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Ofwat chief signals shift away from regulatory focus on price and efficiency

by Karma Loveday

Water regulation needs to champion the environment and move on from focusing on prices, investment and service to foster innovation, customer/community co-working and effective use of data, according to Ofwat’s interim chief executive, David Black.


In a speech published last week, Black argued: “Looking back 30 years, my predecessors established a regulatory framework that secured substantial new investment and drove efficiency improvements for customers. Customers have benefited from better service and environmental improvements made.


“Looking ahead to the future, Ofwat has a key role to play in promoting the sector to deliver greater value – for customers, communities and the environment. Too often Ofwat has the seen the environment as "extra" on top of service to customers. Whereas it is at the centre of the sector and companies have huge ability to enable gains…


“Investment and efficiency and improving asset health will remain important but transformation lies in working effectively with customers and communities, innovation and harnessing the power of digital and technology.”

Citing the recent Green Recovery decisions, RAPID, its Innovation Fund, WINEP reform, the storm overflows taskforce and its PR24 discussion paper, Black said change was already underway in regulation. He added: “We will consult on our approach to open data later in the summer to set how we can help the sector shift towards an open data approach and enable greater use of citizen science.”


Beyond regulation, Black said the whole sector needs to transform over the next 30 years (“or the next five price reviews”) given change that is “larger than any change the sector has been through before in a similar period of time” is needed in the wake of environmental demands to 2050 and wider societal shifts. He said alongside investment (“the easy part”) this will necessitate cultural and operation transformation. “We cannot simply build our way out of the challenges. Firstly, this is likely to be unaffordable, but leaving that aside, the carbon impacts of massive concrete and steel capital programme would be very large and such construction may well be net negative for the environment.”


He highlighted six areas in particular that would help deliver change at scale:

• mass consumer behaviour change – “Only through making the emotional connection to the behaviour change needed in water use, will we be able to make the cultural and practical shifts needed here”;

• “community engagement and nature based solutions come from the margins to a mainstream approach that provides for most of the solutions in the next ten year,” – he cited local communities playing a greater role in managing flows in catchments, including to deal with storm overflows, as an example;

• smart networks and open data – including “by enrolling citizens as monitors and working with them to help achieve our shared aims”;

• a renewable energy revolution in wastewater;

• long-term and adaptive planning – “we need to see the next five price reviews as incremental steps to deliver a 30 year plan” – including by looking beyond the public water supply; and

• innovation.

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