much of this data. They are not responsible for the final product, including any errors that have arisen translating the data from their original sources to the charts presented here.
Water
Volume
4
Water – Energy – Telecoms – Cross-sector
80
90
100
110
120
130
140
150
160
170
180
Water and sewerage 1990=100 Whole economy 1990=100
Source: Commission calculations using ONS (2019) GDP(O) low level aggregates, Chained Volume Measure.SIC 2007 divisions 36 (Water collection, treatment and supply) and 37 (Sewerage)
Water and sewerage output (Gross Value Added) relative to whole economy1990=100
125
130
135
140
145
150
155
160
165
Ofwat: measured and unmeasured water per billed measured household
Consumer Council for Water: average water use per person
Discover Water: water usage per person
Volume
5
Source: water company data provided by Ofwat, Consumer Council for Water, Discover Water/Water UKNote: methodology changes may affect comparisons over time
Water – Energy – Telecoms – Cross-sector
Average daily water consumption per person, litres per day
Investment
6
Source: Commission calculations using water company data provided by Ofwat. Note: 2018/19 prices using GDP deflator
Source: Commission calculation using ONS (2019) Multi-factor productivity estimates: Experimental estimates to October to December 2018.Notes: 2018 prices using experimental implied GFCF deflator. In these historic estimates of Gross Fixed Capital Formation, waste is bundled with water supply and sewerage in the SIC 2007 classification Section E.
Water – Energy – Telecoms – Cross-sector
Water and sewerage investment (capital expenditure) £ billion, 2018/19 prices
Gross Fixed Capital Formation in Water, Sewerage and Waste (experimental measure)
£ billion, 2018 prices
0
1
2
3
4
5
6
0
2
4
6
8
10
12
Efficiency
7
0
20
40
60
80
100
120
140
160
180
1970
1972
1974
1976
1978
198
0
198
2
198
4
198
6
198
8
199
0
199
2
199
4
199
6
199
8
200
0
200
2
200
4
200
6
200
8
2010
2012
2014
2016
2018
Water, sewerage and waste Total market sector
Source: Commission calculation using ONS (2019) Multi-factor productivity (experimental): estimates.Notes: Waste is bundled with water supply and sewerage in the SIC 2007 classification Section E. This measurement of productivity may not reflect changes to quality of outputs.
Source: Frontier Economics (2017) Productivity improvement in the water and sewerage industry in England since privatisationNotes: Quality adjustments to output aim to take into account changes to the quality of service offered by the water industry, eg reductions in water pollution. UK water & sewerage industry is compared to productivity of EU KLEMS (capital, labour, energy, materials and services) comparator group, including EU water, energy, telecoms, construction and some manufacturing sectors. TFP of EU KLEMS sectors is not quality adjusted in the same way as UK water & sewerage TFP, which may affect comparability.
Water – Energy – Telecoms – Cross-sector
Multi-factor productivity (experimental measure)GVA/combined inputs, 1970=100Estimated total factor productivity (TFP) growth
Efficiency
8
Source: Markou and Waddams Price (1999) UK utilities: past reform and current proposals
Source: Commission calculations using water company data provided by OfwatNote: 2018/19 prices using GDP deflator
Water – Energy – Telecoms – Cross-sector
Growth in labour productivity, investment and profitability around water privatisation in 1989
Water and sewerage operating expenditure, 2018/19 pricesTotal, £ billion (left axis)
Per connected household, £ (right axis)
0
50
100
150
200
250
300
0
1
2
3
4
5
6
198
9-9
019
90
-91
199
1-9
219
92-
93
199
3-9
419
94
-95
199
5-9
619
96
-97
199
7-9
819
98
-99
199
9-0
020
00
-01
200
1-0
220
02-
03
200
3-0
420
04
-05
200
5-0
620
06
-07
200
7-0
820
08
-09
200
9-1
020
10-1
120
11-1
220
12-1
320
13-1
420
14-1
520
15-1
620
16-1
7
Pe
r co
nn
ect
ed
ho
use
ho
ld, £
To
tal,
£ b
illio
n
Total, £ billion Per connected household, £
Efficiency
9
0
1,000
2,000
3,000
4,000
5,000
6,000
199
2/9
3
199
3/9
4
199
4/9
5
199
5/9
6
199
6/9
7
199
7/9
8
199
8/9
9
199
9/0
0
200
0/0
1
200
1/0
2
200
2/0
3
200
3/0
4
200
4/0
5
200
5/0
6
200
6/0
7
200
7/8
200
8/9
200
9/1
0
2010
/11
2011
/12
2012
/13
2013
/14
2014
/15
2015
/16
2016
/17
2017
/18
Water – Energy – Telecoms – Cross-sector
Total leakage for England and Wales water companies Megalitres per day
Source: Water company data provided by Ofwat and Consumer Council for Water
Service quality
10
0
0.5
1
1.5
2
2.5
England and Wales Scotland Northern Ireland
Source: Drinking Water Inspectorate
Water – Energy – Telecoms – Cross-sector
Water quality tests failing in zones - % of samples
Everyday resilience
11
0
1
2
3
4
5
6
0
20
40
60
80
100
120
140
Source: Commission calculations using water company data provided by Ofwat, Water UK, Discover WaterNote: methodology changes may affect comparisons over time
Water – Energy – Telecoms – Cross-sector
Sewer flooding: flooded properties per 10,000 connected to sewerage
Properties below minimum standard of water pressure per 10,000 connections
Source: Commission calculations using water company data provided by Ofwat, Water UK, Discover WaterNote: methodology changes may affect comparisons over time
0
50
100
150
200
250
300
350
Service quality
12
Source: Commission calculations using water company data provided by Ofwat, Water UK, Discover WaterNote: methodology changes may affect comparisons over time
Water – Energy – Telecoms – Cross-sector
0
2
4
6
8
10
12
14
16
18
20
199
1-9
2
199
2-9
3
199
3-9
4
199
4-9
5
199
5-9
6
199
6-9
7
199
7-9
8
199
8-9
9
199
9-0
0
200
0-0
1
200
1-0
2
200
2-0
3
200
3-0
4
200
4-0
5
200
5-0
6
200
6-0
7
200
7-0
8
200
8-0
9
200
9-1
0
2010
-11
2011
-12
2012
-13
2013
-14
2014
-15
Annual sewer collapses per 1,000kmAnnual mains bursts per 1,000 km
Source: Commission calculations using water company data provided by OfwatNote: methodology changes may affect comparisons over time
Quality of user experience
13
0
1
2
3
4
5
6
7
8
9
10
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
2006200720082009 2010 2011 2012 2013 2014 2015 2016 2017 2018
Tru
st s
core
Sat
isfa
ctio
n w
ith
val
ue
fo
r m
on
ey
Satisfaction with value for money (left axis) and trust (right axis) for water and sewerage
Trust in companies (score out of 10)
Satisfaction with value for money Sewerage
Satisfaction with value for money Water
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018
Overall satisfaction with water and sewerage companies
Satisfaction with services Sewerage
Satisfaction with services Water
Source: Commission analysis of Consumer Council for Water annual tracking reports
Water – Energy – Telecoms – Cross-sector
Source: Commission analysis of Consumer Council for Water annual tracking reports
Sustainability/environment
14
Source: Environment Agency, Defra (2019) ENV15 - Water abstraction tables for England Source: Environment Agency, Defra (2018) Water conservation report
0
10
20
30
40
50
60
199
9-0
0
200
0-0
1
200
1-0
2
200
2-0
3
200
3-0
4
200
4-0
5
200
5-0
6
200
6-0
7
200
7-0
8
200
8-0
9
200
9-1
0
2010
-11
2011
-12
2012
-13
2013
-14
2014
-15
2015
-16
2016
-17
2017
-18
Water – Energy – Telecoms – Cross-sector
Water abstraction in England: all surface and groundwaters, billion cubic metres
Household water meter penetration in England, %
0
2
4
6
8
10
12
14
16
18
20
Total abstraction Public water supply
0 20 40 60 80 100
PolandBulgaria
RomaniaSlovakiaAlbania
United KingdomEstoniaIreland
HungaryNetherlands
SwedenLuxembourgSwitzerland
FranceCzechia
LithuaniaFinland
EUSpain
SloveniaDenmarkBelgium
ItalyPortugalGermany
LatviaCroatiaGreeceAustria
MaltaCyprus
% of bathing water sites with excellent water quality, 2018
Sustainability/environment
15
Source: Environment Agency (2019) Bathing water data Source: European Environment Agency (2019) European Bathing Water Quality in 2018. Annex 1, Bathing water quality results in 2018.
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
Bathing water quality in England % meeting standards
% passed, 1976 directive % higher, 1976 directive
% passed, 2006 directive % excellent, 2006 directive
Water – Energy – Telecoms – Cross-sector
Sustainability/environment
16
0
500
1,000
1,500
2,000
2,500
3,000
2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018
Number of pollution incidents for England water and sewerage companies
Serious pollution (Category 1&2) Other pollution (Category 3)
Source: Environment Agency (2019) Environmental performance of the water and sewerage companies in 2018
Water – Energy – Telecoms – Cross-sector
Sustainability/environment
17
Source: Environment Agency (2018) The state of the environment: water quality
0
5
10
15
20
25
30
35
40
Ammonia Biological oxygendemand
Phosphorus
Pollutant loads to rivers from the water industry Annual load, thousand tonnes per year
1995 2000 2005 2010 2015
0
5
10
15
20
25
0.00
0.05
0.10
0.15
0.20
0.25
0.30
0.35
0.40
0.45
1974
1976
1978
198
0
198
2
198
4
198
6
198
8
199
0
199
2
199
4
199
6
199
8
200
0
200
2
200
4
200
6
200
8
2010
2012
Nit
rate
(m
g N
O3-
/l)
Ph
osp
ho
rus
(mg
P/l
)
Average annual concentrations of total reactive phosphorus and nitrates in English rivers
Phosphorus (left axis) Nitrate (right axis)
Water – Energy – Telecoms – Cross-sector
Source: Environment Agency (2018) The state of the environment: water quality
Sustainability/environment
18
0
10
20
30
40
50
60
70
1980-84 1985-90 1990-94 1995-00 2000-04 2005-09 2010-14
Water Stress, %
UK France Netherlands Denmark Germany Australia
Source: Commission analysis of data from Food and Agriculture Organization of the United Nations, AquastatNote: Water stress = Total freshwater withdrawal, primary and secondary/(Total renewable water resources-Environmental Flow Requirements)
Water – Energy – Telecoms – Cross-sector
Prices and bills
19
0.0%
0.2%
0.4%
0.6%
0.8%
1.0%
1.2%
1.4%
1.6%
Source: Commission calculations using water company data provided by OfwatNote: 2018/19 prices using CPI deflator
Source: Commission calculations using water company data provided by Ofwat and Living Costs and Food Survey, Office for National Statistics
£0
£50
£100
£150
£200
£250
£300
£350
£400
£450
Water – Energy – Telecoms – Cross-sector
Average water and sewerage bills for England and Wales, 2018-19 prices
Average water and sewerage bills as % of average household spending
0%
1%
2%
3%
4%
5%
6%
7%
8%
9%
Real post-tax WACC (RPI) Cost of equity (post-tax) Cost of debt (post-tax) Real vanilla WACC (Thames Tideway Tunnel construction)
Financial performance
20
Source: Commission calculations using various Ofwat reportsNotes: WACC shown in post-tax terms due to lack of ‘vanilla’ WACC data for older price controls, except for Thames Tideway Tunnel WACC for which only ‘vanilla’ format is available. All WACCs and components are measured in real terms, using the Retail Price Index (RPI), and are plotted in the first year of the price control to which they applied.
Water – Energy – Telecoms – Cross-sector
Allowed Weighted Average Cost of Capital (WACC), cost of equity and cost of debt for water and sewerage price controls
* PR19 draft determinations
Financial performance
21
Source: Commission calculations using water company data provided by NAO (2015) The economic regulation of the water sector, and Ofwat (2019) Financial monitoring report 2017-18 Notes: Regulatory Capital Value (RCV) = Equity + Net debtMarch 2019 prices using RPI deflator
0
10
20
30
40
50
60
70
80
199
0-9
119
91-
92
199
2-9
319
93-
94
199
4-9
519
95-
96
199
6-9
719
97-
98
199
8-9
919
99
-00
200
0-0
120
01-
02
200
2-0
320
03-
04
200
4-0
520
05-
06
200
6-0
720
07-
08
200
8-0
920
09
-10
2010
-11
2011
-12
2012
-13
2013
-14
2014
-15
2015
-16
2016
-17
2017
-18
Debt and equity in the water industry £ billion, Mar 2019 prices
Equity Net debt
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
199
0-9
119
91-
92
199
2-9
319
93-
94
199
4-9
519
95-
96
199
6-9
719
97-
98
199
8-9
919
99
-00
200
0-0
120
01-
02
200
2-0
320
03-
04
200
4-0
520
05-
06
200
6-0
720
07-
08
200
8-0
920
09
-10
2010
-11
2011
-12
2012
-13
2013
-14
2014
-15
2015
-16
2016
-17
2017
-18
Water industry gearing
Source: Commission calculations using water company data provided by NAO (2015) The economic regulation of the water sector, and Ofwat (2019) Financial monitoring report 2017-18 Note: Gearing = Net debt / Regulatory Capital Value (RCV)
Water – Energy – Telecoms – Cross-sector
Financial performance
22
Source: Commission calculations using water company data provided by Ofwat (2019) Financial monitoring report 2017-18
-2%
-1%
0%
1%
2%
3%
4%
5%
6%
An
glia
n
Dŵ
r C
ymru
No
rth
um
bri
an
Se
vern
Tre
nt
So
uth
We
st
So
uth
ern
Th
ame
s
Un
ite
d U
tilit
ies
We
sse
x
Yo
rksh
ire
Aff
init
y
Bri
sto
l
De
e V
alle
y
Po
rtsm
ou
th
SE
S W
ate
r
So
uth
Eas
t
So
uth
Sta
ffs
Actual 2016 Actual 2017 Actual 2018 Real regulatory allowance
Water – Energy – Telecoms – Cross-sector
Actual real cost of debt vs the regulatory allowance, 2016 to 2018
Energy
Volume
24
80
100
120
140
160
180
Energy 1990=100 Whole economy 1990=100
Water – Energy – Telecoms – Cross-sector
Source: Commission calculations using ONS (2019) GDP(O) low level aggregates, Chained Volume Measure.SIC 2007 section D (Electricity, gas, steam and air conditioning supply)
Energy sector output (Gross Value Added) relative to whole economy1990=100
Volume
25
Source: Department for Business, Energy & Industrial Strategy (2019) UK energy in brief, Table 25 Electricity CapacityNotes: (1) Includes coal, non-CCGT gas, oil and mixed/dual fired. Does not include thermal renewables. (2) CCGT = Combined Cycle Gas Turbine. (3) Renewable capacity is on an Installed Capacity basis. Data for other fuels/technologies relates to Declared Net Capacity from 1996 to 2005, data for 2006 onwards is transmission entry capacity (TEC)
0
100
200
300
400
500
600
700
1970
1973
1976
1979
198
2
198
5
198
8
199
1
199
4
199
7
200
0
200
3
200
6
200
9
2012
2015
2018
Town gas Natural gas
Electricity Other fuels excluding petroleum
Water – Energy – Telecoms – Cross-sector
Electricity generation capacity, GW
Source: Commission calculations using Department for Business, Energy & Industrial Strategy (2019) Energy Consumption in the UK, Table C1: Final Energy Consumption by sector and fuel
Final energy consumption by fuel, excluding petroleum, TWh
0
20
40
60
80
100
120
1996 2000 2005 2010 2015 2018
Conventional steam (1) CCGT (2) Nuclear
Pumped Storage Renewable (3)
Volume
26
Water – Energy – Telecoms – Cross-sector
0
1
2
3
4
5
1970
1972
1974
1976
1978
198
0
198
2
198
4
198
6
198
8
199
0
199
2
199
4
199
6
199
8
200
0
200
2
200
4
200
6
200
8
2010
2012
2014
2016
2018
Average electricity consumption per householdMWh/year
0
5
10
15
20
1970
1972
1974
1976
1978
198
0
198
2
198
4
198
6
198
8
199
0
199
2
199
4
199
6
199
8
200
0
200
2
200
4
200
6
200
8
2010
2012
2014
2016
2018
Average gas consumption per gas consuming householdMWh/year
Source: Ofgem (2019) State of the Energy Market, using data from Department for Business, Energy & Industrial Strategy (2019) Energy consumption statistics in the UK (1970-2018), and BEIS (2017) Historical gas data: gas production and consumption and fuel input (1920 to 2016). Note: The figure is not weather corrected as weather corrected data are available only since 2002
Source: Ofgem (2019) State of the Energy Market, using data from Department for Business, Energy & Industrial Strategy (2019) Energy consumption statistics in the UK (1970-2018), and BEIS (2017) Historical gas data: gas production and consumption and fuel input (1920 to 2016). Note: The figure is not weather corrected as weather corrected data are available only since 2002
Investment
27
Source: Commission calculation using ONS (2019) Quarterly acquisitions and disposals of capital assets survey (QCAS) investment made by energy industries Note: 2018 prices using GDP deflator
Source: Commission calculation using ONS (2019) Multi-factor productivity estimates: Experimental estimates to October to December 2018.Notes: SIC 2007 Section D: Electricity, gas, steam and air conditioning supply2018 prices using experimental implied GFCF deflator.
Water – Energy – Telecoms – Cross-sector
0
2
4
6
8
10
12
14
16
18
Gross Fixed Capital Formation in Electricity, gas, steam and air conditioning supply (experimental measure)
£ billion, 2018 prices
Annual investment in gas and electricity £ billion, 2018 prices
0
2
4
6
8
10
12
14
199
7
199
8
199
9
200
0
200
1
200
2
200
3
200
4
200
5
200
6
200
7
200
8
200
9
2010
2011
2012
2013
2014
2015
2016
2017
2018
Gas and Electricity Electricity Gas
Investment
28
0
1
2
3
4
5
6
Electricity Transmission Electricity Distribution Gas Transmission Gas Distribution
Source: Commission calculation using data from OfgemNote: 2018/19 prices using GDP deflator
Water – Energy – Telecoms – Cross-sector
Annual capital expenditure on electricity and gas networks (gas since 2002/03)£ billion, 2018/19 prices
Investment
29
Source: Ofgem (2004) Electricity Distribution Price Control Review – Policy documentNotes: Historical trend of outturn capital expenditure by Distribution Network Operators: not a comprehensive measure of energy network investment.The chart also shows the first three Distribution Price Control (DPCR) periods.2002/03 prices
Water – Energy – Telecoms – Cross-sector
Historic gross capital expenditure by District Network Operators (DNOs)
Efficiency
30
Source: Commission calculation using ONS (2019) Multi-factor productivity (experimental): estimates.Notes: SIC 2007 Section D: Electricity, gas, steam and air conditioning supply. This measurement of productivity may not reflect changes to quality of outputs.
Water – Energy – Telecoms – Cross-sector
Growth in labour productivity, investment and profitability around gas privatisation in 1986
Multi-factor productivity (experimental measure)GVA/combined inputs, 1970=100
Source: Markou and Waddams Price (1999) UK utilities: past reform and current proposals
0
50
100
150
200
250
300
350
400
1970
1972
1974
1976
1978
198
0
198
2
198
4
198
6
198
8
199
0
199
2
199
4
199
6
199
8
200
0
200
2
200
4
200
6
200
8
2010
2012
2014
2016
2018
Section D: Electricity, gas, steam and air conditioning supply
Total market sector
0
5
10
15
20
25
199
0/9
1
199
1/9
2
199
2/9
3
199
3/9
4
199
4/9
5
199
5/9
6
199
6/9
7
199
7/9
8
199
8/9
9
199
9/0
0
200
0/0
1
200
1/0
2
200
2/0
3
200
3/0
4
200
4/0
5
200
5/0
6
200
6/0
7
200
7/0
8
200
8/0
9
200
9/1
0
2010
/11
2011
/12
2012
/13
2013
/14
2014
/15
2015
/16
2016
/17
Electricity Gas
0
2
4
6
8
10
12
14
16
18
199
0/9
119
91/
92
199
2/9
319
93/
94
199
4/9
519
95/
96
199
6/9
719
97/
98
199
8/9
919
99
/00
200
0/0
120
01/
02
200
2/0
320
03/
04
200
4/0
520
05/
06
200
6/0
720
07/
08
200
8/0
920
09
/10
2010
/11
2011
/12
2012
/13
2013
/14
2014
/15
2015
/16
2016
/17
Electricity Gas
Efficiency
31
Water – Energy – Telecoms – Cross-sector
Source: Commission calculation using data from OfgemNotes: Operational expenditure (opex) for all electricity and gas distribution and transmission companies, divided by total electricity/gas supplied.2018/19 prices using GDP deflator
Source: Commission calculation using data from OfgemNotes: Total expenditure (totex) for all electricity and gas distribution and transmission companies, divided by total electricity/gas supplied.2018/19 prices using GDP deflator
Network operational expenditure per units supplied £ per MWh, 2018/19 prices
Network total expenditure per units supplied £ per MWh, 2018/19 prices
Efficiency
32
0%
2%
4%
6%
8%
10%
12%
1970
1972
1974
1976
1978
198
0
198
2
198
4
198
6
198
8
199
0
199
2
199
4
199
6
199
8
200
0
200
2
200
4
200
6
200
8
2010
2012
2014
2016
Losses in transmission and distribution, % of net electricity supplied
Major power producers (old method)
All generating companies (new method)
Source: Office for National Statistics (2019) Workforce jobs by industryNote: SIC 2007 Section D: Electricity, gas, steam and air conditioning supply
Source: Commission calculations using Department for Business, Energy & Industrial Strategy (2019) Digest of UK Energy Statistics (DUKES) 2018: long-term trends, Table 5.1.2 Electricity supply, availability and consumption.Note: Losses on the public distribution system (grid system and local networks) and other differences between data collected on sales and data collected on availability.
Water – Energy – Telecoms – Cross-sector
0
50
100
150
200
250
300
1979
198
1
198
3
198
5
198
7
198
9
199
1
199
3
199
5
199
7
199
9
200
1
200
3
200
5
200
7
200
9
2011
2013
2015
2017
2019
UK workforce jobs in Electricity, gas, steam and air conditioning supply sector, 000s
Everyday resilience
33
Source: Various Ofgem and Offer reports on performance of the distribution and transmission system
0
30
60
90
120
150
0
50
100
150
200
250
199
0/9
1
199
1/9
2
199
2/9
3
199
3/9
4
199
4/9
5
199
5/9
6
199
6/9
7
199
7/9
8
199
8/9
9
199
9/0
0
200
0/0
1
200
1/0
2
200
2/0
3
200
3/0
4
200
4/0
5
200
5/0
6
200
6/0
7
200
7/0
8
200
8/0
9
200
9/1
0
2010
/11
2011
/12
2012
/13
2013
/14
2014
/15
2015
/16
2016
/17
2017
/18
Inte
rru
pti
on
s p
er
100
cu
sto
me
rs
Min
ute
s lo
st p
er
cust
om
er
Minutes lost (old method) Minutes lost (new method) Supply interruptions (old method) Supply interruptions (new method)
Water – Energy – Telecoms – Cross-sector
Electricity supply average minutes lost per customer (left axis) and interruptions per 100 customers (right axis)
Everyday resilience
34
0.0
0.5
1.0
1.5
2.0
2.5
UK France Netherlands Denmark Germany Australia
0
50
100
150
200
250
300
350
2002 2003200420052006200720082009 2010 2011 2012 2013 2014 2015 2016
UK France Netherlands Denmark Germany Australia
Source Council of European Energy Regulators (CEER) - Benchmarking Report 6.1; Australian Energy Regulator (2019) State of the energy market 2018Notes: System Average Interruption Duration Index (SAIDI) refers to the average outage (Loss of electricity access) duration for each customer served. Measured in minutes per customer.
Water – Energy – Telecoms – Cross-sector
Source: Council of European Energy Regulators (CEER) - Benchmarking Report 6.1; Australian Energy Regulator (2019) State of the energy market 2018Notes: System Average Interruption Frequency Index (SAIFI) refers to the average number of energy supply interruptions that a customer would experience. Measured in interruptions per customer.
Unplanned System Average Interruption Frequency Index (SAIFI), including exceptional events, electricity,
interruptions per customer
Unplanned System Average Interruption Duration Index (SAIDI), including exceptional events, electricity,
minutes per customer
Quality of user experience
35
Source: Supplier data from Ofgem data portal, Customer ServiceNote: Complaints data for energy retail suppliers
0
1
2
3
4
5
6
7
8
9
10
2011/12 2012/13 2013/14 2014/15 2015/16 2016/17 2017/18
Source: OfgemNote: Satisfaction data for electricity distribution network operators
Water – Energy – Telecoms – Cross-sector
0
500
1,000
1,500
2,000
2,500
3,000
3,500
4,000
Q2
2014
Q3
2014
Q4
20
14
Q1
2015
Q2
2015
Q3
2015
Q4
20
15
Q1
2016
Q2
2016
Q3
2016
Q4
20
16
Q1
2017
Q2
2017
Q3
2017
Q4
20
17
Q1
2018
Q2
2018
Q3
2018
Q4
20
18
Q1
2019
Q2
2019
Six large Medium Small Average
Complaints received by energy retail suppliers per 100,000 customer accounts, by supplier group
Electricity distribution customer satisfaction,average satisfaction score out of 10
Sustainability/environment
36
0
50
100
150
200
250
30019
90
199
1
199
2
199
3
199
4
199
5
199
6
199
7
199
8
199
9
200
0
200
1
200
2
200
3
200
4
200
5
200
6
200
7
200
8
200
9
2010
2011
2012
2013
2014
2015
2016
2017
2018
Million tonnes carbon dioxide equivalent (MtCO2e) from energy supply
Source: Department for Business, Energy & Industrial Strategy (2019) Provisional UK greenhouse gas emissions national statistics
Water – Energy – Telecoms – Cross-sector
Sustainability/environment
37
Source: Eurostat energy database, Share of energy from renewable sources
0
10
20
30
40
50
60
70
80
90
100
2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017
UK France Netherlands Denmark Germany
40
60
80
100
120
140
160
180
1990 1992 1994 1996 1998 2000 2002 2004 2006 2008 2010 2012 2014 2016
UK France Netherlands Denmark Germany
Source: European commission directorate general for energy (EC DG ENER), Energy statistical country datasheets
Water – Energy – Telecoms – Cross-sector
Share of electricity production from a renewable source, % Greenhouse gas emissions from energy industries 1990 = 100
0%
2%
4%
6%
8%
10%
12%
14%
16%
1970
1972
1974
1976
1978
198
0
198
2
198
4
198
6
198
8
199
0
199
2
199
4
199
6
199
8
200
0
200
2
200
4
200
6
200
8
2010
2012
2014
2016
Energy cost as a % of total household expenditure, by income decile
Lowest income decile Highest income decile All households
Prices and bills
38
Source: Ofgem and Commission analysis of Office for National Statistics Living Costs and Food Survey
Source: Commission calculations using Office for National Statistics Living Costs and Food SurveyNote: 2018-19 prices using GDP deflator
Water – Energy – Telecoms – Cross-sector
£0
£200
£400
£600
£800
£1,000
£1,200
£1,400
£1,600
1970
1972
1974
1976
1978
198
0
198
2
198
4
198
6
198
8
199
0
199
2
199
4
199
6
199
8-9
9
200
0-0
1
200
2-0
3
200
4-0
5
200
6-0
7
200
8-0
9
2010
-11
2012
-13
2014
-15
2016
-17
Average annual household spending on energy, 2018-19 prices
All energy Electricity Gas Other sources
Prices and bills
39
Source: Commission calculation using Department for Business, Energy & Industrial Strategy (2019) Historical electricity data Notes: Net selling values provide an indication of typical prices paid in broad sectors, using data from energy supply companies.2018 prices using GDP deflator
Water – Energy – Telecoms – Cross-sector
Average net selling value of electricity - all consumers p/kWh, 2018 prices
0
5
10
15
20
25
30
35
40
45
50
1921
1925
1929
1933
1937
194
1
194
5
194
9
1953
1957
196
1
196
5
196
9
1973
1977
198
1
198
5
198
9
199
3
199
7
200
1
200
5
200
9
2013
2017
Average electricity and gas bills components, 2018 prices
£30 £30 £27 £28 £31 £37 £29 £27
£56 £101 £85 £102
£33 £78
£10 £8
£130
£126 £159 £149
£145
£141
£151 £144
£410 £367
£306 £307 £448
£524
£426 £389
£0
£100
£200
£300
£400
£500
£600
£700
£800
2008 2012 2016 2018 2008 2012 2016 2018
Electricity Gas
Energy, supplier costs and margin
Network
Environmental, policy and social obligations, other
VAT
Source: Commission calculations using proportions from breakdowns of typical domestic energy bills from various historic Ofgem publications, and BEIS (2019) Annual domestic energy bills, average actual consumption.Note: 2018 prices using GDP deflator
Prices and bills
40
Source: Department for Business Energy & Industrial Strategy (2019) Domestic gas prices in the IEANote: 2018 prices using national GDP deflators, OECD
Water – Energy – Telecoms – Cross-sector
Source: Department for Business Energy & Industrial Strategy (2019) Domestic electricity prices in the IEANote: 2018 prices using national GDP deflators, OECD
Domestic gas price in pence per kWh (including taxes) 2018 prices
Domestic electricity price in pence per kWh (including taxes) 2018 prices
0
5
10
15
20
25
30
1990 1992 1994 1996 1998 2000 2002 2004 2006 2008 2010 2012 2014 2016 2018
UK France Netherlands Denmark Germany
0
1
2
3
4
5
6
7
8
9
10
1990 1992 1994 1996 1998 2000 2002 2004 2006 2008 2010 2012 2014 2016
UK France Netherlands Denmark Germany
Financial performance
41
Source: Ofgem data portalSource: Commission analysis of Ofgem dataNote: Cost of capital measured as Vanilla Weighted Average Cost of Capital (WACC), real terms using Retail Price Index (RPI). WACCs are plotted in the first year of the price control to which they applied.
0%
1%
2%
3%
4%
5%
6%
200
4
200
5
200
6
200
7
200
8
200
9
2010
2011
2012
2013
2014
2015
2016
2017
2018
2019
2020
Electricity transmission Gas transmission
Electricity distribution Gas distribution
0.0%
0.5%
1.0%
1.5%
2.0%
2.5%
3.0%
3.5%
4.0%
4.5%
5.0%
2009 2010 2011 2012 2013 2014 2015 2016 2017 2018
Pre-tax domestic supply margins of large suppliers, combined gas and electricity
Water – Energy – Telecoms – Cross-sector
Allowed Weighted Average Cost of Capital (WACC) for energy networks
Financial performance
42
Source: Ofgem (2019) Regulatory Financial Performance annex to RIIO-1 annual reports 2017-18, Individual Licensee Regulatory Financial Performance Reporting TemplatesNotes: Gearing defined as Net Debt as a proportion of Regulated Asset Value.Cadent has one licence but operates four gas distribution networks.
Water – Energy – Telecoms – Cross-sector
0%
10%
20%
30%
40%
50%
60%
70%
80%
EN
WL
NP
gN
NP
gY
SP
D
SP
MW
SS
E-S
EP
D
SS
E-S
HE
PD
UK
PN
-EP
N
UK
PN
-LP
N
UK
PN
-SP
N
WP
D-E
MID
WP
D-W
MID
WP
D-S
Wal
es
WP
D-S
We
st
Cad
en
t
NG
N
SG
N-S
cotl
and
SG
N-S
ou
the
rn
WW
U
NG
ET
SP
T
SH
ET
NG
GT
Electricity Distribution Gas Distribution Elec Transmission GT
Gearing in energy networks
2014 2015 2016 2017 2018
Telecoms
Volume
44
50
100
150
200
250
300
350
400
450
500
550
Telecoms 1990=100 Whole economy 1990=100
Water – Energy – Telecoms – Cross-sector
Source: Commission calculations using ONS (2019) GDP(O) low level aggregates, Chained Volume Measure.SIC 2007 division 61 (Telecommunications)Note: Telecommunications output is particularly sensitive to the choice of methodology for quality adjustment in price deflation: this may have resulted in underestimation of telecoms output growth. For a discussion, see Abdirahman et al for the Economic Statistics Centre of Excellence (2017) A Comparison of Approaches to Deflating Telecoms Services Output
Telecommunications output (Gross Value Added) relative to whole economy1990=100
0.0
0.5
1.0
1.5
2.0
2.5
3.0
3.5
2010 2011 2012 2013 2014 2015 2016 2017 2018
O2/Telefonica UK EE
Vodafone Three UK
Total of identified providers
Investment
45
Source: Commission calculations using company annual reports, Refinitiv Eikon for data extractionNotes: Where possible, segmental reporting in company accounts has been used to identify capital expenditure (capex) in the UK, but some capex outside the UK by operators may remain in the data.2018 prices using GDP deflator
Water – Energy – Telecoms – Cross-sector
Annual capital expenditure by mobile network operators £ billion, 2018 prices
Annual capital expenditure by fixed telecoms operators£ billion, 2018 prices
Source: Commission calculations using company annual reports, Refinitiv Eikon for data extractionNotes: Where possible, segmental reporting in company accounts has been used to identify capital expenditure (capex) in the UK, but some capex outside the UK by operators may remain in the data. 2018 prices using GDP deflator
0
1
2
3
4
5
6
OpenreachBT Group minus Openreach, mobile and global servicesVirgin MediaSkyTalkTalkCityFibreTotal for identified providers
Investment
46
Source: Office for National Statistics (2019) Annual gross fixed capital formation by industry and assetNote: SIC 2007 division 61 (Telecommunications)
Water – Energy – Telecoms – Cross-sector
0
2
4
6
8
10
12
14
16
18
1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018
Gross Fixed Capital Formation in telecommunications £ billion
Current prices Chained Volume Measure
Efficiency
47
Water – Energy – Telecoms – Cross-sector
Growth in labour productivity, investment and profitability around telecoms privatisation in 1984
Source: Markou and Waddams Price (1999) UK utilities: past reform and current proposals
Volume & service quality
48
Measure 2007 2012 2017 2018
Average monthly mobile data per active connection N/A 0.24 GB 2.33 GB 2.91 GB
Fixed broadband uptake, % of households 52%* 72% 82% 80%
Superfast broadband connections N/A 3.1 million 13.4 million 15.6 million
Average broadband speeds 3.6 Mbit/s** 12 Mbit/s 46.2 Mbit/s 54.2 Mbit/s
Average monthly data per residential fixed broadband line
N/A 23 GB 190 GB 240 GB
Fixed voice call minutes, total 149 billion 103 billion 54 billion 44 billion
Mobile voice call minutes, total 105 billion 132 billion 154 billion 161 billion
Mobile outdoor voice coverage for all operators, % of UK landmass
N/A 59%*** 69% 78%
Mobile outdoor 4G coverage for all operators, % of UK landmass with at least 2 Mbit/s
N/A N/A 49% 66%
Mobile outdoor 3G coverage for all operators, % of UK landmass
N/A 20% 70% 83%
Sources: Ofcom (2019, 2018, 2012) Communications Market Reports; Ofcom (2018) Connected Nations Report; Ofcom (2012) Infrastructure Report; Ofcom (2009) UK broadband speeds 2008.Note: Revisions and methodology changes may affect comparisons over time.
* Total broadband uptake** Figure for 2008*** 2G coverage
Water – Energy – Telecoms – Cross-sector
0
10
20
30
40
50
60
70
80
90
100
2011 2012 2013 2014 2015 2016 2017 2018
UK France Netherlands Denmark Germany
Service quality
49
Source: European Commission (2019) Digital Agenda Scoreboard Indicators
Households with fibre to the premises (FTTP) coverage, %
Water – Energy – Telecoms – Cross-sector
Quality of user experience
50
Source: The Institute of Customer Service (2019) UK Customer Satisfaction Index
Water – Energy – Telecoms – Cross-sector
UK Customer Satisfaction Index Score, out of 100
73.7
74.4
74.2
75.0
76.1
78.7
79.5
78.7
80.7
80.0
79.8
81.3
82.0
71.8
73.8
74.4
75.7
76.1
76.9
78.9
79.8
80.3
80.3
80.4
80.6
81.6
0 10 20 30 40 50 60 70 80 90 100
Transport
Utilities
Telecommunications & Media
Public Services (Local)
Public Services (National)
Services
Automotive
Insurance
Tourism
Leisure
Banks & Building Societies
Retail (food)
Retail (non-food)
January 2019 January 2018
0%
1%
2%
3%
4%
5%
0
30
60
90
120
150
200
0
200
1
200
2
200
3
200
4
200
5
200
6
200
7
200
8
200
9
2010
2011
2012
2013
2014
2015
2016
2017
2018
CMR2005
CMR 2008 Pricing report 2018 CMR 2019
% o
f h
ou
seh
old
sp
en
din
g
Ave
rag
e m
on
thly
sp
en
d, £
Mobile Fixed internet
Fixed voice Fixed voice and internet
% of total household spending
Prices and bills
51
Source: Abdirahman et al. for Economic Statistics Centre of Excellence (2017) A Comparison of Approaches to Deflating Telecoms Services Output.Notes: This research illustrates that changes in headline telecoms prices do not necessarily reflect underlying improvements in the quality of telecoms services. This has implications for the price deflation of telecoms output, potentially resulting in an underestimate of telecoms output growth. In this example, the authors compare an improved version of the Services Producer Price Index (SPPI) with a ‘data usage approach’ which divides total revenue in the industry by the total data volume, to give an average price per bit of datatransported.
Source: Commission analysis of Ofcom Communications Market Reports (CMR) and pricing reports; Office for National Statistics Living Costs and Food SurveyNotes: Mobile telecoms in 2018 does not include spend on handsets due to a change in accounting standards, so is not directly comparable with earlier years.Methodology changes over time mean that price trends from different reports may not be comparable. 2018 prices using GDP deflator
Water – Energy – Telecoms – Cross-sector
Average household monthly spend on telecoms services£, 2018 prices
Impact of quality adjustment methodology on telecoms price deflators
Prices and bills
52
Source: International Telecommunication Union - World Telecommunication/ICT Indicators DatabaseNote: Average of prices across three years 2015 to 20172018 prices using national GDP deflators, OECD
Water – Energy – Telecoms – Cross-sector
0
5
10
15
20
25
30
35
40
UK France Netherlands Denmark Germany Australia
Price of 1GB mobile broadband Fixed broadband monthly subscription fee
Average price of broadband and mobile, £ (2015-2017 average), 2018 prices
Financial performance
53
Water – Energy – Telecoms – Cross-sector
0%
1%
2%
3%
4%
5%
6%
7%
2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019
Weighted Average Cost of Capital (WACC) estimates for telecoms segments and charge controls, where available
Source: Commission calculations using various UKRN Cost of Capital Update Reports, and various Ofcom reports.Note: Cost of capital measured as Vanilla Weighted Average Cost of Capital (WACC), real terms using Retail Price Index (RPI). Cost of capital assessment of telecoms segments (eg Openreach, Rest of BT etc) usually undertaken by Ofcom in preparation for charge controls.
Cross-sector
Investment and volume
55
Water – Energy – Telecoms – Cross-sector
0%
5%
10%
15%
20%
25%
30%
Business investment share Gross Value Added (GVA) share
Share of business investment and Gross Value Added (GVA) from water, energy, telecoms and other industries, 2018 (Each series sums to 100%)
Sources: Gross Value Added (GVA) from ONS (2019) GDP output approach – low-level aggregates. Water investment from water company data provided by Ofwat. Energy investment from ONS (2019) Quarterly acquisitions and disposals of capital assets survey (QCAS) investment made by energy industries. Telecoms investment from telecoms company annual reports, Refinitiv Eikon for data extraction. Other business investment from ONS (2019) Business investment by industry and asset
Financial performance
56
Source: Commission analysis of data from Ofwat, Ofgem, Ofcom and UK Regulators Network (UKRN)Notes: Cost of capital measured as Vanilla Weighted Average Cost of Capital (WACC), real terms using Retail Price Index (RPI). Combination of WACC allowances for price controls (water and energy) and WACC estimates for charge controls (telecoms).Thames Tideway Tunnel construction = TTT.
Water – Energy – Telecoms – Cross-sector
0.0%
0.5%
1.0%
1.5%
2.0%
2.5%
3.0%
3.5%
4.0%
4.5%
5.0%
5.5%
6.0%
6.5%
7.0%
2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020
Energy Telecoms Water TTT construction
*
Weighted Average Cost of Capital (WACC) estimates and allowances, where available
* 2020 based on PR19 draft determinations for water and expected WACC for energy
Prices and bills
57
Source: Commission calculations using ONS (2019) Consumer price inflation tables, CPIH Detailed indices annual averagesNotes: Consumer Prices Index including owner occupiers’ housing costs (CPIH) indices used are: 04.4 Water supply and misc. services for the dwelling, 04.5.1 Electricity, 04.5.2 Gas, 08.2/3 Telephone and telefax equipment and services, and CPIH (overall index)All rebased to 1988=100
Water – Energy – Telecoms – Cross-sector
50
100
150
200
250
300
350
400
450
500
Price indices for electricity, gas, water, sewerage and telecoms compared to average consumer price inflation (CPIH), 1988=100
Water & sewerage Gas Electricity Telecoms Average CPIH
0 2 4 6 8 10 12 14 16
LuxembourgUnited Kingdom
IcelandFinland
MaltaCyprus
NetherlandsPortugal
EstoniaFrance
LithuaniaItaly
AustriaSpain
GermanySwedenKosovo
BelgiumLatvia
RomaniaGreece
DenmarkHungaryBulgariaSloveniaCzechiaPolandSerbia
Slovakia
% of total household consumption expenditure on water, energy and telecoms, 2017
Water Energy Telecoms
Prices and bills
58
0 500 1,000 1,500 2,000 2,500
BulgariaRomania
SerbiaHungary
MaltaEstonia
LatviaLithuaniaPortugal
CyprusCzechiaIrelandPolandGreeceFinland
United KingdomSpain
NetherlandsSloveniaSlovakia
FranceItaly
LuxembourgBelgium
GermanyIcelandAustria
SwedenDenmark
Household expenditure on water, energy and telecoms: 2017 current prices, euro per capita
Water Energy Telecoms
Source: Eurostat, Final consumption expenditure of households by consumption purpose (COICOP 3 digit)
Water – Energy – Telecoms – Cross-sector
Source: Eurostat, Final consumption expenditure of households by consumption purpose (COICOP 3 digit)
Prices and bills
59
Source: Commission analysis of Office for National Statistics (2019) Family spending in the UK: April 2017 to March 2018Notes: The % of total household expenditure spent on water, energy and telecoms is not on the same basis as the international comparisons chart, which uses a national accounts approach to measuring household consumption.2017-18 data, in 2018-19 prices using GDP deflator
Water – Energy – Telecoms – Cross-sector
0%
2%
4%
6%
8%
10%
12%
14%
16%
0
10
20
30
40
50
60
70
80
Lowest 10% 2 3 4 5 6 7 8 9 Highest 10%
% to
tal
ho
use
ho
ld e
xpe
nd
itu
re
Ave
rag
e w
ee
kly
spe
nd
, £
Gross income decile group of household
Average weekly spending by households on water, energy and telecoms, by level of household income
Water, £ per week Energy, £ per week Telecoms, £ per week % of total household expenditure (right axis)
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