Chairs’ dinner brings industry hope of an alternative framework for wastewater compliance

A new possibility surfaced last week as to how Ofwat might define whether companies have breached a wastewater obligation it is responsible for enforcing, when the regulator’s chair, Iain Coucher, reportedly offered a view to water company chairs at a dinner on Wednesday evening.

Since 2021, Ofwat has been investigating all wastewater companies, with one of the central issues whether they meet the requirements of the Urban Waste Water Treatment (England and Wales) Regulations 1994 (UWWTR). These regulations require companies to build and operate their wastewater treatment works so that they can treat wastewater flows received in normal weather conditions, limit pollution from storm overflows and minimise the negative impacts of any discharges of wastewater on the environment. Six companies are subject to enforcement cases within this investigation, and three – Northumbrian, Thames and Yorkshire – were notified of provisional findings before Christmas.

Hitherto it has been understood that Ofwat planned to define compliance as 20 spills per year or fewer. The industry is believed to have sought urgent clarification on this metric and to have taken legal advice to counter the approach, considering the 20 spills measure arbitrary and on grounds including that companies have not been funded to deliver this particular spill level outcome.

Ofwat has been clear that it will consider representations to its provisional findings in the investigations, and that its future decisions will be informed by them.

Industry sources shared that at the dinner last Wednesday, Coucher indicated that Ofwat could assess compliance with reference to the Storm Overflow Assessment Framework (SOAF) methodology. This was developed in 2018 by the Environment Agency and industry, and defined a process for dealing with overflows to meet the requirements of the UWWTR.

Under SOAF, overflows that discharge more than 60 times a year are prioritised for scrutiny, with factors including the underlying cause of the frequent discharge and the cost benefit of intervention evaluated before improvements are required. The SOAF informed investment decisions through the Water Industry National Environment Programme at PR19.

Ofwat said it could not provide detail on either its provisional investigation findings or Coucher’s comments, on grounds of confidentiality and the risk of prejudicing its ongoing investigations.

If Ofwat finds a company has breached an obligation it is responsible for enforcing, it can issue an enforcement order to require the company to take steps to secure compliance, and has powers to impose a financial penalty of up to 10% of relevant turnover. It expects to issue proposed decisions for consultation in the Yorkshire, Thames and Northumbrian cases in the first quarter of this year.

Looking ahead, Ofwat’s PR24 methodology sets out that it will use an average of 20 spills as the benchmark for its storm overflow performance commitment target from 2025.

In parallel with Ofwat’s investigation, the Environment Agency  is conducting a criminal investigation into all wastewater firms, to assess whether there has been widespread and serious non-compliance of environmental permits at wastewater treatment works.