Expert analysis for a changing water industry
November 2021 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
Free thinking
Outcomes-based environmental targets that give companies real freedom to choose solutions would deliver much more green bang for the buck. Wessex Water and Frontier Economics make the case.
The government has a 25-year vision to leave the environment in a better state for future generations – but lacks funding and a delivery strategy. Water companies want to be seen as leaders in environmental stewardship by 2050 – but are hamstrung by prescriptive regulation and a reputation as polluters. Can these, mutually supportive aims be fulfilled without breaking the bank, given spiralling post-pandemic public debt and living costs? It's a $64,000 question.
Pitching in to the debate, Wessex Water and Frontier Economics have proposed Outcome-Based Environmental Regulation (OBER). They claim it “enables society to pay less for more environmental improvements”.
They contend that OBER can remove inefficiency from current arrangements, so society can benefit from bigger green improvements without over-burdening bill-payers. What’s not to like?
We’re not arguing for deregulation, just for targets with incentives set at a different level.”
While still not exactly traditional, catchment management is now a long-standing practice at Thames Water. The company works with, pays or incentivises, others in its catchments to address a range of issues – from pesticide, nitrate and phosphate pollution, to low flows and flooding. In many cases, catchment management activities provide better value than conventional solutions, and there are often other benefits to be had from catchment schemes, such as biodiversity gain and increased amenity.
Since 2018, Thames has been devising a strategy to make this catchment work "smarter". this Smarter Water Catchments initiative has two defining strands. Firstly, rather than focusing on tackling a single issue as catchment management projects have typically done, it seeks further benefit and value from tackling multiple challenges together, in recognition of the environment as a system. Secondly, it is concertedly seeking to evaluate the impact of working with third parties in catchments, to improve river catchments for the all.
Smart, not casual
Thames Water has just launched ten- year plans for its three Smarter Water Catchment trials, and is seeking to build a robust evidence base on the benefits of partnership working and systems thinking.
Storm of protest
Defra u-turns on sewage amendment in the face of public outcry.
Perhaps it was the emergence of the hashtag #TorySewage that tipped it for ministers, but within days of MPs voting with the Government to reject the Duke of Wellington’s Environment Bill amendment, which would have placed a legal duty on water companies to reduce sewage discharges into rivers, Defra issued a climb-down statement saying it would in fact amend the legislation to that effect.
The public outcry at the MPs’ original vote was unprecedented, the Government clearly having underestimated the strength of public
The public outcry at the MPs’ original vote was unprecedented, the Government clearly having underestimated the strength of public hostility to sewage pollution, as well perhaps as the powerful effect of fake news as well as fact. Conservative MPs took the brunt, with social media channels (embarrassingly in the week before COP26 started) awash with their smiling PR shots together with the hashtag and how they voted.
Inevitably as the story spread, others were swept in. Particular ire resulted from the Environment Agency’s appearance on an ITV Tonight What's In Our Water? primetime broadcast, where the representative said rivers are for wildlife rather than swimming in. For the water companies, much was made of their private ownership, and as one change.org petition put it, the inclination to “prioritise profit for their shareholders over the health of their customers”. Shades of FaceBook.
The fifth amendment
Northumbrian Water’s innovation gathering last year was rescued from the pandemic by technology. This year – its fifth – it moved to a meeting place in history and went global. Trevor Loveday was virtually there.
Challenges facing the UK water sector grow in intensity and complexity with every passing year and stretch beyond the engineering and financial into the political. At the time of writing, both houses of Parliament are playing volleyball with sewer management issues potentially costing billions.
In the face of this, a climate emergency, a pandemic and the attendant social turmoil, all business arguably has to be unusual or prepared to be so. It seems reasonable, then, to say that thinking differently will have to be normal.
So in October, Northumbrian Water ran the fifth event under its Innovation Festival banner. This event has grown steadily since it’s instigation in 2017 and it has changed over time. But its most radical shift came last year, out of the challenge of running any gathering in a pandemic. Coronavirus turned a plan last year to add an international, online element to the tents-in-a-field convention of the first three festivals into a need to abandon the tents.
This year the online/ physical hybrid happened. The design sprints, hacks and so-called year’s-work-in-a-week sessions took on transglobal interaction as a major feature, while others shook hands and danced in one of Newcastle’s historic buildings.
But it was not a return to old ways.
In the Mex
Incentive payments for service to customers and developers make their first appearance in in-period draft determinations, for 2020-21.
Portsmouth Water followed closely by Wessex Water ranked top in Ofwat’s domestic customer experience league table for 2020-21 – the first year that companies will receive financial payments for out and under performance. Meanwhile, Thames came bottom, with a £16.7m penalty.
The C-MeX ranking and incentive payments by company. 2019-20 was a shadow year where financial incentives were not applied. Ofwat has not made direct comparisons to the shadow year, due to some methodological differences. However it said the 2020-21 data will now be treated as a benchmark against which to compare forward performance.
In an extensive report, Accent shared the detail of its findings and views on what is driving the results. What drives satisfaction?
For CSS, Accent said the “most striking” reason for good scores was resolution of the query. Satisfaction averaged 87.37 for those whose query had been fully resolved, compared to 52.86 who felt it wasn’t. Moreover, non-digital contacts were much more likely to be satisfied compared to the digital contacts: 80.95 versus 75.15.
D-MeX
Meanwhile, Severn Trent Water came top of the table on developer experience (D-MeX), with Wessex in second place and Portsmouth third. SES Water was bottom, with Yorkshire Water just above.
What were developers satisfied with? Participants were most satisfied with the accuracy and completeness of documentation provided (with an average score of 77.48), followed by understanding their needs (74.15) and meeting agreed deadlines (74.01). The lowest satisfaction rating was for offering value
for money (62.31).
These results reinforce our long-held concern that water companies which generate high numbers of complaints can still end up being financially rewarded through the customer experience measure. CCW chief executive, Emma Clancy
New for Hampshire
Southern Water has dropped desalination as its preferred resource option for Hampshire and now favours an additional transfer from its in-progress Havant Thicket reservoir.
Southern Water’s Plan A to protect the chalk rivers Test and Itchen while continuing to provide enough water for the residents and businesses of Hampshire during drought conditions has changed, following an extensive options appraisal process. In short, the preferred option set out in its 2019 Water Resources Management Plan (WRMP19) of a 75Ml/d desalination plant at Fawley has been dropped in favour of a new water transfer scheme.
Desalination did not even make it to back-up option status. That position continues to be occupied by wastewater reuse, rebadged as water
recycling by Southern following extensive customer consultation. Any resource option ultimately chosen will of course be pursued in parallel with ambitious leakage and demand management strategies.
A blueprint for water neutrality
Creating new homes for thousands of people, without increasing the amount of water the community in which the homes are built uses, seems an impossible ask. But that is exactly what Affinity Water and its partners are aiming to do, using winnings from the first round of Ofwat’s Water Breakthrough Challenge innovation fund.
The project, Water neutrality at NAV sites, in fact has a few objectives. Firstly, it is looking to explore how to make new developments water neutral, and ultimately to produce a ‘blueprint’ on this based on its experiences and findings. Ed Barnes, head of demand management at Affinity Water, says demand reduction is a company priority. It has 24 projects in flight to manage demand, and business-as-usual challenges have been exacerbated by Covid lifestyle changes which resulted in a 9% demand increase last year. Affinity’s Central region sits alongside the M25 and serves what Barnes says is “classic commuter belt territory,” which brings the dual issues of being affected by sustained demand pressures from continued home working, and is an area of substantial growth.
With Breakthrough Challenge funding, Affinity Water and partners intend to draw up a plan for the seemingly impossible: water neutral development.
Climate crisis? Water crisis
Hasin Jahan will be part of the WaterAid delegation at COP26, hammering home the link between climate change and water, and calling for adaptation and water, sanitation and hygiene funding.
“The climate crisis is a water crisis,” Hasin Jahan passionately argues, a few weeks before setting off to make the point at COP26.
She is the country director of WaterAid Bangladesh, and part of the WaterAid delegation that will be taking part in an historic effort at the international climate conference to emphasise the role of water in meeting the goals of the Paris Agreement and supporting ambitious global climate action.
Jahan explains that the water, sanitation and hygiene (WASH) agenda that WaterAid and others promote is inherently connected with the four stated goals of COP26.
Jahan: mobilising funds is "absolutely very important for us."
She places a particular emphasis on the WASH connection with goals two, three and four: adapt to protect communities and natural habitats; mobilise finance; and work together to deliver. While the global south contributes little to global emissions, it is greatly affected by their consequences. Adaptation, she says is vital to protect its people and environments from the onslaught of floods and drought. Availability of funds is "absolutely very important for us,” Jahan says, because more than 80% of climate related funding is directed at mitigation. And on working together, she says, "That's obvious…and true for everyone.”
keep on top of the threats and opportunities in retail and upstream.
It's the eye on the competition.
Lift the
Bilateral flow
MOSL’s John Gilbert looks ahead to the next stage of the bilaterals programme after a blinding start to phase 1.
I wouldn’t say we dragged anyone across the line, but it
was touch and go at times.”
John Gilbert
“It probably couldn’t have gone better.” So says MOSL’s head of planning John Gilbert, reflecting on the launch of a new, centralised system to manage bilateral transactions in the non household retail market on 22 September – widely recognised as one of the biggest developments since the market opened in 2017.
One month on, he remains delighted and emphasises the point that it’s the team effort across the market that we have to thank for such a smooth and successful start.
“We had planned for some challenging go-live scenarios, from high volume of hits to the web portal to a flood of queries,” he shares, explaining MOSL had front line, second line and third line support plans in place, and that the project team worked late into the night on 21 September to be ready for anything.
Some trading parties were nearly as keen, Gilbert implies, with the first logins coming through at about 3am, and the first requests raised just after 8am.
Affinity leads wholesalers in service to retailers
Retailers have ranked Affinity Water as the best performing wholesaler in the second ever Retailer Measure of Experience (R-MeX) survey, the results of which were issued by MOSL last month. Affinity secured the leading overall performance score of 7.9 compared to a market average of 7.3.
Other top performers were Portsmouth and Yorkshire (7.7 each), and Anglian and United Utilities (7.6 each). Severn Trent was at the bottom of the table (6.6), closely followed by SES Water (6.8).
The market average score was down slightly from the first survey, undertaken in August 2020, when it stood at 7.4. However response rates were up, with MOSL receiving completed responses from 14
retailers representing 98.2% of the supply points and 93.6% of the consumption in the market. MOSL commented: “We would note the continuous strong performance of trading parties across all the reviewed service areas. Whilst many scores had minimal or no change in comparison to last year…this assures MOSL that performance remains consistent and for the most part, good across all wholesalers.”
Among the changes evident from last year were significantly improved scores from Thames and South Staffs, while Bristol, Wessex and SES did worse overall. Water-only companies continued to perform well but last year sat entirely in the top half of the table. This year they were distributed throughout.
The businesses of water efficiency INDUSTRY COMMENT
As carbon reduction talks kick off at COP26, Everflow’s Clare Galland looks at how it and its SME customers can make a difference.
In the UK, water usage is an important component in reducing our carbon footprint, with 6% of UK carbon emissions attributed to water use. We also know that 30% of water is used by businesses, which is where retailers come in – and why we at Everflow are passionate about cutting water wastage among our SME customers.
Water, while being a renewable resource in its purest form, is not carbon-neutral – far from it.
Greenhouse gas emissions are produced every time we use water in any way. Once it’s collected, it needs to be treated to make it safe to drink, which uses chemicals that are not renewable. It then has to be transported to its final destination, all of which uses energy, before wastewater is collected and returned. All of this uses an awful lot of energy and so businesses, including ourselves and our customers, need to focus on making the whole cycle as sustainable as possible.
Galland:
"All too often, customers are not being given the right signals or incentives."
THE
WATER REPORT
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Thompson: "personalised service" to members.
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