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October 2024
Issue 108

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

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Bounce back better

The NIC has identified design standards for summer peak demand as a priority, among other infrastructure resilience gaps that need to be filled.

You could be forgiven for assuming that a sector as essential as water would have a complete set of consistent standards, including design standards, for maintaining supply from source to tap, in all circumstances. But that isn’t the case. While there are plenty of standards – from targets on reducing supply interruptions to planning for resilience to a drought with a 0.2% annual probability – there are also gaps. For instance, there is no requirement to store a certain volume of water per 10,000 people supplied, or to have a Plan B supply source for populations over a certain size.  

This can – and has – had very real consequences, as those who have experienced prolonged water outages because of system resilience deficits would attest. An excellent example can be found at South East Water. Some customers  experienced supply interruptions driven by unprecedented peak demand in the July 2022 heatwave, and again in June 2023 causing a number of 

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schools to close, and prompting an Ofwat investigation and letter to the company criticising that “the resilience of supplies is well below what would be expected from an essential service provider”. The schools did not close because there wasn’t enough water, but because South East could not physically keep up with meeting expanded demand. But it did not technically fall short of standards; peak demand standards simply don’t exist.​

Playing to two audiences

The government wants to clamp down on, and partner up with, the water sector, as it announces special measures and offers a reset.

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Asking investors to pour money into a sector in one breath that you are publicly kicking in another is quite the role to play. But that seems to be the government’s gambit as it leaves campaign mode behind and faces the reality of governing the water sector.

 

Barring some tucked in provisions (presumably considered urgent) about special administration, the Water (Special Measures) Bill – introduced in the House of Lords last month by Baroness Hayman of Ullock – is all about tightening a hold on a sector that is deemed to be out of control. It promises prison and penalties for water executives and their companies, and more powers for those supposed to be keeping them in check.

It enabled the government to play to the gallery with water company ‘crackdown’ messaging that was readily picked up by an 

eager press, helpfully brought to life by condemnatory comments from environment secretary Steve Reed including reference to £41m of bonuses and benefits for chief executives since 2020: “companies may need to remove executives from post or take other corrective actions” if the expected standards are not met.

Uncomfortable as that must have been for the water execs present, there was soon a shift of tone from Reed – an olive branch even, as he offered the sector a “reset” and to work in partnership with the government towards a new future – one in which water and wastewater services expand to underpin growth, cope with climate change and please customers.

Better now than at any time since the industrial revolution? 

David Lloyd Owen reviews key literature on river health and evidence underpinning the current water quality debate.

Over the past couple of years, there has been a lot of work assessing inland water ecosystem health and what has been responsible for changing this in England over the past few decades. Another series of papers also helps us to place changes in a broader European context. This is important when considering the current debate about privatisation and regulation.

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What is of particular interest here is that this work also takes us outside discourses based on Water Framework Directive (WFD) compliance and concerns about sewage treatment works and combined sewer overflows, instead concentrating on the actual ambient quality of our inland ecosystems.

The emphasis is on species richness. Degraded habitats tend to support thin or denuded communities, in terms of the species you would expect to see there. Does this matter? Indeed it does, as the presence of indicator species tends to point to the intensity of downstream treatment that will be required to produce potable water. 

The ace of spades

Havant Thicket is now under construction – and leading the pack of new reservoirs in the pipeline. 

The start of the physical construction phase of the new Havant Thicket reservoir was signalled last month as ground was ceremonially broken at the site. Bob Taylor, chief executive of Portsmouth Water, observed: “As well as breaking ground quite literally here on site, this milestone represents a ground-breaking moment for the water industry as a whole.”

He’s not wrong. Havant Thicket is the first reservoir to be built in England for over 30 years and will play a vital role in securing long-term water resilience for part of southern England. It comes at the head of a pipeline of other reservoirs that are part of the strategic resource options programme being overseen by RAPID. 

 It is also: the first tangible product of regional planning; has been developed under an innovative partnership with neighbouring Southern Water; is environmentally led in its core purpose; and has social and environmental value as high priorities in its design. 

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As well as breaking ground quite literally here
on site, this milestone represents a ground-breaking moment for the water industry as a whole.”

Cold comfort

Watchdogs put welcome focus on the urgent needs of vulnerable customers as winter approaches. But for the most part, the call was do more within existing frameworks, rather than to discuss new policy fixes.

Anyone attending or listening in online to the Vulnerability Summit co-hosted by Ofgem and Ofwat last month would be left in little doubt of the need for dedicated focus on customers who need extra help. While there was some discussion of wider vulnerability and clear messages about the value of collaboration across sectors, the event was dominated by the issue of energy affordability. 

Speaker after speaker made the rationale plain. Ruwani Purcell, director of external affairs at Citizens Advice, shared that we are “setting and breaking unwelcome records” – including that average energy debt is now £1,700 and that 5m people are living on negative budgets, with the October price cap rise set to pull 200,000 more in. People need “urgent support” to help them get through winter, she told the room of representatives from utilities, consumer groups, charities, trade bodies, financial services and government. 

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We are setting and breaking unwelcome records;  average energy
debt is now £1,700 and that 5m people are living on negative budgets.”

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

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The path to prosperity

The Strategic Panel has set out is final roadmap which now includes a route towards price cap relaxation. There seems plenty of goodwill, but no guarantees.

Retail price caps could be reviewed and potentially relaxed earlier than planned if the business retail market can achieve certain conditions that would afford protection to customers while enabling competition to grow.

 

That’s according to the Strategic Panel’s final Roadmap to a flourishing market – a wide ranging stocktake of what needs to change to make the market work better and deliver benefits for customers of all sizes, while maintaining appropriate safeguards. 

 

Conditions and actions

The roadmap identified 31 market conditions which the Panel believes need to be met to enable the market to flourish.

These fall into three categories: 

  • Customer engagement and choice – Customers are clear about how the market operates; confident in exercising the choices available; and know they are protected from malpractice. 

  • Accurate and accessible data – Customer experience and market operation are underpinned by accurate and accessible data that can be used to innovative for customers.  

  • Processes, capability and economics – Customers embrace opportunities to build water security through investment in smart technology and customer incentives to reduce demand.
     

The roadmap goes on to set out who needs to do what and by when (34 actions in total) to achieve these conditions, as summarised in the graphic. 

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The central line

The market urgently needs a smart meter data sharing mechanism. A centralised hub has emerged as the front runner – but raises many challenging issues. 

The non-household market needs a common mechanism for sharing granular smart meter data. And quickly. 

 

Wholesalers with smart rollout programmes or trials underway are already sharing data with retailers in different ways. This variety will increase as more rollouts start in earnest in AMP8. That would be complex and inefficient and must be guarded against, as lessons from bilateral transactions attest.

Meanwhile the Central Market Operating System’s (CMOS) front end is already near capacity.  Metering lead at MOSL, Martin Hall, told the Strategic Panel’s Open Forum last month that the number of reads

 

CMOS won’t be able to cope.”
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going into CMOS – typically two per meter per year – has already started to creep up. “CMOS can manage that level at the moment…but only just,” he said. However, “CMOS won’t be able to cope” with an increased number of smart reads, even one per month for settlement purposes, let alone daily reads. This urgently needs to be managed.

CONTENTS October 2024 full contents of the magazine  

FEATURE Peak demand standards and resilience gaps.

 

NEWS REVIEW Sewage anger to #floodthestreets.

 

REPORT Special measures and an autumn review of regulation.

 

REPORT United Utilities’ investment view of its Draft Determination.

 

REPORT Key stakeholder positions on PR24.

 

INDUSTRY COMMENT Audit to make a comeback in AMP8.

 

NEWS REVIEW Thames hit with further downgrades.

INDUSTRY COMMENT Towards climate resilient networks. 

INDUSTRY COMMENT WICS audit fallout widens.

 

NEWS REVIEW Call for Scots storm overflow overhaul.

 

ANALYSIS River health literature review.

 

FEATURE Spades in the ground at Havant Thicket. 

 

REPORT Regulators’ Vulnerability Summit. 

 

INDUSTRY COMMENT Public trust and water management. 

 

INDUSTRY COMMENT International standards on flushability.

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

It's the eye on the competition.

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NEWS REVIEW Ofwat seeks views on ADR for wholesalers.

REPORT Roadmap to a flourishing market and REC relaxation prospects.

REPORT Roadmap to a flourishing market and REC relaxation prospects.

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