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from Water UK

theView from Water UK
31 August 2010

Better regulation

Timely review of water regulation

Defra has announced a review of Ofwat's role and remit as the water sector faces changing demands.

After two decades, it makes sense to ask if the regulator remains in good shape to build on its own, and the industry's, successes.

The industry will be responding to ministers' call for evidence. Among the questions it may consider are:

 •  Is economic regulation as efficient as it might be?

 •  Does Ofwat prioritise the real wishes of customers?

 •  Does existing regulation enable companies to be as effective as possible in meeting the requirements of their customers and their social and environmental obligations?

 •  Is Ofwat sufficiently aware of the needs of investors, whose confidence has underpinned the success of both regulator and companies until now and will be no less vital to their ability to meet future challenges?

Ofwat review will consider future challenges facing industry
Defra press release

Contact: Barrie Clarke

Better regulation

Ofwat beyond limits

It has been a busy time for Ofwat, with the focus shifting from the 2009 price review to the future of economic regulation and how price limits for water and sewerage services should be controlled.

At this stage in Ofwat's ambitious sustainable water programme it is perhaps inevitable that there are more questions than answers.

Before long, however, everyone – government, regulators, companies and interest groups – will have to get down to practical decisions on how the sector can build on the successes of a stable and predictable regulatory regime to face the challenges of the future.

The industry’s policy reform paper, Meeting Future Challenges, sees only two years or less to identify, evaluate and implement the changes required, so time is of the essence.

Beyond limits – how should prices for monopoly water and sewerage services be controlled?
Ofwat focus report

Meeting Future Challenges: a blueprint for policy action
Water UK

Contact: Rob Wesley

More scrutiny for scrutiny

The government is placing all regulation under ever greater inspection. From 1 September a "one-in, one-out" system will be applied to new proposals.

When ministers seek to introduce regulations that impose costs on business or the third sector, they must identify regulations with an equivalent value that can be removed.

The fresh look is welcome. Water UK supports the aims of reducing administrative burden, applying regulation more flexibly and seeking innovative, non-regulatory ways of achieving desired outcomes.

It should not be forgotten, however, that regulation is both inevitable and valued in providing people with confidence in the quality of essential services. As a Defra discussion paper on the natural environment puts it, regulation can raise performance when used wisely.

See also 'Structural Reform Plan outline proposals', below.

New rules to hand over powers to individuals and companies by cutting red tape and bureaucracy
Department for Business, Innovation and Skills

Contact: Rob Wesley

Structural Reform Plan outline proposals

Along with all other government departments, the Department for Business, Innovation and Skills has published its draft Structural Reform Plan (SRP) for comment.

In his foreword, the Secretary of State refers to the need to create "a stable platform for long-term, private sector-led economic growth".

Of particular interest to the water industry are: proposals for ending tick-box regulation (substituting risk-based or co-regulation or seeking alternatives); ending 'gold-plating' of EU rules; reviewing competition law and authorities; and reviewing takeover protocol.

The SRP is short on specifics, however, and many sectors, including water, will be eager to hear more about how the proposals will be followed up.

Draft Structural Reform Plan
Department for Business, Innovation and Skills

Contact: Richard Venters

Regulator puts customer focus on investment

The Water Industry Commission for Scotland has published the first in a series of discussion papers on the future regulation of water in Scotland.

This goes beyond the traditional approach of an economic regulator and seeks views from stakeholders on how best to involve customers in the price review process.

The consultation suggests that customers should have more say about discretionary aspects of the investment programme. They could be given information about the impact on their water bill instead of being told the total costs of projects.

The WICS plans to set up a dedicated team to foster customer engagement, in a move that parallels the regulatory focus south of the border. Customer involvement is, it seems, a UK-wide aspiration.

Putting customers at the centre of the price review process
WICS discussion paper

Contact: Bryan Wallis

Meeting Future Challenges

The water industry's blueprint for policy change has created a lot of interest over the summer.

Developed across the whole industry as a firm set of proposals (it is not a consultation), Meeting Future Challenges is being considered by ministers, MPs and peers and will be discussed in fringe meetings of party conferences in the autumn.

On 14 September, the All Party Parliamentary Water Group holds a meeting on the plans put forward by industry leaders, including Pamela Taylor, Water UK CEO.

The objective is practical policy change to enable water companies and regulators to respond to new conditions. The blueprint recommends:

 •  Putting customers first

 •  Renewing incentives for efficient and sustainable delivery

 •  Developing flexible regulation that encourages sustainable and innovative behaviour

 •  Ensuring sustainable access to the capital markets.

Things are already looking very promising. Defra’s Natural Environment White Paper is likely to provide scope for a fresh look at environmental permits, which could help companies meet higher standards more sustainably. A Water White Paper in June 2011 should provide other opportunities for positive change.

Meeting Future Challenges
Water UK policy blueprint

All Party Parliamentary Water Group meeting, 14 September 2010

Contact: Dawn Waterman


Ofwat's 'straw man'

Ofwat has published 'Valuing water: How upstream markets could deliver for consumers and the environment'.

The latest in Ofwat's stream of policy papers and focus reports contains proposals previewed as a competition 'straw man'.

If the diffidence seems uncharacteristic, it may be because this is the most detailed account to date of Ofwat's commitment to restructuring the industry. While presented as just a collection of ideas, the implications are far-reaching.

The paper argues for the importance of valuing and trading water as a commodity. The best way is through regulated markets which would provide more information and enable better strategies for managing scarcity, regional imbalances and investment.

In devising the straw man, Ofwat has looked at approaches suggested by academics and examples from other industries. The paper moves from the complexity of the proposed new industry structure to a section on benefits for existing players - lower bills, more choice, more efficient use of water resources - and new players - easier entry, ability to negotiate packages between upstream and existing suppliers.

In Meeting Future Challenges, its blueprint for policy action, Water UK points out that Ofwat's current incentive regime is a barrier to trading, and reform could help deliver the benefits identified in 'Valuing water'.

Valuing water: How upstream markets could deliver for consumers and the environment

Contact: Barrie Clarke


Planning for our national infrastructure

The coalition's decision to abolish the Infrastructure Planning Commission in favour of a Major Infrastructure Unit in the Planning Inspectorate is still making waves.

Green energy projects are among those on hold as utilities and construction sectors seek clarity on government intentions.

In June, Energy Minister Charles Hendry said: "A fast and efficient planning system is critical for facilitating investment in much needed energy infrastructure."

The water industry has consistently delivered investment on time and on budget but supports calls for everything to be done to speed up the planning system without disregarding local democracy.

The Water UK Investing in Infrastructure conference on 28 September will underline the essential role of investors in securing a healthy environment and a healthy economy. The event will take a pan-utility view of financeability with executives and regulators from all sectors.

Leading the debate will be James Stewart, CEO for Infrastructure UK. Mike Forster, Director of Infrastructure and Sustainability, BAA, will speak on investment in airport infrastructure.

Investing in Infrastructure
28 September 2010, Cavendish Conference Centre, London W1

Contact: Bhavini Munro
020 7344 1888

Business worries about impact of planning delays on infrastructure development

Water UK press release

Water environment

In step to tackle pollution at source

A new-old approach to monitoring and control of rural diffuse pollution pioneered by the Scottish Environment Protection Agency deserves the attention it has generated.

SEPA's innovative - some may say old-fashioned - mitigation strategy is based on 'watery walks' taken by priority catchment officers along rivers and burns to identify sources of pollution in the form of nutrients, bacteria, pathogens and chemicals.

This is followed up on the ground by work with farmers and landowners to raise awareness of the impacts of their activities on water supplies, river quality and bathing beaches. So far 2,500km have been walked and 1,200 examples of bad practice identified.

This collaborative approach addresses the double bind of diffuse pollution: to find out who is responsible and encourage them to take action.

Walking the talk to better rural water quality
Water UK press release

Watery walks lead the way to better water quality for the Borders
SEPA news release

Contact: Bryan Wallis

Water for Wildlife

A long-established partnership between the water industry, the Environment Agency and the Wildlife Trusts continues to promote better wetland conservation through a joint approach.

The Water for Wildlife partnership meeting at Rutland Water this month studied countrywide examples of best practice, including a West Country project in which sensitive enhancements and well targeted advice have effectively turned farms into water purification plants - water leaving is actually cleaner than water coming in.

The scheme could point the way to similar innovative projects in the future. As part of an integrated catchment management strategy, Wildlife Trusts are funded to manage habitats to improve water quality. According to the organisers, savings from the project will exceed its cost many times over.

Since Water for Wildlife began, the partners have delivered efficient and effective practical work at local level but also built a presence in the national conservation debate.

Water for Wildlife

Contact: Sarah Mukherjee

EU regulation

European water policy in prospect

Expect a busy session this autumn for EU water and environment people on all sides of the policy process.

The Commission programme includes finalising a new list of Priority Substances under the Water Framework Directive and reporting on endocrine disruptors and an assessment of combination effects of chemicals. This is important in respect of future requirements for wastewater treatment processes.

Belgium assumed the presidency of the European Union on 1 July with a main focus to develop a workable financial supervisory package. Climate change is also high among its priorities, and Eureau, representing the Europe-wide water industry, is supporting the presidency with a conference on Climate Change and Water on 14 October.

Ahead of this, in September, there will be discussion on Services of General Interest and an initiative on concessions for provision of public services by private companies.

Contact: Water UK Communication


Start on sustainability, smart on energy

As part of the Start festival for sustainability, IBM, a Water UK partner, will host a nine-day business summit to include links with water, from supply through distribution to consumption.

Launched by the Prince of Wales this summer, Start aims to show what a sustainable future could look like and to encourage the simple steps that we can all take to make it a reality.

The water industry will be represented at events round the country and take part in debates at the business summit - on resource efficiency, climate change, and the future governance and delivery of infrastucture services.

IBM's Smarter Energy for a Sustainable Future (9 September) will focus on how to move on from the 'when' and the 'what' to the 'how' of energy use, inviting government representatives, utility leaders, academics and industry professionals to formulate a set of actionable recommendations for the UK.

IBM summit: Smarter Business for a Sustainable Future

Start to use water more efficiently, says Prince of Wales

Contact: Emma Crosby


the View...

There are times when the need to ask 'Who guards the guards?' (Quis custodiet ipsos custodes?) is obvious. This is not one of them. Ministers' determination to draw a line between policy making and implementation is spotlighting so-called 'quango regulators' with other public bodies. They are not just aiming at 'deregulation' or 'red tape', although targeting waste and irrelevance may put these clichés in the frame. Water regulation must move on, but the industry's success in recent years argues for care as baby and bathwater are reviewed.

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Related links


The spirit of the age
Changed times mean new opportunities for the water sector

Next events

All Party Parliamentary Water Group - Meeting Future Challenges
Tues 14 September, 6-7pm, Committee Room 6, House of Commons
Join senior industry figures at the APPWG meeting to discuss the industry's blueprint for policy change

Investing in Infrastructure
Tues 28 September, London
Investment challenges, structural change and sustainability for the UK

Water UK 11th Annual Leakage Conference
Thurs 28 October, Midlands
The leading industry event for leakage professionals

Press releases

Timely review of water regulation

Start to use water more efficiently, says Prince of Wales

Business worries about impact of planning delays on infrastructure development

Water meters and the environment

Walking the talk to better rural water quality

Britain's beaches deserve their quality awards

Driving green policy - water industry is a leader in renewable energy