June 2022 issue

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

Procurement pathfinder

United Utilities is to pioneer Direct Procurement for Customers with the recent launch of its Haweswater Aqueduct tender.

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United Utilities will become the first water company to tender for a Competitively Appointed Provider (CAP) to deliver a major piece of infrastructure under the new Direct Procurement for Customers (DPC) arrangements.

The Haweswater Aqueduct Resilience Programme is the company’s biggest infrastructure project since privatisation. United Utilities will go out to market, in pursuit of a single CAP to design, build and fund six replacement tunnel sections of the Haweswater Aqueduct and maintain it for a period of 25 years post construction. The aqueduct plays a key role in providing clean drinking water for 2.5 million people in the North West and has done so since the 1950s.

Director of strategic programmes, Neil Gillespie, points out that even without the DPC element, the project is complex and challenging. “It’s 52km of 3.5m diameter tunnels in six locations between Cumbria and Manchester, across areas of outstanding natural beauty, remote rural locations with limited access, as well as some urban areas…with all the traffic issues there.”

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Whole

On Tuesday 13 September, Indepen and THE WATER REPORT will host the 2022 Social Contract Summit – Whole systems go! The event will ask how a whole system approach can deliver more

for less from our infrastructure in the face of climate,

nature and resources challenges.

go!

systems

What would good look like from PR24?

CCW's Dr Mike Keil shares the watchdog's customer objectives.

No one would expect CCW to be anything other than customer centric in its ambitions for PR24. But in a newly published set of objectives for the forthcoming price review, the watchdog makes it clear that part of its ambition is to see the customer playing a much greater role as an active participant – capable of contributing ideas and helpful behaviours – as well as responding to options put forward by companies and experts.

CCW has never before published its objectives for a price review ahead of the game. Head of policy, research and campaigning Dr Mike Keil explains: “Last time we did have objectives, but internal only. And we felt for transparency’s sake that it was much better to, right at the beginning of the process, say ‘these are the chunky things that we are after for this review’.”

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“I think what we need to really, really crank up is the recognition that people can be part of the solution. Particularly on sewer misuse and water resources.”          Mike Keil  

Environment Act targets: is the thinking right?

We sought views from our panel of business and thought leaders  on Defra’s water demand, nutrient and storm overflow reduction targets.

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Following some delay in the publication of the supporting evidence and assumptions on some of the statutory environmental targets proposed under the Environment Act, Defra extended the closing date of its consultation on these targets from 11 May to 27 June. 
The main targets for the water industry are: in water demand and phosphorus pollution.


• to reduce the use of public water supply in England per head of population by 20% by 2037 against a 2019/20 baseline with sub targets beyond household consumption of a 31% reduction in leakage, and a 9% reduction in non household demand; and


• reduce phosphorus from treated wastewater by 80% by 2037 against 2020 levels. Defra noted water firms are due to  deliver a 50% cut by 2027, and beyond that, the strictest limit for Environment Agency permits would be set for 400 wastewater treatment works serving a population greater than 2,000.

White knight

In a new White Paper, Water UK calls  for urgent investment in water to save the country from catastrophic consequences.

The water industry has issued a warning that without appropriate investment, structured in a way that will achieve maximum impact, customers and

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about two essential industry underpinnings. Water 2050 asserts that the current approach to environmental regulation and the current approach to making investment decisions are no longer fit for purpose.

 

It identifies two associated priority areas for urgent change: reform of environmental regulation and enabling the right investments to be made at the right time.

 

It argues that the changes it proposes would allow investments to achieve far more and “therefore support the long term affordability of water bills”.

the environment could be left high and dry and out of pocket. In a white paper, published by Water UK last month, water companies raise fundamental criticisms

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Perceived wisdom

Government’s

recent WINEP reform

taskforce has been a useful step in the right direction but has not gone far enough.”                                         Water UK

The reformed WINEP methodology and new WISER look set to introduce considerably more flexibility into green outcomes delivery.

Water companies have been invited to “meet the ambition and expectations in WISER and follow the WINEP methodology to develop an environmental programme for the price review 2024.” Both documents are now published, and together offer an encouraging and substantially new approach to the construction and delivery of environmental outcomes. 


The Water Industry National Environment Programme (WINEP) has been substantially reworked as a result of deliberations by the WINEP Taskforce and a consultation last year, with the aim to deliver “greater environmental benefits for every pound invested by water companies by using a more outcomes-based approach”.


Where this has landed may be short of the hopes of some; Water UK’s new 2050 White Paper, for instance, argued: “Government’s recent WINEP reform taskforce has been a useful step in the right direction but has not gone far enough in moving away from prescriptive outputs, delivering in partnership or encouraging systems-based thinking.” However, the Government’s assertion that “The methodology is expected to make real changes to the options proposed by water companies to address environmental challenges and increase flexibility,” seems to hold water.

 

Companies have played a substantial part in forming the methodology, and it does respond to many things the industry has called for, including enabling considerably more delivery flexibility.

Mon AMI

New research finds AMI can unlock the benefits of metering data in a way that AMR simply can’t –  and recommends smart be pursued at PR24.

If the messages of a new report from Frontier Economics and Artesia Consulting are heeded, water companies investing in meters should be challenged at PR24 if they don’t put the smartest technologies in their business plans, rather than if they try to make the investment case for them.

 

That would be quite the turnaround from previous price reviews. But say Frontier and Artesia, the evidence now stacks up to show Advanced Metering Infrastructure (AMI) – which continually collects consumption data and feeds it back to data storage facilities very frequently (typically hourly) via a fixed communications network – is far and away the best metering choice. 

Their latest report, Unlocking benefits through data and metering, follows a November 2021 paper commissioned by communications infrastructure provider Arqiva in which the companies scrutinise the costs and benefits of AMI roll-out in England and Wales by 2030.

 

That work found there to be estimated net benefits of £1.9bn overall. The new study, also commissioned by Arqiva, compares investment in AMI against investment in Automated Meter Reading, which requires drive-by or walk-by reads, typically undertaken once or twice a year.

 

Specifically, it compares quantitative costs and benefits alongside a qualitative assessment of other key impacts, assessed from the perspective of both water companies and customers.

 

The analysis is based on evidence from company roll-outs of both technologies, cost and performance data provided by Arqiva and international experience through a number of case studies.

Goddard: long term and at the right pace”.

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will keep you on top of the threats and opportunities emerging from retail and upstream competition.

It's the eye on the competition.

Next bilateral processes launched

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The programme to improve how water retailers and wholesalers work together to deliver for customers is set to reach another milestone this month.

Bilateral transactions between retailers and wholesalers have been a major source of friction since the non household market opened in 2017, increasing trading party costs and impacting customer service.

MOSL has been working closely with trading parties since September 2020 to develop and introduce a central ‘hub’ to manage all bilateral transactions and begin agreeing a standardised approach to more than 60 bilateral processes.

The hub and first and most frequently-raised bilateral process – meter verifications – was launched in September 2021. A release of additional functionality followed in February 2022. After extensive testing and confirmation of trading parties’ readiness, another four processes were due to go live

Gilbert: "we're in good shape."

decide whether to connect to the hub via the web portal or system-to-system integration for each process, enabling deferrals for non-business days and improving the quality of performance reports. Commenting on the milestone, John Gilbert, MOSL’s head of planning, said: “We’re in good shape and I have every confidence that we will be going live as planned."

on 30 May, each with a retailer and wholesaler-initiated version: meter repair or replace, customer complaints, customer enquiries and trade effluent enquiries.

 

The latest release also provides new functionality, including the ability for trading parties to

Strategic Panel looks to PR24 for radical market change

Retail market leaders in England have identified PR24 as an over-arching priority in a recent draft strategy document.

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McAuley: looking for radical change.

of Work the retailers' Strategic Panel seeks to transpose the strategic direction set by Ofwat and Defra for the market into prioritised outcomes and programmes of work.

 

The draft document, which is open to consultation until 24 June, points to  PR24 as sitting across the three market outcomes identified as priorities – value creation, customer service excellence and water efficiency as core – and the five priority work areas identified as a means to achieve them. Underneath each

work area is a detailed three-year work programme aligned to MOSL’s three-year rolling business plan.The paper explained: “PR24 will determine the allowed revenues for wholesalers during the next price control period. Setting these revenues at an appropriate level is important for customers in ensuring appropriate services are offered, including ensuring that wholesalers are appropriately incentivised to invest in the delivery of efficient and effective services and technology in the non-household market that support the delivery of key market outcomes and priorities.

 

"This will have to be balanced carefully with Ofwat’s priorities for the household market.”

In a letter to the market, chair of the Strategic Panel, Trisha McAuley, made it clear her top-tier group was looking for radical change. She said: “We consider fundamental change is needed. Our overarching priority is a market that delivers sustainable economic growth in its widest sense, creating social, economic, and environmental value for customers, market participants, society, and the environment. Our strategic outcomes – value creation, excellent customer service and water efficiency – are core to achieving this.”

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