A national water policy and compulsory metering were on the agenda at NCE’s recent round table gathering of water industry leaders. Margo Cole reports.
Too much demand and not enough supply: it’s a common theme in discussions about the UK water industry, and one that immediately raised its head when NCE gathered a group of the sector’s leading players to debate the current and future challenges facing the sector.
Participants in the MWH-sponsored round table discussion were drawn from a wide spectrum of the industry - including contractors, consultants, water companies, suppliers and academics. NCE editor Antony Oliver chaired the discussion.
All agreed that the ease with which most of the public obtains an almost unlimited water supply, and the relatively low cost they pay for it, have created a culture in which, as Clancy Docwra strategy and business development director Colin Waugh said: “We don’t value water in this country.”
This statement was put in context by Thames Water external affairs and sustainability director Richard Aylard. “We supply two tonnes of our product - pharmaceutical grade water - for the price of a Costa coffee,” he said. It was a statement that prompted Arup associate director and Chartered Institution of Water & Environmental Management (Ciwem) past president David Wilkes to ask: “Why are we using this clinically pure resource and washing the dog with it, or using it to water the grass?”
All agreed that this situation is unsustainable in the long term. Water companies have been asked by government to reduce average per capita consumption to 130l a day by 2030 - compared with around 150l today - but they are limited in what they can do to achieve this, especially as the government has so far ruled out compulsory metering.
“The big challenge is per capita consumption,” said Aylard. “We’ve all signed up to reducing that to 130l, but it’s not in our grasp to get it down that far. It will require a concerted effort from government, regulators, industry and consumers.”
Wilkes believes change will only occur if the consumers are somehow persuaded to change their behaviour. “There are huge variabilities in per capita consumption, and plumbers tell us that they are being asked to fit ever more water consuming bath taps, showers etcetera,” he said. “We need to try to moderate people’s behaviours so that they realise that water is not available in unlimited quantities and isn’t something that comes for free.”
Mott MacDonald water director Mark Enzer added: “If we are going to be genuinely customer led, should we tell them what they should want, or find out what they really want? Customers probably don’t want a whole lot of clean water just to flush down the toilet.”
“Why haven’t we got smart meters and tariffs that drive the right behaviours? Because the UK has not had a policy to levy charge via meters”
Chris Newsome, Anglian Water
Ciwem and the ICE favour universal metering, but with “smart” or “sliding” tariffs that rise in proportion to how much water people use, so that all households get enough water for health and hygiene at a basic rate. “People do need to understand the cost of water. We’re not a social service. So there should be sliding tariffs,” said Northumbrian Water project manager Jim Jenkins.
Water company chiefs confirmed that consumption is lower in metered households than in non-metered ones, suggesting that consumers respond better to economic pressures than to societal pressures to change their behaviour.
Guests at the round table discussion
Richard Aylard,External affairs and sustainability director, Thames Water
Chris Newsome Asset management director, Anglian Water
Mike Woolgar Managing director, environmental & water management, Atkins
David Wilkes Associate director, Arup and immediate past president, Chartered Institution of Water & Environmental Management
Mark Enzer Water director, Mott MacDonald
Professor Simon Tait, director, Bradford Centre for Sustainable Environments and Pennine Water Group
Roger Venables,managing director, Crane Environmental
Graham Keegan, water director, Costain
Andy Flowerday, director, Barhale
Colin Waugh, strategy and business development director, Clancy Docwra
Michael Norton, global water director, Amec Environment & Infrastructure and chair of the ICE water panel
Peter Ridgway, market development director, Aco Technology
Jim Jenkins,programme manager, Northumbrian Water
Garry Sanderson, UK managing director, MWH
John Abraham, Managing director, MWH Treatment
Antony Oliver, Editor, NCE
“Do I believe that metering is the answer [to reducing consumption]? Yes I do,” said Anglian Water director of asset management Chris Newsome. Seventy per cent of his domestic customers are metered.
“Why haven’t we got smart meters and tariffs that drive the right behaviours? Because the UK has not had a policy to levy charge via meters.
It was a theme taken up by Enzer, who posed the question: “Is water like chocolate - something that people want but know they should consume less of; or is it more like petrol - something that people need, but have their consumption constrained by price?
“It is important to understand what type of product water is in terms of behaviour and economics. Is it a case of modifying behaviour or managing the economics? I think it is both - they are interrelated. What we need is for more than just engineers and environmentalists to look at it [water demand] because it’s to do with economics and behaviour.”
At the moment, the price water companies can charge is carefully controlled by industry regulator Ofwat, while responsibility for changing consumer behaviour and perceptions - as well as for managing the UK’s limited water resources - falls firmly on the shoulders of the water companies and their supply chains. The regulated water industry is set up in a way that incentivises water companies to keep bills at rock bottom, while government policy appears increasingly aimed at promoting competition between firms.
Earlier this year, for example, the government introduced a bill that will pave the way to allow all businesses and local authorities in England and Wales to buy their water from any supplier -
a situation that already exists in Scotland.
But the drought last spring demonstrated how difficult it is for water companies to work in isolation. With shortages in some parts of the country and a surplus in others, they had to collaborate to make the best use of scarce resources. They are now looking to the government to provide a policy framework that sets national parameters for water supply.
As Bradford Centre for Sustainable Environments director Simon Tait said: “There is a role for government when you have a scarce, finite resource.”
“Is water like chocolate - something that people want but know they should consume less of; or is it more like petrol - something that people need, but have their consumption constrained by price?”
Mark Enzer, Mott MacDonald
Atkins managing director, environmental and water management Mike Woolgar added: “In theory we need an overarching water policy, but we don’t have one. The policy would express how we want water to be managed, then regulation can be designed to achieve that.”
Amec Environment & Infrastructure global water director and ICE water panel chair Michael Norton also said the government could be doing more. “Where is the policy to bring us from a situation of water insecurity to water security?” he said.
Aylard expressed concern about the government’s emphasis on competition, and the way this impacts on resourcing decisions. “We will need to be really careful that upstream competition does not inadvertently lead to less overall resilience in the system,” he said. “There is also some doubt about where there is genuinely ‘spare water’ and, where it does exist, how it should best be allocated, bearing in mind that droughts do not always happen in the same locations.”
No discussion about water management would ever be complete without at least touching on the possibility of moving water around the UK in some form of water grid. If “spare” water does exist, then it is mainly in the north of England and parts of Wales and Scotland, while the biggest demand is in the South East and the major cities.
At this gathering, however, the view was pretty much unanimous that building massive pipes to transfer water around the UK was a non-starter - at least in the short term - because of the massive construction costs and the energy required to pump water over long distances.
“The ICE has come down pretty decisively to say that it [a national water grid] is a flight of fancy,” said Norton. However, he added: “That’s not to say we couldn’t do a lot more to capture more of the water the nation has. Still much of our rainwater ends up in the sea.
He added: “We need more interconnectivity between companies and more storage.”
“We need to shift away from the current short term thinking based around five year periods to drive down costs and improve service for customers”
Andy Flowerday, Barhale
While some neighbouring water companies sharing resources during this year’s drought - for example there was an arrangement between Anglian Water, Thames Water, Severn Trent Water, Cambridge
Water and Veolia in the east of England - these sorts of relationships require Ofwat approval, and the system is not currently set up to support that.
“We have got to look at the issues around regulation,” said Jenkins. “If you’re going to move water around you have to jump through all the hoops of regulation, which means you have to know years in advance whether they’re going to allow it.”
Tait agrees. “I think we need more flexibility - collaboration between bodies and the flexibility to come to pragmatic deals,” he said.
Despite their differing perspectives, the experts gathered at the NCE round table all agreed that issues like resource sharing and the perennial problem of lack of supply versus increasing demand could be more effectively addressed if there was a water policy that treated the UK’s water as a national asset. “It [water] is a national strategic resource and it should be managed as such,” said Enzer.
Direction from government
“We need clear direction from government,” said Wilkes. “I think Ofwat is doing an OK job within the government remit - we need a price regulator to make sure we smooth out some of the shocks we put to the customer. But we also need to have a proper dialogue with the customer base and to be talking to them about their behaviours; and we need some stability in the supply chain.”
As part of that supply chain, Barhale director Andy Flowerday wants more stability than is currently provided by the five year Asset Management Plan (AMP) cycles that are used to determine levels of water company capital investment. “We need to shift away from the current short term thinking based around five year periods to drive down costs and improve service for customers,” he said, “so the challenge is how to shift towards longer term thinking.”
MWH UK managing director Garry Sanderson said the peaks and troughs of the AMP cycles also have an impact on the consulting sector: “It’s been a difficult and painful place to be in terms of attracting and retaining talent. The last AMP turn was slap bang in the middle of the recession.
“However,” he added, “we do need a way to manage investment.”
Despite the restrictions imposed by the five year AMP cycles, there was a sense at the round table that the industry should celebrate its achievements since privatisation 23 years ago. “The legacy we’ve left over the last 15 years is really good. What we’ve done has been a fantastic achievement,” said Costain water sector director Graham Keegan. But we have to move on now to understand the technology issues. That requires a change of focus.
“It’s about demand as much as it’s about supply,” he added. “We need to put effort into technology - especially now the big capital programmes are disappearing.”
Since the water industry was privatised in 1989, investment has mainly been geared towards improving drinking water and effluent standards to meet European and UK legislation. As a result, previous Asset Management Plan (AMP) periods have been characterised by major construction projects, including large numbers of new and expanded treatment works.
The deadline for meeting many of these standards now passed. Water companies having fulfilled their water quality obligations, are likely to focus their attention in future AMP periods on efficiency improvements, energy savings, renewals and maintenance.
MWH Treatment managing director John Abraham told the NCE gathering: “Over the last 25 years a lot of investment has been driven by quality. The next five years will be about technology and creating smarter assets totally focused on whole life costs and reduced carbon.”
Thames Water external affairs and sustainability director Richard Aylard agrees. “We are going to have to reduce our use of carbon-based technologies within the water sector,” he said.
One of the biggest changes anticipated is a blurring of boundaries between different aspects of water supply, waste, energy and flood management.
“We need to think about wastewater as a resource, and not a cost that doesn’t have a value to the market,” said Amec Environment & Infrastructure global water director and ICE water panel chair Michael Norton.
MWH managing director Garry Sanderson agreed. “We are starting to look at overlapping of systems - waste and energy; flooding and ecology; technical and environmental issues overlapping with economic and social issues,” he said. “That’s very interesting.”
Abraham, added: “One of the big drivers and concepts coming from Europe will be within the waste and sludge market - combining waste water and solid waste centres into energy production plants.”
Anglian Water director of asset management Chris Newsome said that new technologies could also have a big role to play in the supply side: “If we really wanted to correct this [shortage of supply], we’re an island nation - we have to believe the solution is out there and go in search of it. For example, the answer could lie in an innovative, low cost solution to desalination.”
Looking ahead, industry leaders predicted other changes, with Mott MacDonald water director Mark Enzer saying that asset management, information management and building information modelling (BIM) will all be important components of the water industry’s future legacy, while Barhale director Andy Flowerday and Bradford Centre for Sustainable Environments director Simon Tait foresaw more collaboration.
“The water industry is too fragmented,” said Flowerday. “What the structure should be about is having more collaboration - people and organisations pulling together to be more efficient. There are more efficiencies to be had.”
Tait added: “I think we need more flexibility - collaboration between bodies and the flexibility to come to pragmatic deals.”