Ofwat has responded to the Environment Agency’s consultation on Significant Water Management Issues (SWMI) relating to the Water Framework Directive.
Among the issues it has raised are how the water companies will achieve the quality improvements required by new Directives such as the WFD, while reducing energy use and CO2 emissions, as required by new national, European and international legislation. Ofwat has pointed out that the water industry is an energy-intensive industry and that purifying water and wastewater is energy intensive and will continue to be so.
Ofwat has commented that the water industry is concerned that in a rush to implement European legislation with absolute certainty, there could be a reliance on the quick fix of imposing stricter standards on water companies with negative consequences for the environment; most notably, an emphasis on energy and chemical intensive treatment systems. In Ofwat’s view attention should instead be paid to other ways of improving the water environment, including the promotion of better catchment management and more sustainable water treatment. Ofwat also expresses the view that it is not only important to have mechanisms that effectively control diffuse pollution, but that the mechanisms are formulated such that their costs are recoverable from the polluters and the consequence of diffuse pollution are not borne by the generality of water customers. This would include cross-sector analysis to enable the application of the polluter pays principle and the principle of cost recovery - which the industry considers to be key requirements of the WFD and will ensure that customers are not paying for the problems caused by other polluters.
While Ofwat considers that metering is the fairest method of charging for water, the regulator as yet does not advocate universal metering across England and Wales because, in many areas, the extra capital and operating costs of metering might outweigh the benefits in water savings.
Ofwat has also highlighted the fact that WFD timetabling for PR09 – the current price review- is a key issue for the water industry. In Ofwat’s view unless the EA and water companies pre-empt the draft classification and the draft environmental objective stages, it will not be feasible for companies to include fully-costed, worked-up solutions to these environmental issues in the draft business plans in August 2008.
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