Ofwat proposes new measures to boost resilience

Water companies need to plan better to manage future risks so they can ensure they can maintain improvements in their operational performances according to Ofwat.

In a discussion paper published last week, Ofwat emphasised that the sector needs to do more to ensure that it is:

• managing its current responsibilities on behalf of customers, society and the environment;

• more transparent, open and accountable to customers and stakeholders;

• ready to adapt to future challenges; and

• delivering improvements in areas where gaps or concerns have been identified.

Ofwat said it expects assets and systems to “deliver reliable services for customers and the environment under a range of shocks and stresses and companies to identify and mitigate risks, including those connected with asset health and climate change.”

It went on to call on companies to “plan for the long term, underpinning short- and medium-term plans with a longer-term strategy that reflects customers' priorities and has the environment at its core.”

In the discussion document the regulator has laid out proposals for changes to its approach to monitoring “to provide a richer picture of operational resilience for customers and stakeholders.” It says this is part of its “longer term ambition to help the sector to adapt and continue to deliver better outcomes for customers, society and the environment.”

Ofwat’s aim is to develop what it calls an integrated monitoring framework which, it claimed, will address current shortfalls in the sector’s operations. Ofwat said shortcomings included: previous failings when assets are stressed through (say) severe weather; limited insight on future risks and too much focus on least cost solutions.

The discussion paper describes an “iterative, three-stage process”:

1. to target reporting of a small number of additional water and wastewater measures;

2. to gain further insight through collaborative development and refinement of monitoring; and

3. to consolidate each element to form the integrated framework. This will enable us to form a holistic.

Ofwat said this “will provide a richer picture of the large, complex and diverse

asset base our sector is responsible for managing on behalf of its customers, society and the environment.” Ofwat listed the gains it anticipates as arising from its new monitoring regime as enabling it to:

• challenge companies to identify immediate and emerging risks to long-term operational resilience;

• assess when to use other regulatory tools, including enforcement;

• identify areas for future policy development;

• encourage the sector to innovate, collaborate and promote good practice in operational resilience;

• challenge companies to improve transparency and accountability of asset health and operational resilience; and

• challenge companies to look for future risks and opportunities.

It added: “We expect the framework to evolve over time.”