Interim DEFRA minister, David Rutley, has given support to Ofwat’s view that the water industry should lead the charge on water resources planning beyond company boundaries, and that markets should play a role.
The news came in a letter to Ofwat chief executive Rachel Fletcher about the National Infrastructure Commission’s recent report on water (a letter dated 21 June but published last week, and responding to Fletcher’s letter of 31 May).
Rutley first noted that the government shared the NIC’s conclusion that we need to increase long-term security of water supply. He then said: “To complement individual company plans, I agree that the industry should come forward with firm proposals to establish a clear industry view on the scale of the challenge and develop plans to deliver additional supply infrastructure in the most timely and cost-effective way possible. This could be done through greater regional coordination and harnessing the power of competition and market forces within environmental constraints.”
While “there is much that companies can do within the current regulatory framework,” Rutley committed that DEFRA would work with the industry and regulators to see where changes could enable better action. He explained: “The work the Environment Agency (EA) has underway; developing a national framework and the emerging thinking from the 25 year environment plan on system operation will both be an important part of any future. We should encourage pilots during the next price review period to test how planning and procurement could deliver greater overall benefits to customers with increased resilience delivered in the most efficient way. I am encouraged that Water Resource South East is already moving towards such a model.”
Elsewhere in the letter, Rutley took the opportunity to prod some water companies to be more ambitious after 2020 when they submit final Water Resource Management Plans later this year. He noted the government supports Ofwat’s leakage target for 2025 (15% reduction; in the draft plans, many but not all had adopted this minimum cut) and reminded firms of environment secretary Michael Gove’s call for greater ambition in his March City Conference speech. “I look forward to seeing final water resource management plans, and how water companies have considered feedback from their consultations and the Commission’s water resources report,” he concluded.