OFWAT has been criticised for putting profits before long term maintenance. In a recent case, Thames Water was found to have breached human rights over recurring sewage flooding. This comes as the true extent of groundwater pollution was found to be more dangerous than previously thought (NCE 6 September 2001).
This week we ask: does Ofwat take sufficient account of environmental concerns when setting price limits?
Yes Bill Emery, Ofwat chief engineer and director of costs and performance.
We are the economic, not the environmental regulator. It is our job to ensure that water companies are properly financed to carry out all their duties including implementing works to achieve tighter environmental standards required by ministers. Of course, we do have another very important duty and that is to protect customers.
We test whether proposals put forward by the companies are efficient and cost-effective and offer value for money for both the environment and the companies' customers. This approach means that the maximum gain is derived from every pound spent - which customers pay for.
Since 1989, we have seen the delivery of major environmental improvements. The achievements have received prominent coverage recently in the national press: 'Rivers at cleanest since industrial revolution' - Financial Times, 6 November 2001, 'British beaches cleaner than ever' - The Guardian, 7 November 2001.
In terms of outputs, the current environmental improvement programme to 2005 is the largest yet embarked upon, and as it is delivered I'm sure we'll see more headlines like these.
But delivering improvements is only part of the story. We also need to provide for the maintenance of the existing asset systems. Judgements on maintenance spending must take account of the 'fitness for purpose' indicators of these assets, which include environmental criteria. Proposals for new indicators on which we have recently consulted do just this.
The improving state of the water environment has been a good news story over the past decade and I am proud of the part we have played in it. Looking ahead, there will be new challenges. A lot of attention is being focused on sustainable development. Sustainability is important environmentally, socially and economically.
We will continue to work with the Department of Environment, Food and Rural Affairs and other regulators to meet the government's environmental targets and produce a fair and balanced outcome for customers and the environment - indeed all stakeholders in the industry.
No Stephen Battersby, Robens Centre for Public and Environmental Health, University of Surrey and co-founder of the Campaign for the Renewal of Older Sewerage Systems (CROSS) OFWAT has not taken sufficient account of the wider environmental issues and, in particular, the environmental health impacts of leaking sewers in setting price limits. While the need to invest in reducing pollution from sewage treatment works is acknowledged, the emphasis on end of pipe solutions has hindered a more sustainable approach to the environment.
The approach by OFWAT and the politicians can be typified by comparing action on leaking water supply pipes and leaking sewers.
While the notion of a water shortage due to low reservoirs is absurd and leakage from pipes contributes to this, much of the water from leaking supplies does not pass beyond use, but actually recharges potential groundwater sources.
Leaking sewers introduce a range of organic and inorganic chemicals in addition to faecal bacteria and viruses into the environment and, when contaminating groundwater, put a potential source of water out of reach.
The benefit of groundwater sources has been the relatively low treatment costs. That benefit is lost when contamination from leaking sewers occurs.
It is sometimes said that such pollution is only of shallow groundwaters that are not sources of potable water. Today, there is evidence to the contrary.
The problem - one that will be perpetuated in the basis of the recent OFWAT report on the development of enhanced serviceability indicators for sewerage assets - is that serviceability criteria ignore all but the most obvious problems.
A survey has shown that 9% of UK catchments have greater than 50% infiltration, implying yet further loss of a potential resource. Fluctuations in the water table may mean that a sewer can be both above and below at different times, leading to reversal of infiltration and exfiltration and potential groundwater contamination.
These are matters that OFWAT has failed to take into account in the past when assessing asset management plans and setting price levels. There is a real risk this will continue.
Since its peak in 1994/95, leakage has fallen by more than 1,800 ML/d (37%) - enough to supply the daily needs of more than 12 million people.
Price limits set by Ofwat for the period 2000/05 assume capital investment of over £5 billion by water companies on environmental improvement schemes.
Parliamentary Environmental Audit Committee (2000) was not satisfied that OFWAT's 'no deterioration' approach to the maintenance and renewal of underground assets (sewers and water mains) was a logical or acceptable means of assessing the level of investment required. The committee believed this approach has amounted to intellectual neglect of this important problem.
INFOPLUS www. ofwat. gov. uk www. eihms. surrey. ac. uk/robens /erg