Ofwat amends all licences to take in its governance objectives

The licences of all 17 regulated water companies now contain a new condition to enshrine Ofwat's Board leadership, transparency and governance objectives. The regulator amended licences on 22 July following a May consultation to which all companies gave their consent. Ofwat intends to introduce similar changes to the licence of Thames Tideway shortly.

Thames and Affinity miss leak targets as Water UK reports sector improvement

Thames Water and Affinity Water missed their leakage targets last year. The data was made available by Water UK, which last week updated the www.discoverwater.co.ukinformation site with 2018/19 figures. Thames went 78 million litres over its 612 million litres a day target, while Affinity went 28 million litres over its target of 168 million litres a day. All other companies with a defined target for the year met or achieved it. Water UK pointed out there had been a “sharp increase” in the number of companies meeting or beating their targets. Only seven did so in 2017/18. It added that the overall volume of water being leaked is down by 10 million litres per day. Commenting on the figures, W

Ofwat to get Ofgem-style powers to amend licences

DEFRA has confirmed it will override objections from most water companies and give Ofwat Ofgem-style powers to modify licences. In its response last week to responses to its January 2019 consultation Improving our management of water in the environment, the government said it will modernise the licence amendment process in water based on the energy model – “however we will take account of the needs of the water sector, and comments provided in consultation responses”. It explained: “The government believes that we have delayed change and modernisation for too long… The status quo means that the regulator is potentially constrained from making modifications that it considers necessary, withou

Ofwat guidance makes it clear most intercompany loans will be blocked

Ofwat has clamped down on intercompany loans at water companies with new draft guidance. The guidance, open for comment until 3 September, makes it plain that Ofwat will only consider derogations from ring-fencing licence conditions if they serve customer interests or bolster financial resilience. Such derogations include inter company loans from regulated businesses to their parent companies. These require permission from Ofwat and the regulator pointed out it would be unlikely to give consent for them in future. The move is the latest in Ofwat’s programme of work to make sure water companies are financially resilient and act in customers’ interests. Following previous case by case interven

Tor Water on final warning

Ofwat has given notice that it intends to issue a final warning to south west based new entrant retailer Tor Water to comply with its market obligations. The regulator last week said it will issue a Final Enforcement Order under the Water Industry Act 1991 to Tor, requiring it to provide various outstanding documents and notifications, and to cease to be a defaulting trading party. Ofwat issued a direction to Tor in May, with which it only complied in part. It ordered Tor to pay outstanding undisputed invoices and to cease to take on customers. The retailer has also since gone into default with a number of wholesalers.

Southern appoints new chairman

Southern Water has appointed Keith Lough as chairman. Lough's (pictured) current non-executive positions include Rockhopper Exploration, Cairn Energy and Hunting. He has been a non-executive director of Ofgem since 2012 and he will step down from this role prior to his 1 August start at Southern. Meanwhile Southern has also appointed Kevin McCullough as an independent non-executive director with immediate effect. McCullough is currently chief executive officer of Calon Energy. Previously he was chief at UK Coal Production after being the chief operating officer for RWE Innogy, and then npower. He was chairman of Horizon Nuclear Power prior to its sale to Hitachi and was a non-executive direc

Southern Water applies for drought permit

Southern Water has applied for a drought permit and warned customers of the likelihood of its need to impose temporary use bans (hosepipe bans). The company it was seeking to continue abstracting water from the River Test to avert the risk of drought. It said it had warned in June of falling flows in the river – a vital source of fresh water for south Hampshire – and said flows were currently at the point where a drought permit could be needed to enable Southern to continue abstraction from it.

Business Stream reports £250m in new contracts as it seals Yorkshire deal

Business Stream has reported wins of more than £250 million in new contracts since the English retail water market opened in April 2017 and it has confirmed its acquisition of Yorkshire Water Business Services and Three Sixty from Yorkshire Water parent , Kelda to add 140,000 customers. The Yorkshire move almost doubles Business Stream ’s market share, the company claimed. It announced in January 2019 its deal to take on the non-household customers from Kelda – its second acquisition following its acquisition of the non-household customer base of Southern Water. The acquisition will take effect this autumn.

Villiers appointed environment secretary

Prime minister, Boris Johnson, has appointed backbencher, Theresa Villiers, as the new environment secretary. Former transport minister and Northern Ireland secretary, Villiers (pictured), succeeds Michael Gove who has been moved to Chancellor of the Duchy of Lancaster in Johnson’s cabinet overhaul. Meanwhile Theses Coffey has kept her post as water minister while being promoted to minister of state at Defra.

One-in-four in Ireland see no need to save water despite record drought

Research commissioned by Irish Water has found that 25% of people think that the level of the rainfall in the Republic of Ireland makes water conservation unnecessary despite seeing the country’s first ever first hosepipe ban last year during its worst drought 70 years. Meanwhile 52% of Ireland’s public conceded that they waste water according to the survey by B&A. Publicly owned Irish Water has reported its current leakage rate at 43%. It has launched a campaign to encourage the public to use only what they need by emphasising the economic and environmental cost of providing safe drinking water.

Significant pollution incidents up as water sector accounts for 12% of total

The Environment Agency has reported a 14% increase year on year in the number of significant pollution incidents, to 493 in the 2018-19 financial year with water company incidents rising to 69 from 58 accounting for 12% of the year’s total. In its latest annual report the agency said the increase in serious pollution events was “partly due to the prolonged periods of dry and hot weather in 2018-19” which, it said, intensified the impact of incidents. According to the report water along with illegal waste management, agriculture and "other, non-regulated companies" accounted for 66% of all incidents. Water and illegal waste had each increased their number of incidents year on year. The agenc

Fitch warns draft determination will inflict credit quality damage across sector

Credit rating agency, Fitch Ratings, has forecast that Ofwat’s draft price review determinations were “likely” to undermine the credit quality in the sector. The agency’s warning came as it downgraded its outlook for Anglian Water Services Financing debt to Negative from Stable because of Ofwat’s “significant decrease in allowed totex” relative to the company’s business plan. Fitch has also affirmed its rating of Anglian’s holding company, Osprey Acquisitions, with a Negative Outlook on its anticipation of weak dividend cover capacity and uncertainty over the financial profile of Anglian Water. Fitch highlighted Osprey's cash flows and debt service significant reliance on dividends from Ang

Thames unveils first of 100 on-the-street water fountains for London

Thames Water has unveiled the first two of 100 drinking water refill points to be rolled out across London, in partnership with the Mayor’s office. The two fountains in Ealing will be joined by others including in Camden, Greenwich and Southwark over the next few weeks. Locations of the fountains will be displayed on Google Maps and there will be promotional posters on bus stops and other advertising sites near every fountain from mid- August until the end of September. Each fountain will undergo regular safety and quality inspection by Thames Water engineers. Steve Spencer, chief operating officer at Thames Water said: “London’s tap water is world class and we’re celebrating this by buildin

Swift summary of draft determination

PUBLISHED LAST WEEK AS A SPECIAL BULLETIN FOR SUBSCRIBERS Here is a quick summary of Ofwat's PR19 draft determinations for slow track and significant scrutiny water companies. For a fuller briefing, see the July edition of THE WATER REPORT. Overview • 12% real terms fall in average bills. Reductions for combined water and sewerage services range from £7 for Hafren Dyfrdwy to £110 for Northumbrian Water, in 2017-18 prices. • £49bn of spending (incorporating £12bn for new and improved services) Cost of capital of 3.19% in CPIH terms, down from December 2017 view of 3.4% Cost efficiency • Totex cost efficiency gap 11.3% • Base cost gap 4.3% • Ofwat’s view of efficient wholesal

Gove pledges boost for Ofwat's powers

In a speech last Tuesday, environment secretary, Michael Gove, pledged to boost Ofwat’s powers via the Environment Bill. He said: “We will legislate to strengthen Ofwat’s powers to update water companies’ licences, in order to make sure that they can do their job.” The comment came after Gove (pictured) criticised water companies for poor environmental performance. He said: “At present, 16% of our rivers, lakes, estuaries and coastal waters are in a ‘high or good status’. Our target is to improve this to 75% as soon as is practicable. Of course this cannot be achieved by water companies alone, but the role water companies are playing is simply not good enough. The recent Environmental Perfor

Defra consults on "ambitious" target for personal water consumption

Defra last week published its long-awaited consultation on measures that might be taken to reduce personal water use, together with a call for evidence to gather data and information on what an “achievable but ambitious” personal consumption target could be. The consultation, open until 11 October, invited responses from the public as well as specialists including water companies and academics. It will look at measures on how to achieve this non-binding target and will include exploratory questions around: the labelling of water-using products; how building standards can be improved; the future role of metering; the implementation of behaviour change campaigns; and, how to improve the availa

Sustainable drainage design delays in England are double frequency in Wales

Delayed and blocked planning applications due to sustainable drainage system (SuDS) design are twice as likely in England compared to Wales according to a recent report by the Institution of Civil Engineers and Wavin. The report, SuDS – perception and progress: A comparison of England and Wales, showed findings that 60% of developers another “professionals” in England, compared to 30% in Wales, had seen plans delayed or refused because of of objections to the SuDS designs. According to the report, SuDS was more likely to be the preferred method of surface water management for 62% of professionals in Wales while only 39% in England held the same preference. The report, according to the author

England's drinking water risk index soars with three companies responsible

Risk arising from water quality incidents soared by more than 300% in England during 2018 while in Wales it fell 42% according to the latest Drinking Water Inspectorate’s (DWI’s) reports from the chief inspector on England and Wales. The Event Risk Index (ERI) for the combined public water sectors of England and Wales increased in 2018 to 783 from 241 in the previous year according to the DWI report. For Wales alone the ERI fell from 55 to 32. Southern Water, Thames Water and Bournemouth Water were responsible for the increase in national ERI in 2018 with the coliform detection at Southern Water’s Testwood works the largest single contributor accounting for more than 30% of it. The DWI also

Retail transfer gain leaves pre tax earnings down 8% at SES Water as costs rise

Profit before tax at SES Water was down 8% for the year to 30 March 2019 to £9.7m after a one-off £2m profit from the sale of its business retail operation to an associated concern in the previous year offset a £1.1m fall in financial expenses in the current report. While operating costs increased for the year £3.3m to £48.4m – including a £1m rise in wages to £10.6m and pension costs up £0.7m – a 2.7% revenue rise to £66.8m and other income of £1.6m, including a £1.25m insurance claim, took operating profit up 1% to £20.1m. A de leveraging exercise during the financial year 2018-19 reduced the company’s gearing from 77% to 61%. It included the conversion of £12.4m-worth of preference

Yorkshire Water appoints Barber as chief as Flint retires

Yorkshire Water has appointed Liz Barber as chief executive. She will take up her new post from 12 September when the current chief, Richard Flint, retires after 27 years with the company, nine as chief executive. Barber (pictured) is currently the company’s chief financial officer – having held the post since 2010. She joined Yorkshire from Ernst & Young.