Consultancies publish options for upping pan-sector co-ordination in bringing on new water resources

Consultancies, Baringa and Mott Macdonald have co-published proposals for upping sector coordination in meeting the need for new water resources. Possible measures included in the report are: demand data sharing, combining planning expertise and capacity across stakeholders, clarification of planning governance, alignment of planning bodies and building public support for investment.

The report, according to its authors, seeks to, “identify potential future considerations for improving the institutional and regulatory framework in England so that it better supports and incentivises the co-ordinated planning, development and operation of new and existing water resources to deliver greatest public value across multiple sectors, in addition to resilient public water supply.”

The authors go on to explain: “The aim in gathering these together is to provide, in one place, a common set of considerations for review by RAPID and other stakeholders.”

The report offers twelve potential considerations that could “develop further coordination beyond the current framework,” and they fall under three priorities:

1. potential considerations that could support near-term delivery of current plans, including proposed Strategic Resource Options (SROs) and implementation of the regional water resource plans;

2. potential considerations that could have significant impact for future planning, delivery and operation; and

3. potential considerations to refine future planning, delivery and operation.

Considerations under priority 1 are:

• the commercial incentives framework – review and test existing and potential future arrangements for commercial incentives for coordination;

• data sharing – increase open access to water resource demand and supply information, and consider the requirements for the design and ownership of a common set of data standards and exchange mechanisms;

• managing expertise, knowledge and capacity for planning and delivery – combine resources and capacity to support all sectors and participants and bring on more integrated plans while supporting stakeholders in under-represented sectors such as agriculture; and

• funding models and cost allocation – develop clarity in funding models for multi-party SRO development. Expand funding opportunities for multi-sector solutions at the catchment or landscape level,

Priority 2 considerations are:

• planning hierarchies and governance – clarify the overall planning governance framework, building on existing elements including the National Framework for Water Resources;

• consistent planning methodology – extend existing guidance, including the Water Resource Management Plan guidelines, to develop a system-wide, multi-sector, common planning approach; and

• certainty of inter-regional transfer needs – explore options to increase levels of certainty for strategic water supply transfers between regions.

• roles and risk allocation – dispense responsibilities to the best-capable organisations to reflect the diversity in risk appetites between sectors;

• legacy abstraction rights – there remain opportunities to update the framework with, for example, an approach to legislative and legal changes that could support a move from absolute entitlements to proportional and dynamic rights;

• public interest and support – this may include development and promotion of public support for investment, and involvement in wider reforms to Development Consent Orders; and

• operational capabilities – experience of operating multi-party, pan-sector water resource programmes exist but would need to be expanded to deliver the SROs and regional plans

Priority 3 has one consideration:

• alignment of planning cycles (currently on different timelines), between various regulatory drivers including water supply, flooding, catchment management and licensing, and of physical planning boundaries.

The authors of the report suggest the next steps might be for RAPID "to work with other water resource sector participants including government to seek views on the proposed considerations and their priorities, define more tightly, a shortlist of priority items, develop a strategy that lays out a roadmap for change, and refine the priority considerations through more detailed evaluation of costs and benefits."

Separately RAPID has published an investors' guide to the water industry describing the sector as offering:

• stable and predictable regulatory framework with a track record of supporting substantial investment;

• significant growth opportunities;

• project risk ring-fenced to special purpose vehicle;

• ability to flex the incentive / risk allocation package;

• to specific projects to get efficient allocation;

• low counterparty risk due to water companies being required to maintain investment grade credit ratings; and

• a minimum 25-year low-risk operation period.

RAPID highlights Direct Procurement for Customers as the preferred model for future large projects.