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theView from Water UK
30 September 2008 www.water.org.uk
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Finance

More spent to develop networks

Investment in water and sewerage infrastructure in England and Wales has risen, with water companies on track to complete planned improvements as anticipated by 2010.

The latest financial report from regulator Ofwat shows that companies together invested more than £13m per day – a total of nearly £5bn in the year to March 2008 – in essential networks.

This is the highest level of investment for years and adds up to some 53 per cent of total industry turnover. More than half of this has been spent to ensure reliable water and sewerage services for customers by replacing or maintaining water mains and sewers.

Financial performance and expenditure of the water companies
in England and Wales 2007-08

Ofwat report

Water industry increases investment to strengthen essential networks

Contact: Rob Wesley


Competition

Cave Review objectives for competition

The Water UK position on competition was outlined in a Soapbox article in Utility Week on 12 September. This made special reference to the work of the independent Cave Review.

Water UK anticipates that the review on competition and innovation, commissioned by the Treasury and Defra, will enable the industry and its regulators to take a welcome step forward.

The main reason for this cautious optimism is that the Cave Review’s terms of reference require it to start from the objectives which government has for the water industry and water competition, namely to encourage sustainable innovation and to benefit customers and the environment. The crucial issue then becomes the determination of the specific rules for water competition that will achieve these ends.

In particular, competition rules must take account of the heavy environmental, social and health-related obligations that fall on the water industry. Critically, they must ensure that water customers share the financial burden of improving our society and its water environment and no competitor wins customers merely because it exempts them from contributing financially to these goals. The terms on which competitors gain access to the parts of the water supply chain that remain a monopoly – most essentially, the networks of pipes – need to be designed accordingly. And competition rules must also retain incentives to encourage new entrants into the market.

The Cave Review Team has its work cut out and will publish preliminary views in November 2008.

Cave Review must find the right route to competition
Published by Utility Week

Cave Review
Link to Defra website

Contact: Jeanne Golay

Customers

Making the case on water debt

The Walker Review of Charging and Metering for Water and Sewerage Services looks at debt and affordability.

The review's terms of reference include the "effectiveness of measures to incentivise people to pay" and "the effectiveness of different types of innovative tariffs in helping vulnerable customers".

These issues are close to the hearts of many within the industry trying to identify and help those struggling to pay their bills.

The Saving from Poverty initiative has big potential here. But the industry needs help from the government in tracking down hardened customers that can pay but don’t.

The Walker Review and the forthcoming Floods and Water Bill are good opportunities to get the case across and bring about real, and in some cases legislative, change.

Water debt and affordability – a new briefing

The Walker Review
Link to Defra website

Contact: Phill Mills

Complaints data – encouraging trend

The Consumer Council for Water has released its annual report on complaint handling in the water industry in England and Wales. Water UK was pleased to note that the report showed an underlying downward trend in the number of complaints.

The overall increase in 2007-08 was the result of one-off events, namely the introduction of new billing systems at a small number of companies.

While it is always regrettable that customers should be inconvenienced by such changes, these systems are major investments in customer service and will result, eventually, in increased customer satisfaction.

Water UK was also pleased to note that most companies resolved over 90% of complaints at the first stage and, as last year, dealt successfully with 99.5% through their own processes, without involving CCWater.

Complaint Handling in the Water Industry in England and Wales 2007-08
CCWater report (Word file)

Industry complaint handling is steady

Contact: Jeanne Golay

Environment

Blue policy with green spaces?

Prospects for environment policy under a Cameron government were shared last week in an Institute of Contemporary Arts seminar entitled 'Green-Blue - The New Tory Environmentalism'.

Tim Yeo MP, chair of the House of Commons Environmental Audit Committee, made a good case for the compatibility of conservative principles and environmentalism. He confirmed the commitment of David Cameron and those around him but regretted that he couldn't say it was shared throughout the party.

From the left the commentator and activist George Monbiot agreed there was potential in what he had heard so far but criticised the party's climate change policy and urged tighter regulatory and fiscal action.

The overall conclusion was: jury still out on whether policy would be refreshed in a blue-green dawn. Some people it seems still harbour suspicions that the leadership sees environmentalism more as a device to change perceptions of the party than a core government policy.

The Blue/Green Charter

Contact: Barrie Clarke

Climate change

Footprints one step at a time

Water industry investment in both time and effort to understand, measure and manage its carbon footprint is already delivering real benefits.

Among them are the consistent and agreed approach to accounting, and carbon embedded into decisions about investment.

But carbon accounting is still a young and rapidly evolving area. The industry works with the information that is available and aims to update its tools and frameworks when new or better information comes along.

Chemicals are a good example. Each year the water industry uses around 800,000 tonnes of chemicals for water and wastewater treatment. These products embody a great deal of carbon in their manufacture, yet information on them is at best sparse. It is important that the water industry, and other users, have data available to make sustainable decisions for the long-term.

Contact: Bruce Horton

EU regulation

Resources protection in the pipeline

The European Parliament is to resume discussions on proposals for a directive on sustainable use of pesticides and regulation for the placing of plant protection products on the market.

Water UK supports the inclusion in the directive of additional measures aimed at preventing contamination of the aquatic environment and water resources intended for drinking water. Within the regulation of plant protection products mechanisms must be found to prevent use of any active substance that also compromises protection of water resources.

Contact: Gaetane Suzenet

Water resources

Working together for resources planning

Making sure that households, business, agriculture and the environment all have enough water available to thrive and prosper is a serious business.

For their part, water companies work hard to balance the amount of water available to them with consumer demand and protection of the natural environment.

The resource management plans published by all English water companies earlier this year show how they intend to do this over the next quarter century. These plans have rightly generated considerable debate.

With consultations closed, companies will soon be setting out how they intend to respond and to improve the plans where necessary.

Where appropriate, companies will also work together and with others for the benefit of the regions in which they operate. This is sensible and can help ensure that the top priority – security of future supply – is achieved.

Contact: Bruce Horton

Drinking water

Tap water served in style

It seems the 'drink tap water' message is working. Expect the Carafe for London to be decanting our drink of choice around the city's eateries by April.

With the shortlisted entries now down to 10 (from a total of 115 designs), finalists in the Carafe for London competition were revealed at City Hall this month and the winner will be announced in December.

The competition, at the heart of the London on Tap campaign, gained strong support from business, government, the hospitality industry, environmentalists and design communities.

And sales of bottled water have dropped during the campaign, as more people switch to the greener choice of tap water.

Meanwhile, tap at the table has for some months been a subject for public comment on the Consumer Council For Water website. ‘Tap into water in restaurants – have your say’ records consumer expectation, satisfaction and outrage in almost equal measures.

Proprietors, it seems, can charge anything from 30p to £1 for a glass of water. One customer was told the price was for “the hire of the glass, not the water”.

Clearly in a restaurant we like and expect to be to be served with a jug of complimentary fresh tap water. With the Carafe for London, where once this may have been considered an expression of hospitality, it will now also serve to demonstrate the establishment's own good taste.

Contact: Karen Thompson

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the View...

Last week, as fear of financial collapse grew ever more real, Ofwat reported that water companies in England and Wales had again increased their combined capital expenditure. The 2007-08 accounts show once more the essential role the markets play in supplementing industry cash flow and allowing investment at the pace and price society expects. With no sign of investment demand slowing, we can only hope that the turmoil does not put at risk the future of a fine example of capitalism in action. But as it seems none of the pre-crunch certainties can now be relied on, companies, regulators and ministers will have to approach the 2009 water price review with particular care and appreciation of what is at stake.


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