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Better regulation
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UK water companies have worked together to produce 'Meeting Future Challenges: a blueprint for policy action'. For the first time, the industry sets out shared priorities for policy change.
The core challenges are: pollution and water quality standards; managing surface water, flooding and coastal erosion; water resources management and affordability; reducing greenhouse gas emissions; and adapting to climate change.
With a new government in place, and a round of price reviews just completed, there is now a window of opportunity to take the necessary action. There is also an appetite for reform, in water and in other regulated sectors too, including energy, telecomms and transport. And independent reviews – of water competition and innovation, and charging for water services – have added momentum to the call for change.
There is no time to lose, however, if the benefits of change are to influence the next round of price reviews and asset management plans.
Priorities for action in the industry blueprint are:
• more customer involvement in prices and investment
• renewal of incentives for sustainability
• more flexible regulation to encourage innovation, and
• more sustainable access to capital markets.
Water companies propose policy overhaul in face of economic end environmental challenges
Meeting Future Challenges
A two-year window for water regulation
Water UK comment
Contact: Dawn Waterman
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Better regulation
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'Meeting Future Challenges', the blueprint for change, has already stimulated valuable debate. That is now set to intensify in stakeholder roundtables giving the industry an opportunity to explain its priorities and encourage support. The blueprint is intended to take UK water services to a new level by building on the experience and success of recent years.
The changes are ambitious but it is hoped that stakeholders will see them as realistic. The objective is policy that enables companies and regulators to raise the industry's performance without risking its achievements (only too possible with alternative agendas for change).
Water companies have a strong record of working in partnership and look forward to cooperating with different groups to bring about reform. Success for all will be measured in the outcomes for customers, the environment and the economy.
 Meeting Future Challenges
Contact: Dawn Waterman
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Water resources
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The first six months of 2010 have been the driest across the UK since 1929, the Met Office reports today. Latest rainfall data show why reservoir levels in western parts are unusually low. In this particularly dry spell, water companies along with environment agencies monitor surface and groundwater resources with particular attention.
To ensure a secure supply of water in a range of scenarios, the companies prepare 25-year water resource management plans following consultation with customers, local organisations, consumer and environmental interests. The plans are approved by government before publication.
Companies also prepare drought plans in partnership with the agencies. These plans cover the sequence of actions the companies will take to secure supplies when long periods of low rainfall reduce the volume of water available for use. In some situations, drought plans require temporary restrictions on non-essential uses of water.
Water company 25-year plans
Water restrictions
Driest start for more than 80 years
Met Office press release
Contact: Water UK Communication
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Finance
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The Emergency Budget was dominated by measures to reduce the deficit, but the government wisely accepted that capital spending on essential infrastructure must be maintained to generate badly needed growth. The position of Infrastructure UK was confirmed. The organisation's role is to facilitate private sector investment in infrastructure and improve long-term planning and delivery. Decisions on departmental budgets will come in the autumn, so impact on the water sector is still unknown. The Defra budget is not protected and faces significant cuts.
In advance of the Budget, the welcome given by business to a proposed cut in corporation tax was moderated (particularly in capital-intensive sectors) by the government's intention to pay for it through a reduction in capital allowances.
In the event, the Budget reduction in allowances was lower than advertised and will not take effect immediately. It is too soon to be precise, but for water companies and their customers, the impact of the original package – increases in industry costs and customer bills – appears to have been alleviated.
Chancellor confirms focus on infrastructure investment
Contact: Rob Wesley
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It remains to be seen what effect the Budget and departmental cuts will have on Scottish Water and Northern Ireland Water, both government-owned. In the absence of a domestic charging scheme, Northern Ireland Water is heavily dependant on direct government funding.
Last week, Scottish Water reported that in 2009-10 it made an operating surplus of more than £100 million and exceeded its Overall Performance Assessment target by 20%.
Scottish Water still has, and needs, access to public borrowing, encouraging some Members of the Scottish Partliament to comment on this and call for change.
The important thing is not the source of funds but their continuing availability to a successful service that is making a big contribution to the present and future economy and environment in Scotland.
Scottish Water annual report
Contact: Bryan Wallis
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Infrastructure
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Flood and Water Management Act 2010 and Water Act 2003 contain provisions with far-reaching consequences for drainage infrastructure. How will this be affected by a change of government? Alongside many other reforms, the Acts provide for three major changes:
• transfer of existing private sewers to water companies
• construction of new sewers to prescribed standards, and
• adoption and management of sustainable drainage systems by local authorities.
The existing timetable looks tight. Defra's proposals for new build standards going live in April 2011, and transfer of sewers from October 2011, require the making of new regulations, which means going out to consultation very soon. However, the incoming government has announced a review of all new regulations.
Defra is clear that it wants this government to be the "greenest ever". The new sewerage and drainage provisions would seem to be supportive, but the moratorium casts doubt on how quickly they will proceed.
Early clarification of the government’s intentions on implementation of the sewerage and drainage provisions will be welcome.
Contact: Richard Venters
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Development & Planning
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Innovation Hub 2010, 13 July, London
Senior figures from the water sector and other regulated industries will examine new approaches within the supply chain, through partnership and in risk management at the launch of this new forum. Defra Director of Water Sonia Phippard has confirmed that she will contribute to discussions on the day. Like many utilities, the sector faces significant challenges in adapting to climate change, managing water resources, providing an affordable service and meeting changing consumer expectations.
The Innovation Hub will focus on improved efficiency and sustainability, drawing upon case studies from water and other utility businesses as the basis for innovative thinking in the context of water.
Regulators and practitioners from across industry and the supply chain will attend.
The Innovation Hub 2010 will also establish a platform for involvement of the under 35s developing careers in the water industry. The Next Generation Network will present an opportunity for networking in the context of the drive for innovation across all aspects of the water business.
Full programme
Places are still available. For details and bookings please contact: Bhavini Munro
0207 344 1888
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Sustainability
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The new environment secretary has underlined the government's determination to be the greenest ever. This includes a welcome commitment to anaerobic digestion which should include making the most of water industry experience and assets. At the heart of the new government strategy is the reduction of recyclable and biodegradeable materials that now go to landfill. Anaerobic digestion (AD) is seen as a core green technology that should play a bigger part in this strategy.
The M&S commitment to landfill reduction, which has met some resistance on cost and application, serves to strengthen the case for developing expertise and active encouragement of other sources of renewable energy – especially those that offer good returns.
Water and sewerage companies have long experience of using AD to treat sewage and produce energy; and they operate related assets worth hundreds of millions of pounds in which they continue to invest.
Waste – new thinking for a new economy
Anaerobic digestion: M&S experience should concentrate minds
Contact: Barrie Clarke
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