Ofwat concerns about supply persist in Thames' water resource plan
Ofwat has questioned the appropriateness of the supply side solutions and the regional cooperation put forward by Thames Water in its revised draft Water Resources Management Plan.
In a letter from PR19 senior director David Black to the secretary of state, dated 28 November but published by Ofwat last week, Black said Thames had responded to many of the concerns the regulator raised with its original draft plan, “improving its level of ambition in relation to leakage reduction, per capita consumption levels and water trading”. However, he continued “the revised draft plan does not provide evidence that it delivers in the best interest of customers in some key areas.”
Black said the plan “still does not provide sufficient evidence the proposed supply-side options are appropriate in the context of the overall programme and regional context” – particularly as “there needs to be confidence the proposed supply-options are low regret and the timing of their delivery is appropriate”. He said the company should justify the early surplus generated under the plan, and consider this for short and medium-term trading opportunities with neighbouring companies before any strategic regional solutions are developed.
It should also set out how the proposed changes to the demand management programme have impacted the supply option selection. Black further pointed out: “There are low risk drought orders identified in the latest company drought plan with the potential to provide approximately 40Ml/d in drought conditions which could support local and regional supply-demand balances, if included within the plan options.”
On regional planning, Ofwat said Thames should continue to work with other south east firms to further optimise regional resilience including through the appraisal and develop several strategic regional solutions. Black also said: “We acknowledge there is planning uncertainty as a result of the interdependencies with other companies’ plans. We expect Thames Water to manage this uncertainty to provide confidence in a programme which reflects both the least regret and optimum solution for the south east.”
Thames Water published a revised draft WRMP 2019 on 3 October 2018 for re-consultation. It predicted that many of its water resource zones would be in deficit in the future, without additional action to reduce demand or provide additional supplies. The London zone is forecast to enter a deficit in the early 2020s and is at risk to severe drought events.