IN A PANDEMIC
November 3, 10, 17 & 24 2020
THE WATER REPORT and Indepen have unveiled their ONLINE 2020 Social Contract Summit that will focus on the next steps for the water sector In demonstrating public purpose in the wake of Covid 19.
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.
Time for change
The green recovery offers a unique opportunity to try new things and plant seeds of reform of investment in resilience and the environment.
Interest in a green recovery from Covid 19, as distinct from a recovery of any sort, has not waned despite growing realisation about the scale of the recession we are facing. Theories abound on why this might be, from soaring public appreciation of nature during the lockdown to comprehension that the unthinkable (a pandemic) has happened once so could realistically happen again (environmental destruction).
Many sectors are vying for a share of any public support that might be made available for a green recovery. Water does not historically have the loudest voice when there is a cacophony of this sort, but it does have some important attributes going for it in this particular case. It has a strong track record of delivering hefty private investment in environmental outcomes.
It has a national presence and could host demonstration projects and initiatives countrywide, truly to the benefit of UK plc. Companies are also rooted in their catchments, so might be expected to have decent convening power to pull other players in their regional economies in.
better; we’ve been listening and bringing those on board.”
Leakage is high profile and important to all water companies, but particularly pertinent in Affinity’s area given its water resource position and contentious chalk stream abstractions. Chief executive, Pauline Walsh, explains she has made it an absolute top priority since joining the company in 2018. “Leakage is hugely important to us for two main reasons. One, because we know it’s hugely important to our customers. Two, because it’s hugely important to the environment.
Affinity Water recorded its lowest ever leakage last year, meeting its 2019/20 target of 162Ml/d as well as its ambitious 14% overall reduction target for AMP6. That was all the more remarkable because the company missed both its 2017-18 and 2018-19 targets – the latter of those two years in fact saw a particularly high rate of 196Ml/d. Walsh is understandably over the moon with the turnaround.
A lot of ideas came out from across the business on what we could do
Getting the whole business to focus on leaks helped Affinity beat its 14% leakage target for AMP6, and is a step in the right direction for its new green purpose. Pauline Walsh explains.
More on less
New thinking? Do come in
Water companies have produced the sector’s first ever strategy to coordinate innovation delivery. Over the summer, they’ve been listening to what potential collaborators think.
The water industry is, for the first time, in the foothills of developing a sector-wide innovation strategy. In July, the 19 water companies in England, Wales, Scotland and Northern Ireland, together with Water UK, UK Water Industry Research and Arup, published their initial thoughts on how the sector could embrace innovation.
Without wishing to underplay the work done to get to this point – there has been a huge collaborative effort and some key draft decisions have already been taken, notably to opt for a virtual rather than a physical Centre of Excellence – this is really only the start of the process.
Not only does the work done so far need to be refined and tested with a broad set of stakeholders, but also, over time,
innovation theory will need to be turned into practice.
Up,up and away
Chris Loughlin, chief executive of South West Water (SWW) since 2006 and of Pennon since 2016, has just stepped down from both roles, having overseen a complete transformation of the water company and the wider group.
Under Loughlin’s leadership, SWW has gone from having the most troubled relations and reputation in the sector, fuelled in part at least by charging the highest prices, to being the only company to be held up by Ofwat as an example of best practice at both PR14 and PR19.
As he steps down after 14 years as chief, Chris Loughlin reflects on taking South West Water from the bottom of every league table to fast tracked twice.
Vacancy flags expire but charge deferral extended
Last month, Ofwat’s ruling on how to unwind measures put in place to help the market through Covid came into force.
After its consultation in early July on unwinding Covid measures in the business retail market and the recommendations of the Codes Panel following its meeting on 28 July, Ofwat ruled there could be a limited extension of liquidity support until the end of October 2020.
The total amount any one retailer will be allowed to defer will be subject to a cap equal to 40% of primary charges due from March-July 2020, effectively limiting the total amount of liquidity available to the amount that was made available under Ofwat’s April decision.
This year’s State of the Market report shows little in the way of significant shifts from year two
According to Ofwat: “Our vision of a well-functioning and competitive business retail market remains one which enables customers to save time, water and money.” Judged against this standard, the business water market continues to struggle.
Ofwat’s State of the Market report for year three (April 2019 - March 2020) revealed some success on saving customers money, but little in the way of water or time savings. In the round, little had changed in terms of outcomes from year two, despite a lot of effort in some quarters to improve market performance.
The third leg of Ofwat’s definition of a successful market concerns water savings.
Business customer consumption is becoming increasingly of interest to policymakers as part of the national effort to ensure supply continues to meet demand in light of climate change and population growth, among other pressures.
Yet for customers, few mentioned water efficiency as a motive for switching or re-negotiating, and only 6% of those who switched in the past year reported receiving new water efficiency or leak detection services as a result (up from 4% in year two). This rose to 15% in medium-sized organisations and 23% in large ones.
Where’s the support?
Ofwat finds incumbent support for markets is patchy, and tells the industry to up its game
Financially incentivised retailer and business customer satisfaction metrics, greater tariff structure harmonisation, and regulatory endorsement of the work of the Retailer Wholesaler Group (RWG) all featured among the actions Ofwat is planning in the business retail space following publication of its review into incumbent water company support for effective markets.
The review covered developer services and other markets alongside business retail, and followed chief executive Rachel Fletcher’s May 2019 letter to the 15 English water companies calling out that levels of support for markets were “unacceptable”. The letter challenged companies to improve and asked them to provide evidence to demonstrate where and how they were actively supporting markets.
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