Expert analysis for a changing water industry
March 2024
Issue 102
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
Tough and tougher
Defra’s water crackdown doesn’t go far enough for some.
The government’s “crackdown” on water companies continued last month, with the twin announcement of an Environment Agency inspection surge and a ban on bonuses for water executives whose companies have committed serious criminal breaches.
Recruitment is underway at the Environment Agency (EA) for up to 500 new staff, with a view to quadrupling inspections. The plan is for that to take inspection numbers from 930 this financial year, to 4,000 a year by March 2025 and 10,000 by April 2026. Defra said this will include an increase in unannounced inspections – “strengthening oversight of water companies and reducing the reliance on water company self-monitoring, which was established in 2009”.
The £55m-a-year cost will be funded through increased grant-in-aid from Defra to the agency and higher charges for permits levied on water companies, which is currently subject to consultation.
The announcement added that the EA will use data-driven analytics to map discharges against rainfall more effectively, so it can direct new specialist officers to any sites at risk, identify any non-compliance and take action.
We need to get much tougher with unannounced inspections to bring an end to the routine lawbreaking we have seen from water companies.”
Environment secretary, Steve Barclay
Time for adult conversations
New Zealand’s new government has halted centralising water reform in its tracks. Margaret Devlin, chair of Auckland’s provider Watercare, looks ahead to
informed local dialogue about the future.
“Local water, done well” is how New Zealand’s new National-led coalition government has summarised its water policy. Before Christmas, local government minister, Simeon Brown, said his administration would restore council ownership and control of water assets by passing legislation early in 2024 to repeal the former Labour
government’s Three Waters laws. That has now happened, with Brown commenting in a newspaper column that removing the “disastrous” legislation was a first 100 days of office priority for the new government.
The move has undone policy dating back to 2019, following the Three Waters Review of 2017, to centralise management of drinking water, wastewater and stormwater from 67 local councils to four (subsequently amended to ten) regional entities. The policy has been enacted through a number of pieces of legislation since, and has included the creation of a drinking water regulator in 2021, and an economic regulatory regime last year.
Smart collaboration for AMP8
The sector needs to be clear about what is required in AMP8 and have the right mechanisms in place to ensure it can efficiently meet its obligations.
AMP8 is an extremely important moment in the evolution of the water sector from being a fixer of legacy issues and old problems to driving forward towards creating a completely new 21st century water management sector for the good of our society.
The challenges for the UK water sector are well documented, from the need to reduce leakage, water scarcity and pollution incidents to providing more resilience against extreme weather events. The net zero agenda will push the industry to further reduce process emissions, adopt new ways of managing biosolids and implement more nature-based solutions.
Furthermore, the water sector will need to look at increasing biodiversity net gain and achieving nutrient neutrality in catchments
under severe strain. These challenges must be faced in an era of greater media coverage, increased political oversight and scrutiny and more demanding customers. This will require the industry to change to be more circular, inclusive and transparent.
Smart – from source to tap
SES Water aims to be the UK’s first fully smart water company.
Chief digital and information officer, Dan Lamb, explains.
.jpg)
SES Water has the stated ambition to become the UK’s first fully smart water company. Leading the charge is SES’ chief digital and information officer, Dan Lamb, who points out the role itself has only existed for about double the 18 months he has held it, and that its creation reflects SES’ digital ambition.
Lamb shares that among his information oversight functions,
The risk of cyber attack has been rising up the industry’s agenda with the South Staffs and now Southern breaches obviously prompting increased concern. “What if that was us, and what are we doing to make sure it isn’t? Those are the two, if you like exam questions, that we've been constantly asking ourselves over the last 12 to 18 months,” Lamb shares.
cyber security looms large at present. “Restlessness and anticipation are probably the two words I would use to describe our mindset,” he says. “There's an ongoing restlessness, and readiness for the fact that something could occur and unfold.”
While information security is a priority for Lamb, it is the digital part of his role that seems to really excite him. “Working with the rest of the organisation on how we best plan, execute and deliver on digital transformation,” is how he puts it – all of which links in with the first fully smart water company ambition. And SES has already achieved an industry first: a fully intelligent network. It has smart sensors throughout its pipe network providing data, which the SES Water team is turning into useful insight.
Who watches the watchdogs?
The House of Lords Industry and Regulators Committee says urgent reform of regulators is required to preserve watchdogs’ integrity and legitimacy.
The House of Lords Industry and Regulators Committee has called for the creation of an “Office for Regulatory Performance” to investigate and report on regulators’ performance and support Parliament in holding regulators to account.
That was among the many actions advocated by the committee in its new report, ‘Who watches the watchdogs? Improving the performance, independence and accountability of UK regulators’, which scrutinised the work of the UK’s 90 regulators and found urgent reform is needed to improve accountability and performance.
The committee findings included:
-
there is a perception that some regulatory leaders have been appointed on account of their political loyalty rather than their experience and capability; and
-
there have been unacceptable Government delays of appointments to regulators’ boards, which hampers the governance of regulators and makes the positions less attractive.
Independent regulators must have the confidence to tell the government and the
public about the serious problems facing their sector and be able to set out proposals to meet them with clarity, efficiency and transparency.”
Inquiry chair, Lord Hollick
Fresh eyes on the issues
Ten innovators from outside of the water industry have won funding in Ofwat’s first Water Discovery Challenge.
Ten teams of innovators from outside the water industry have secured funding of up to £450,000 each in Ofwat’s first ever Water Discovery Challenge.
The competition, worth £4.5m, is part of the Ofwat Innovation Fund and is the first element of the Fund exclusively for non-water sector players to secure funding for ideas to help solve the biggest challenges facing the industry.
Over the next six months, winners will also receive non-financial support to further the development of their solutions such as
mentoring, along with a final showcase event that will allow them to pitch their projects to potential water company partners and/or investors.
Helen Campbell, senior director for sector performance at Ofwat said: “This competition was about reaching new innovators
from outside the sector with different approaches and
new ideas, and that’s exactly what
the winners announced today
are doing.”
will keep you on top of the threats and opportunities emerging from retail and upstream competition.
It's the eye on the competition.
Seven projects secure Market Improvement Funding
Water efficiency and stewardship projects dominate the winning bids.
Seven projects have been successful in the latest round of the non-household (NHH) market’s Market Improvement Fund (MIF) , which awards up to £200,000 to projects that will benefit the market, its customers and the environment.
The Strategic Panel awarded £753,000 of a £1m pot. An eighth bid remains under review. There were 15 bids in total – the highest number so far in this, the third round of the MIF.
MOSL’s head of market performance, Markus Lloyd, commented: “The MIF provides a platform for innovators to conduct pilots, undertake research and test potential solutions to problem areas in the market that aim to make it better for customers and the
environment. The projects are excellent examples of innovation in the market and we look forward to seeing what they produce.”
MOSL trims 1% from charge rise and secures business plan approval
Wholesalers and retailers have voted and approved MOSL’s 2024-27 business plan.
The market operator trimmed back the costs proposed in its draft business plan in response to feedback. The draft plan put forward a charge increase for the main budget of 12%, driven predominantly by the cost of Market Performance Framework Reform and inflation. The final plan proposed an 11% increase, a reduction of £110,000 taking charges for 2024-25 to £13.5m.
MOSL explained it had reduced the cost of the Data Assurance audits to £140,000 (a reduction of £70,000) and reduced other core costs by £40,000, through a range of small savings.
Business Stream’s Jo Dow appointed to Strategic Panel
The non-household retail market’s Strategic Panel has appointed Jo Dow, chief executive of Business Stream, as a retailer member. She started her two-year term on 1 March.
Everflow’s chief financial officer, James Cleave, was reappointed for a two-year term as fellow retailer member, effective from the same date.
No changes without consultation to business customer protection code
Stakeholders will continue to get a say on all proposed changes to the Customer Protection Code of Practice (CPCoP) in the business retail market after Ofwat altered the position it consulted on in September 2023.
The regulator said it will implement the changes on 1 March, which deals with “Tranche 1” minor modifications to the CPCoP, but with some alterations. The most significant was that Ofwat had proposed it could make future non-substantive changes to the CPCoP without the requirement for a formal consultation.
Retailers push back on emergency contact provision plans
Requiring retailers to collect information as proposed from customers to share with wholesalers in the event of an emergency or unplanned event would be “impractical and disproportionate,” according to one participant at an Ofwat webinar to discuss Tranche 2 changes to the Customer Protection Code of Practice.
The contributor pointed out that no cost allowance has been provided for this under the REC price protections, and that legacy data issues inhibit customer contact.
MOSL urges Ofwat to update Open Water website
MOSL has called on Ofwat to update the Open Water website ahead of expecting retailers to increase business customer awareness of the ability to switch suppliers.
Speaking at Ofwat’s Tranche 2 webinar, MOSL argued: “The Open Water website should be the central platform through which existing and future business customers can find out more about the market, how to switch and which retailers are operating. However, the Open Water has not been materially updated since market opening. The content is out of date which may have the impact of deterring customers, rather than encouraging them to engage in the market.
CONTENTS March 2024 full contents of the magazine
EVENT Getting what you pay for – a water system that delivers for all.
REPORT Defra’s water crackdown continues.
REPORT Fines v failures.
REPORT Senedd tells Welsh Water to raise its game.
INDUSTRY COMMENT Scots bite the bullet on prices.
REPORT Who’s watching the watchdogs?
INDUSTRY COMMENT Smart collaboration for AMP8.
INDUSTRY COMMENT Sponge cities support resilience.
REPORT Stormont storms back.
INTERVIEW Adult conversations from Auckland.
NEWS REVIEW Cornwall water saving tariff.
NEWS REVIEW Customer service enforcement.
INDUSTRY COMMENT Multi-billion pound revenue leaks.
INTERVIEW SES’ Dan Lamb on being fully smart.
INDUSTRY COMMENT Smart platform success.
REPORT Water Discovery Challenge winners.
INDUSTRY COMMENT Digital control of flood risk.
NEWS REVIEW Pickering pollution case appeal.
will keep you on top of the threats and opportunities emerging from retail and upstream competition.
It's the eye on the competition.
REPORT Market Improvement Fund winners.
NEWS REVIEW MOSL secures business plan approval.
