Expert analysis for a changing water industry
April 2024
Issue 103
This website includes excerpts from the latest edition of THE WATER REPORT.
Full coverage is available only in the print and digital editions of the magazine. SUBSCRIBE HERE
PUBLISHED BY
KEW PLACE
Hard times
From death threats and violence to challenge down the pub, workers are feeling the human consequences of the negative public discourse about water. And there are consequences for the sector as a whole too.
Anecdotally, hostility to water staff has sharply increased amid the negative public discourse – which could have both human consequences and consequences for companies and the industry as a whole – particularly as it comes at a time when the sector needs to attract thousands more colleagues and partners to deliver ambitious improvement plans for the future.
My predecessor…had targeted
death threats… I therefore have
significant additional security at my home.”
We asked THE WATER REPORT Expert Forum members to share their insights on the experience of working in or with the water sector at the moment, and for their thoughts on forward skills / talent prospects. The research is small scale, more akin to a focus group than a mass survey. But the findings nonetheless raise real cause for real concern.
Human consequences
Around half of our respondents said they had some personal
experience of challenging or negative sentiment because they work in or with the water sector, while nearly two-thirds said they know of other water colleagues who have experienced challenging or negative sentiment.
In the worst cases, the severity is alarming. One respondent shared: “I haven’t had direct abuse yet but my predecessor…had targeted death threats… I therefore have significant additional security at my home provided by the company.” Another shared: “There have been some very aggressive incidents in the team — someone was nearly run down in a worksite when a car drove through, another was threatened with physical sexual violence from someone who didn’t like the answer they were receiving, another was threatened with poo being delivered to them at their workplace for example. Some of my colleagues face quite aggressive questioning in parish and local council meetings — including with finger pointing and other direct personal criticism.”
There was a sense from a number of respondents that open criticism is becoming commonplace. One said: “We are all experiencing the same thing and I have heard that some front line colleagues are getting quite a bit of flak to the extent now that if they can, they tend to not mention that they work for a water company.” Social media was flagged as a particular issue. One remarked: “Media interviews and discourse on social media generally [is] more challenging these days, again because of misinformed views.”
Call to action
River Action chief, James Wallace, will hold polluters’ feet to the fire – but really wants to collaborate on solutions in the face of a freshwater and river health emergency.
For the chief executive of a campaigning organisation that is prepared to mount court challenges and publicly pursue polluters through the media and campaigns, James Wallace of River Action is very keen to collaborate. “We must get beyond this name, blame and shame stuff and actually work together across industries,” he urges.
Wallace explains that it is a question of balance. “We have to hold people's feet to the fire. We still unfortunately have to, like we're
going to be doing tomorrow with pathogen testing [the day after we met, River Action released data on “alarmingly high” levels of E.coli bacteria from sewage pollution along the stretch of the River Thames that was to be used for the coming weekend’s Oxford and Cambridge boat race.
“Thames Water are responsible for putting rowers’ health at risk – fact. The number of people who've been ill – rowers, swimmers or just dog walkers and their dogs – it will be in the hundreds or thousands across the country. So unfortunately we have to tell those difficult stories.
“But the next stage is to offer hope. And that comes through collaboration and offering sensible solutions.”
Tapped out
Thames shareholders blame Ofwat as they cut the equity flow ahead of draft determinations.
Thames Water’s shareholders confirmed hours before the Easter weekend on 28 March that they would not now be providing £500m of equity by 31 March, as conditionally pledged in July 2023 as the first tranche of an AMP7 £750m support package.
Lack of of regulatory arrangements that shareholders deemed acceptable prompted the backslide. Thames said that, based on the feedback from Ofwat to date: "the regulatory arrangements that would be expected to apply to Thames Water in AMP8 make the PR24 plan uninvestible.” The message was clear: good money won’t be thrown after bad, implying that even if that means writing off the billions of investment to date.
Thames' plan now is to continue discussions with Ofwat in the hope of securing an affordable, deliverable, financeable and investible draft determination in June, and at that stage to “pursue all options to secure the required equity investment from new or existing shareholders”. Where new shareholders might be found, and on what terms, was not addressed.
In the meantime, the emphasis was on Thames’ liquidity of £2.4bn of cash and available committed facilities, which chief financial officer, Alastair Cochrane, said was sufficient to keep the firm running for 15 months. He said Thames remains compliant with its financial covenants and, when pressed on whether the £500m hole would prove a problem for signing off the accounts in June, Cochrane said: “With £2.4bn of liquidity, we are a growing concern. I would expect that to be reflected in the accounts.”
Urban wastewater: update and outlook
Welsh Water's director of environment Professor Tony Harrington, looks at the revised EU Urban Wastewater Treatment Directive and the changes it might bring.
Q: What is the background?
A: The original Urban Wastewater Treatment Directive (UWWTD) was adopted in 1991. Many would say this, along with the Bathing Water Directive, were the drivers for privatisation. The UWWTD’s brief is to "protect the environment from adverse effects of wastewater discharges from urban sources and specific industries’.
Under the directive, member states are required to ensure that wastewater from all agglomerations above 2,000 inhabitants are collected and treated according to EU minimum standards, as detailed in the directive. Member states also have to designate sensitive areas, according to criteria included in the directive, for which stricter standards and deadlines apply. So this is very much a
regulatory ‘output’ rather than environmental ‘outcome’ style of regulation.
Q: Why is the UWWTD being revised?
The EU Commission evaluated the directive back in 2019 and confirmed that its implementation has led to a significant reduction in pollutant releases – a surprise perhaps for many who still feel the performance of our drainage systems is wholly unacceptable. One of the key reasons for the directive’s effectiveness was confirmed as the simplicity of its output style requirements, which facilitates straightforward enforcement.
Today about 98% of EU wastewaters are adequately collected and 92% adequately treated. Interestingly, the evaluation also showed though that there are still sources of pollution that are not yet adequately addressed by the current rules. These include
pollution from smaller agglomerations and septic
tanks, storm water overflows (no surprise there)
and micropollutants that damage our environment.
Mind the chasm
Stop installing dumb meters, says the Environment Agency, as supply gap reaches 5bn litres a day by 2050.
The Environment Agency (EA) praised a “significant increase in water companies’ ambition for drought resilience and improving the environment” in the revised draft Water Resources Management Plans (rdWRMPs). However, the EA said Defra had written to firms individually, with “many requiring further actions before the plans can be finalised”.
That is perhaps because the rdWRMPs revealed an even bigger supply gap by 2050 than previously calculated: nearly 4,860Ml a day, which is more than a third of the 14bn litres of water currently put into public supply. The EA explained that the deficit had risen (from c4,000Ml/d) due to: updated demand forecasts (around 300Ml/d additional need); further reductions associated with abstracting less to improve the environment (250Ml/d); and better representation of the baseline supply position excluding drought measures and yet-to-be agreed water transfers included (430Ml/d).
As is traditional, the Agency expounded upon the need for a twin track approach in response – though it highlighted that demand reduction bears the burden. 65% of the water needed in 2050 is planned to come from reductions in demand: 48% from using water more efficiently and metering, and a further 17% from reducing leakage. The remainder comes from new supply options.
But there was more urgency in the EA’s tone, and an insistence that both demand and supply measures must be delivered. It was unusually robust in its endorsement of smart metering and non-rainwater dependent supply side options.
Modernise: go modular
RSE has its sights set on disrupting the water treatment market with factory-built plug and play solutions and other innovations, as Stephen Slessor explains.
“There's not really many chances you get in a career to join a place where it’s properly exciting every day,” enthuses Stephen Slessor, who in January took up post as chief executive at RSE.
The business specialises in the design, build and maintenance of water treatment and purification equipment for all purposes including drinking, industrial and recycling. Within that, it specialises in modular design, “a standard, modular, plug and play type
approach,” Slessor explains where, typically, treatment solutions are factory built and transported for assembly on site.
Ploughing this furrow has already been a huge success: RSE was a Scotland-centric business with a turnover of around £60m in 2019, and now operates UK-wide and brings in over £330m. It has grown to incorporate 13 businesses.
Slessor comments: “So it's 70% year-on-year growth over the last few years, delivered through investment in insight, technologies, people and treatment and through bringing companies into the business that are focused on providing solutions.” He shares: “We actually have about 450,000ft² of manufacturing space now across the UK, which is actually – outside of the automotive and defence industry – in the top five in terms of capability.”
Half as good
Not all smart solutions are equal, Frontier Economics and Artesia Consulting warn, ahead of Ofwat setting a benchmark cost allowance for PR24.
Smart metering solutions with lower functionality will only deliver between 50% and 67% of the benefits of solutions with the highest functionality. That emerged from analysis by Frontier Economics and Artesia Consulting, in a report for communications specialist Arqiva.
Smart water metering: making the right decisions comes at a critical time, as Ofwat scrutinises the extensive smart metering proposals in water companies' PR24 business plans, and as companies work on refining their solutions and rollout strategies.
Benefits range
Frontier and Artesia built on the findings of their May 2022 report,
Unlocking benefits through data and metering, which assessed
smart metering costs and benefits. This found that high specification AMI could deliver between £1.3bn and £2.2bn of net benefits compared to AMR across England and Wales.
The report also found that within the world of AMI, the precise
capability of the solution determined the benefit level. This is linked to the fact that there is no defined smart metering standard in water, which means there is no common definition for the performance of a smart meter. Consequently, metering solutions available have a spectrum of capabilities which yield different levels of benefit, and come at different costs.
What we are trying to do is disrupt the traditional way of
delivering projects, capex and opex with a modular, factory-based approach.”
will keep you on top of the threats and opportunities emerging from retail and upstream competition.
It's the eye on the competition.
For good measure
The Strategic Panel has produced a clear and wide-ranging NHH smart metering strategy in pursuit of consistency from wholesaler-led programmes.
“Smart metering is, in effect, a national rollout being delivered regionally,” observed Trisha McAuley, chair of the Strategic Panel, which published its National metering strategy for the non-household market late last month.
The plan – developed by the Panel with support from MOSL, the Metering Committee, trading parties and other stakeholders – seeks to bring order to the potential chaos of wholesaler-led smart rollout programmes in AMP8 and AMP9.
It aims to maximise rollout speed, efficiency and transparency by recommending a framework and identifying opportunities for
consistency and standardisation among wholesalers, as well as address how wholesalers and retailers should work together, share data and provide a good level of service to customers.
The backdrop is water scarcity, climate change and Defra’s 9% NHH
demand reduction target for 2038, with smart metering promising benefits for water efficiency as well as service improvement and tariff innovation.
At present, NHH meter penetration is as high as 98% in some regions and as low as 70% in others – despite the NHH market using a third of the country’s water, of which just 1% consumes nearly half.
Smart scrutiny
Waterscan’s Spring Self-Supply Users Forum welcomed news of a national smart metering strategy – but had some questions.
Waterscan’s commercial director Nick Hayes told MOSL’s director of asset solutions, Martin Hall, that he was “selling to the converted” in extolling the virtues of high quality, granular consumption data at the Spring Self-Supply User Forum at the beginning of last month. Hall had provided the community with a heads up on the National Metering Strategy for the non-household (NHH) market, which MOSL went on to publish at the end of March.
Hall ran through the benefits for self-suppliers specifically, including greater bill accuracy, increased opportunity to identify leaks and
pursue water efficiency, and that granular data would open the door for tariff and alternative supply innovation. He also noted the challenges, which included the interplay between smart meters and loggers; gaining access to reliable data; inconsistent wholesaler rollout schedules across the market; and evolving roles and responsibilities.
Hayes pointed out that Waterscan had long traded in granular consumption data and absolutely appreciated its benefits. Market development manager Matthew McLeod shared that the self-supply community had already benefited from Thames and Anglian – the only two companies with sizeable rollouts to date – providing continuous flow alerts and putting wholesaler reads into CMOS once a month, aiding settlement accuracy and data quality.
Wave finds old meters are a major cause of zero reads
Wave has called on wholesalers to proactively replace meters at the end of their operational life, after finding dilapidated meters are a major cause of zero reads.
The findings emerged from Project No Flow, a Market Improvement Funded study which Wave ran with Occutrace, to scrutinise meters not registering any consumption. Of 771 meters identified as zero-consuming, 64% had degraded to the point of ceasing to be functional. This has negative consequences for customers and across the market.
CONTENTS April 2024 full contents of the magazine
TWR EXPERT FORUM Working in water.
INDUSTRY COMMENT David Black on rebuilding trust.
INTERVIEW James Wallace, River Action.
NEWS REVIEW National Storm Overflow Plan.
INDUSTRY COMMENT Let data lead on CSOs.
INDUSTRY COMMENT UWWTD set for revision.
REPORT CCW on PR24 business plans.
REPORT Thames shareholders turn off the tap.
INDUSTRY COMMENT Asset health needs a reset.
NEWS REVIEW Water credits for Cambridge.
REPORT Supply gap widens in WRMPs.
REPORT Not all smart meters are created equal.
INTERVIEW RSE’s Stephen Slessor seeks a shake up.
NEWS REVIEW Norfolk Water Fund seeks £30m.
REPORT Frontier Economics on green regulation.
INDUSTRY COMMENT Demand flexibility for net zero.
INDUSTRY COMMENT Matching water companies with innovators.
NEWS REVIEW Ofwat gets Growth Duty.
REPORT National NHH Metering Strategy.
REPORT Self-suppliers scrutinise smart metering.
NEWS REVIEW Old meters cause zero reads.
