The Environment Agency (EA) says it expects all water companies to install smart meters from 2025 and to replace the current basic meter stock. 

The regulator has set out its expectations in its detailed review of England’s draft regional and water resources management plans which examines whether the plans will secure resilient and sustainable water supplies up to 2050.  The Agency is also warning that "multiple water companies have produced draft plans that have fallen below the expectations set out in the water resources planning guideline."

According to the Agency, the success of ensuring the nation’s future public water supply will depend upon a twin-track approach of delivering new supplies of water and reducing water demand, by improving water efficiency and reducing leakage.

However, while the water industry’s plans come close to long term targets on reducing leakage and per capita consumption, the EA is concerned around the deliverability of demand reductions given recent widespread challenges in achieving planned reductions on household water consumption. Delivery risks needs to be well considered and mitigated by water companies as they finalise plans, the review says.

The review is highlighting the fact that many new supply options will take at least 5 to 10 years to deliver and “therefore significant and urgent action is required to design, plan, and build these.”

In addition, demand reductions are crucial, particularly in the short term. Referrring to the Environment Act 2021 target of reducing Per Capita Consumption of public water supply in England by 20% by 2037-38 from the 2019-20 baseline, the review points out that the current draft water resources plans would only deliver a 17% reduction in water use per person by this time.

“Government expects water companies to set out how the target will be delivered in updated plans and expects them to act quickly and take significant steps forwards on installing smart meters and delivering on their wider water efficiency commitments,” the Agency states.

Water industry has “poor recent record of delivering their funded demand management programmes”

Commenting on the deliverability of demand management programmes, the EA says the water industry has “a poor recent record of delivering their funded demand management programmes.”

The review has found that many plans appear to start from a baseline demand above forecast from previous plans as a result, which is putting security of supply and the environment at greater risk than planned.

In the regulator’s view, reducing customer demand and leakage is essential to maintain security of supply, particularly in the first 5 years of the plans. The EA warns:

“Given the heavy reliance on reducing demand and recent delivery issues, we are concerned about the deliverability of the short term plans. We expect both water companies and regional groups to consider demand management delivery risks, the implications associated and how these can be mitigated effectively.”

On metering, the review says that currently just under 60% of household properties are metered in England and most of the meters require a physical visit to record what water has been used. The visits generally happen once or twice a year, limiting understanding of household water use.

“We, the Environment Agency, are therefore asking water companies to stop installing these types of meters and instead rollout smart meters which capture daily and sub-daily usage data. This needs to happen more quickly than currently planned. We expect all water companies to install smart meters from 2025, and to replace the current basic meter stock….

“We also expect water companies to roll out smart meters for business users, working in conjunction with retailers.”

According to the EA, smart meters will unlock new potentials for customers to better understand their water use and where they can save water. In addition to enabling “many water efficiency activities”, smart metering will also help to identify leakage within the network and on customers’ own properties.

The government is seeking a 9% reduction in non-household (business) water consumption by 2037-38 from 2019-20 levels as part of delivery of the water demand target. Currently the draft plans achieve a reduction of only 1.8%.Therefore further work is needed to demonstrate that the plans will meet this non-household target.

“New supplies are needed and decisions about these need to be made now”

However, the Agency is warning that while smart meters will help save water by ensuring households and businesses use water wisely and through reducing leaks, this will not be enough, commenting:

“New supplies are needed and decisions about these need to be made now. Water companies and regional groups are planning a far larger round of investment to protect water supplies now and in the future than past water resources plans.”

The draft water resources management plans contain proposals by 2050 for multiple new schemes supplying 10Ml/d or more including:

• 9 new desalination schemes
• 9 new reservoirs
• 11 new water recycling schemes
• multiple new internal and inter-company transfers to share resources

“The decisions around the delivery of multi-billion pound water infrastructure schemes taken in these plans will be critical to securing water supplies for generations to come. As these draft plans are updated following consultation feedback from consultees, now is the time to ensure they offer best value for society and deliver improvements to critical long-term water resources resilience.”

According to the Environment Agency, there have been limited numbers of options identified in some plans and the environmental regulator expects further exploration of options as plans progress to enable choices.

Quality of plans falls short of expectations - “In some cases, this has reduced our confidence around the robustness of these plans

The  EA is critical of the quality of the draft plans, saying:

"The water industry has been stretched by the step changes in the latest round of water resources planning. Multiple water companies have produced draft plans that have fallen below the expectations set out in the water resources planning guideline. In addition, several draft regional plans have also not effectively delivered against the national framework objectives.

“In some cases, this has reduced our confidence around the robustness of these plans and whether selected options do truly represent best value for society. We expect significant improvements to be made, taking onboard the consultation responses”, the Agency says.

Delivering the plans - plans mark a step-change in ambition for investment

The EA concludes by saying that as plans are finalised:

“It is critical that there is focus on their delivery. These plans mark a step-change in ambition for investment in both reducing water demand and increasing water supplies. Monitoring progress and focussing on effective delivery will be essential to manage the uncertainty associated with the WRMPs and regional plans and act appropriately….

“These plans include complex, controversial supply schemes….the draft regional plans have also highlighted the lack of detail and evidence in particular areas including the needs of non-public water supply sectors. It is critical that regional groups are improving evidence and ensuring effective engagement with other sectors. This must build on the first round of regional plans to ensurefuture plans have greater accuracy around needs and more focus on collaborative solutions.”

Click here to access the Environment Agency review documents