Defra, the Environment Agency, the Drinking Water Inspectorate and Ofwat have sent a joint letter to the water companies calling on them to do more work on building resilience in water resources management in England.

The regulators say that “ambitious and co-ordinated leadership” across industry, government and regulatory bodies is needed to meet the challenge to water resources in the face of increasing pressures from climate change, population growth, societal expectations and increasing environmental aspirations.

The letter says there is a need for:

• Increased ambition in the forthcoming company business plans for the 2020 to 2025 period.
• Regional water resource planning that transcends company boundaries and identifies optimum solutions for the region, and the nation as a whole.
• Greater use of markets and competition to ensure solutions are delivered efficiently.
• Clear, joined up direction from government and regulators.
• A responsive regulatory approach to deal with issues as they arise.

The regulators want to see increased ambition in forthcoming business plans saying that the water companies should begin work now on projects and transfers to enhance resilience.

The letter also refers to the government’s commitment to work with the utilities to set an ambitious personal consumption target and agree cost-effective measures to meet it.

The regulators want the water companies to take what they describe as “a genuinely regional approach to producing plans that transcend company boundaries and identify optimum solutions for the region as a whole.” The planning should then provide the basis for individual water company plans, the letter says.

In the forthcoming PR19 regulatory period, the water companies will be expected “to commit time and money” to regional planning and assessing the feasibility of regional and inter-regional solutions - including consideration of strategic transfers and strategic water storage infrastructure.

The regulators also expect greater use to be made of competition and markets, saying:

“We will be looking for regional groups to fully explore the role of markets in delivering their strategic water resource solutions.”

Ofwat will lead the work to facilitate new markets to support improved water resilience, with the Environment Agency leading the development of a National Framework for water resources.

Looking further ahead, the letter says:

“Our ambition is to enter the 2024 planning period with a regulatory framework that fully supports strategic, ambitious and collaborative water resource plans that make sure we have resilient water supplies for the long term.

“Greater co-operation within PR19 and through regional groups, as well as greater use of markets, may identify issues relating to regulatory processes, the need for new institutions or commercial frameworks, or the need to resolve potentially conflicting objectives.”

The letter, which is signed by Sarah Hendry Director, Floods & Water at Defra, Rachel Fletcher, Ofwat’s Chief Executive, Marcus Rink, Chief Inspector of Drinking Water at the Drinking Water Inspectorate and Harvey Bradshaw, Executive Director of Environment and Business at the Environment Agency, concludes:

“We fully expect that you will meet our challenge to be more ambitious, more collaborative and embrace markets….. We will step in, using the different regulatory levers we have, to encourage the sector to go further if we have concerns that outcomes may not meet the above expectations.”