Regulator Ofwat wants lower water bills but that could come with the risk of drought orders.
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The National Infrastructure Commission wants water transfer systems to guarantee supply in the next decade, but at a cost.Who thinks standpipes in the street should be a main plank of a water supply strategy in the future? Not many takers I’d imagine. Yet temporary use bans and drought orders are some of the solutions being put forward as options by water companies in the water-stressed areas of England’s south and east in order to match too little supply with too much demand. And with drought orders there is always the fear of standpipes.
This is not a risk just for the distant future but for the next decade.
The English water companies are currently in negotiation with regulator Ofwat over pricing for AMP 7 which includes agreeing capital investments for 2020 to 2025, informed by their draft water resource management plans (WRMPs). These look at what is needed to provide secure water supplies to businesses and homes for the next 25 to 50 years. In December, Ofwat will set the final price limits for 2020 to 2025, effectively setting in stone the plans for those five AMP 7 years.
Pressures on supply include climate change, population growth and a reduction in the amount of abstraction from river and ground water sources resulting from new environmental strategies. These include obligations to maintain catchment river flows and habitats along with new abstraction parameters required by the European Union Water Framework Directive after 2027 which, Brexit or not, are expected to be complied with.
Alongside, Ofwat is guiding the water companies to focus on leakage control and demand reduction rather than major infrastructure during the price negotiations. Its aim is to achieve lower bills for customers in the next AMP period. Given the time it takes to build pieces of water civil engineering, AMP 7 funding will also affect what is deliverable in AMP 8 (2025-2030).
As an example of the problem, the companies and consumers in the south and South East are facing, here is what Southern Water has to say about next 10 years in Hampshire in the west of its region. “… our supplies to customers will remain at risk during the AMP7 period and into AMP8 until sufficient alternative supplies are delivered. On the basis of environmental conditions we expect to encounter before 2027, we have forecast that we will need to implement temporary use bans in Hampshire and to apply for drought orders (in some areas).”
We have forecast that we will need to implement temporary use bans in Hampshire and to apply for drought orders (in some areas)
The focus on demand management and leakage reduction planned for AMP7 is all to the good. Reducing demand will play as vital a role in securing future supplies as any new resource infrastructure. “It is essential from the environmental, cost and time perspective,” says Mott MacDonald practice lead for water resources management Sally Watson.
Ofwat has set the companies a target of reducing by 15% the 3bn litres/day lost through leakage. It wants increased metering to encourage individual water use to fall from 140litres/day to between 50litres/day and 70litres/day by 2050.
“And there is a lot of interest in making the assets companies already own work better – so they are more efficient, break down less and use telemetry to get more out of what we have got,” says Stantec technical discipline lead for water resources Rachel Dewhurst.
“But in terms of much of the major infrastructure needed, under current proposals the next five years will be mainly about the planning.”
Big ticket schemes pushed into the future
After that, in AMP 8, the draft WRMPs reveal there will be some “new water” infrastructure works but the bulk of the desalination plants, water reuse and recycling facilities and reservoir work for resilient water supplies are slated for the years after the mid 2040s, pushing the cost of the big ticket items into the future.
Until then, the spectre of drought will always be looming. “There was serious concern in the South East in 2012, if you remember,” says Stantec water group director Paul Daily.
“Luckily we then had a wet summer but alarm bells were starting to ring at government level.”
Those bells are still ringing and there is now a counter argument to the water resource route being proposed by Ofwat and the water companies and it is coming from the National Infrastructure Commission (NIC).
Ofwat is defending customers from higher bills, but can only view issues over a five year cycle. The NIC has been created to have a longer term, strategic view to defend the country from interruptions in supply and the disgruntlement and social unrest that extended drought conditions could generate.
There is a lot of interest in making the assets companies already own work better
The NIC is due to unveil its national infrastructure assessment this month in which it will make evidence-based recommendations to the government to ensure water, along with transport, energy, flood risk, digital communications and waste infrastructure are fit for purpose and improve quality of life.
At the moment it believes that the water sector is off the pace in terms of proper water resilience planning.
In April, the NIC published Preparing for a drier future: England’s water infrastructure needs, which politely presents the water regulator and water companies with the suggestion that they might like to have something of a rethink of their current plans.
“The drafts demonstrate limited ambition for improved long term resilience,” the report says.
The report points out that “with current plans there is about a one in four chance over the next 30 years that large numbers of households will have their water supply cut off for an extended period because of a severe drought.”
In reality, the NIC points out that that would not be allowed to happen. Instead the government and companies would take emergency measures to continue household water supplies for as long as possible, despite very high financial and environmental costs. Therefore, the commission said, the companies should plan for enough resources so that cuts in supply do not happen and to assess the costs by comparing them with the much higher costs of emergency response.
The question is whether we plan now to spend £20bn spread sensibly over the long term or do we end up spending £40bn later in panicked spending following an emergency?
The NIC’s central finding was that government should ensure increased drought resilience in England by enhancing the capacity of the water supply system via a twin track combination of demand management and investment in supply infrastructure to increase by a third the 3,000Ml/day resilience in the system to 4,000Ml/day.
To cope with imminent drought threat, the NIC recommends that Ofwat launch a process to seek solutions by the end of 2019, complementing the price review, so that at least 1,300M litres/day resilience is provided by 2030. Alongside that it wants the water industry to be targeted to halve leakage by 2050 and to introduce compulsory water metering country wide by the 2030s.
The focus for the solutions for 1300M litres/day water supply by 2030 should be, the NIC said, water transfers, currently the Cinderella of national water supply.
These currently account for about 4% of total supply capacity and are largely within local boundaries either within those of a water company or in a regional grouping of companies such as Water Resources South East (see graphic).
Transfer systems can move water from areas with surplus to those where it is needed.
“New storage could be provided in a wider range of places, which can reduce costs and increase the likelihood of timely delivery,” the NIC says.
“This should encourage a more dynamic and transparent market, allowing a wider range of options to be identified and bringing down costs for customers.”
The NIC has estimated that strategic transfers via new pipelines and the canal network could potentially provide about 700Ml/day of its required total, with the rest from other supply infrastructure.
It raises the suggestion that English water supply must be planned cohesively rather than in independent fiefdoms.
“The scale of this infrastructure goes well beyond that seen in the plans currently proposed by water companies,” NIC said in the report.“It is likely to need strengthened regional approaches and perhaps an independent national framework.”
Ofwat responded to the WRMPs in mid June. On resilience it said: “some draft plans did not sufficiently convince us that they will meet future drought and non-drought hazards effectively”.
The regulator also noted that “Government is currently considering its response to the NIC recommendations. We are also considering the NIC’s analysis and expect companies to reflect on them as they finalise their WRMPs.”
Negotiations will be interesting.