Ofwat has announced details of the next steps for the abstraction incentive mechanism (AIM) taskforce established earlier this month - the water industry regulator is encouraging more organisations and other water companies to become members.
The taskforce is currently advising the regulator on developing a system for encouraging water companies to reduce the amount of water they abstract in environmentally-sensitive areas when water is scarce.
The task force is due to provide Ofwat with proposals setting out requirements that all companies will report their performance against the current AIM (‘reputational AIM’) during 2015-16 to 2019-20 by 1 October 2015. As a minimum companies will be expected to report:
- on environmentally-sensitive sites
- on abstractions made at low flows
- (at least) annually during 2015-20
- on their environmentally sensitive sites from 1 July 2015 onwards if practicable and from 1 October 2015 onwards at the latest
Other taskforce responsibilities include confirming the list of environmentally-sensitive sites that each company in England has agreed with the Environment Agency. Ofwat has proposed that the taskforce should use the Water Framework Directive band 1, 2 and 3 sites that companies reported on in their 2014 price review business plans as their starting point.
Ofwat is also expecting the taskforce to agree solutions to the data issues identified in earlier work on the AIM and to present options on how the reputational incentive should work. Looking ahead, the taskforce will also be required to provide the regulator with advice on the development of a financial incentive (the ‘financial AIM’) that Ofwat can use with water companies in the 2020-25 AMP7 period.
Quality of data is an ongoing issue – Ofwat first announced its intention to set up a system to reward or penalise the water companies on abstraction in environmentally-sensitive areas in its final methodology for PR14 published in July 2013. In April last year the regulator said that to resolve the data issues with the AIM would require “significant effort” and committed to work with a group of water companies and other relevant stakeholders - the AIM taskforce - to do this in 2015.
Commenting on the expected lifespan of the taskforce, Ofwat said:
“We expect the taskforce will operate for as long as necessary to help the reputational AIM start to operate in practice and to provide advice on the development of the financial AIM.”
As part of their price controls for 2015-20, five water companies - Affinity Water, South East Water, Thames Water, United Utilities and Wessex Water - proposed performance commitments related to the AIM. The companies are jointly responsible for:
- appointing an independent Chair for the taskforce
- coordinating taskforce meetings
- producing notes of key points from the meetings – to be agreed by the taskforce and published on the Ofwat website.
Ofwat and the Environment Agency are also members of the group. The regulator now wants to encourage other water companies, together with any other stakeholders with an interest in abstraction to join and contribute to the taskforce. This includes environmental bodies and water companies previously identified as not being covered by the AIM. In earlier work, Ofwat, the Environment Agency and Natural Resources Wales identified that several companies would not be covered by the AIM, among them Dŵr Cymru and Dee Valley Water.
Deadline to register an interest in joining the AIM taskforce is Friday 22 May 2015 – email Jon Ashley at This e-mail address is being protected from spambots. You need JavaScript enabled to view it for details.