Regional water resources planning to continue in future planning rounds

Defra, the Environment Agency and Ofwat have made it clear that they expect regional water resource planning to continue in future planning rounds.

In a letter to the chairs of the five regional groups, the authorities praised the groups’ work to date, arguing it “must continue and be built upon”. They said: "We believe that regional water resources groups should be front and centre in creating a secure and sustainable future for England’s waters in the face of the climate and biodiversity emergency. Regional groups should show strong leadership in a more holistic and integrated approach to water management, exploring opportunities to deliver cross sector mutual benefits. In doing so regional groups must be adequately resourced and have appropriate governance.”

The Department and regulators identified the following key outcomes they would pursue in the next planning round.

Greater water supply resilience with:

• new infrastructure that is delivered when required and creates the greatest long term benefits for society and the environment and

• improved resilience to drought among water using sectors beyond public water supply.

Improved water efficiency and demand management by:

• creating plans that incorporate technologies and efficient practices that are employed to increase water efficiency and reduce leakage. Plans should identify, use and champion best practice at many levels and across sectors and

• reducing the risk associated with planned water efficiency not being achieved and supporting targets across business and household water users being met.

Environmental protection, improvement and increased resilience are secured through ambitious environmental planning which:

• ensures the environment is integral to planning future water needs, with improvements prioritised and agreed collaboratively and

• addresses environmental pressures proactively before they become a problem and makes sure solutions are sustainable and shaped by a broad understanding of environmental impacts.

Greater value for money, efficient costs and greater benefits are achieved by:

• developing robust evidence on water needs and the need for infrastructure;

• scoping a broad and innovative range of options for improving public water supply resilience, including new transfers, cross-company options, cross- sector options developed with third parties and strategic resources; and

• appraising those options fairly and developing optimal adaptive programmes with appropriate sensitivity testing.

Effective regional engagement through:

• maintaining a strategic overview of regional priorities and activities;

• ensuring the public and stakeholders, such as local planning authorities and

• catchment partnerships, are engaged and inform the plans; and ensuring regional consideration and representation within national strategic projects.

The three authorities also confirmed they planned to:

• develop the refreshed National Framework for water resources, which aims to enhance multi-sector planning alongside improvements in public water supply planning delivered by regional plans;

• continue the Regulators Alliance for Progressing Infrastructure Development (RAPID);

• use the directional powers of section 78 of the Environment Act (2021) to improve the regional planning process;

• review strategic governance arrangements, recognising the continued need for an independent chair;

• put in place policies and regulation to support demand management; and

• look at cross sector and boundary issues and engage with NRW and the Welsh government in respect to their views for including parts of Wales within future regional plans.

Moody’s affirms Southern Water ratings following issuer change

Moody’s has affirmed Southern Water’s ratings following a bond issuer substitution.

The ratings agency affirmed the underlying and backed Baa3 senior secured debt ratings of bonds after they were assumed by SW (Finance) I PLC, a new UK-based issuer that substituted the previous Cayman Island-based issuer, Southern Water Services (Finance) Limited.

Concurrently, Moody's assigned a stable outlook to SW (Finance) I PLC and withdrew the outlook on Southern Water Services (Finance) Limited.

Moody’s explained that affirmation of the Baa3 senior secured debt ratings reflects, as positives, Southern Water's low business risk profile, stable cash flow generated under a transparent regulatory regime, and operating company net debt that fell from above 70% to 65% of regulatory capital value following an equity injection in 2021. The ratings are constrained by Southern Water's “persistent operational underperformance,” fines and penalties associated with historic wastewater pollution incidents, and the company's long-dated debt and derivatives portfolio with high borrowing costs.