Alex Plant also highlighted that population growth, high inflation and increased public expectations of environmental quality are high on the list of issues the publicly-owned organisation is facing.
He said: "The combined pressures of climate change and our ageing assets, which were not designed to cope with today's more frequent extreme weather events, mean we are facing into some very strong headwinds."
Writing in Scottish Water's interim annual report, published today, Mr Plant said extreme weather was the new ‘norm’ and had played a major part in how the business performed for the first six months of this financial year.
He told how the hot, dry period of weather in May and June saw average reservoir levels drop to just 72% capacity – 14% below average for that time of year – so that at one point 29 reservoirs were close to running short of supply.
This was followed by multiple periods of very heavy rainfall and named storms, which caused sewer flooding and left some treatment works inaccessible.
Mr Plant added: "We know the upward cost pressures will be challenging for the rest of this year and beyond. It’s essential we secure the necessary investment for future years to allow us to adapt to climate change and get ahead of the curve in replacing assets that are already past their sell-by date and could soon cost more to repair than replace.
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"Without this – and if we instead “kick the can down the road” – future service levels will be at risk and future generations will face very significant increases to bills, which would not be fair.
"At the same time, we know we must ensure that those who are struggling to pay are supported. Around half of all council taxpayers in Scotland are receiving discounts on their water bills, which helps in this regard. We must also raise our game and find more innovative approaches to addressing the climate change adaptation challenge.
"Collaboration is a key part of this effort too. Developing nature-based solutions to mitigate against both flood and drought risk is key – working alongside a range of organisations including government, local authorities, regulators, developers and non-governmental organisations."
Mr Plant, who joined the organisation in June, highlighted how he also wanted customers to play a bigger role by having more say on how they think their charges should be spent, and by playing their part in protecting the natural environment and conserving water.
He said: "It's my hope our customers will become an even greater part of Scottish Water’s journey to achieving our strategic ambitions and wider purpose. We need to step up in terms of how we can help everyone appreciate fully the precious and scarce resource that water is, to use only what is needed and to take actions that help keep our waste water networks flowing freely.
"I was struck within weeks of joining Scottish Water at just how much trust our 2.6 million customers have in us as an organisation. We are also held in high esteem by our supply chain partners, being named as best UK water company in a recent industry survey. This has been hard-earned and I want to make sure we continue to be held in such high regard.
"This is a time of intense scrutiny for the water sector across the UK and I am determined that Scottish Water should be recognised as an exemplary and innovative organisation, a leader in sustainability, a great employer and a trusted partner."
Despite the challenges, the report notes that customer satisfaction in Scottish Water remains stable, and the organisation is on track to deliver its significant capital investment programme for the year – its biggest to date.
In the six months to September, £400 million of planned investment was delivered - £70 million more than at the same time last year. The funding has enabled the opening of new treatment works, supported Scotland’s housing growth and safeguarded future water quality. It has also led to innovative green technology at many sites to offset energy usage.
Scottish Water's Chair, Dame Susan Rice, is standing down after eight years at the end of this month and in the report she praised the utility’s dedicated workforce. She said: "It's something which helps make Scottish Water what it is, and it is priceless. It is this sort of dedication that delivers results."
Deirdre Michie, who has been a member of the utility’s board for six years, has been appointed successor and will take on the role of Chair from 1 January 2024.
