Water industry regulator Ofwat has today published representations it has received from the water companies, the Environment Agency and Natural Resources Wales on its draft determinations for the companies’ AMP6 Business Plans.

Overall the Environment Agency expressed its satisfaction with the outcome of the draft determination which sees the inclusion of the majority of the water companies’ environmental requirements.

Ofwat has agreed to 99% of the National Environment Programme (NEP): NEP, up to phase four, which includes water resources, fisheries and water quality obligations.

However, the Agency has expressed particular concern that the draft determinations excluded some schemes which are required to meet environmental obligations, saying the lack of certainty could delay the achievement of important environmental outcomes. The schemes are:

• United Utilities NEP phase 5 (water quality WFD) programme
• United Utilities shellfish water programme
• SembCorp Bournemouth NEP programme

The Agency also said that some obligations have only been partially funded and there are others where the companies appear unclear on the allocation. The environmental regulator has reiterated the need for the schemes and said it expects the work to go ahead as planned. These include:

• United Utilities’ Thirlmere Link West Cumbria water supply scheme
• United Utilities’ chemical and phosphorus trials and investigations
• Bristol Water’s NEP programme
• Anglian Water’s restoring sustainable abstraction and eel regulation programmes

The Agency’s representation says:

“We note Ofwat is not challenging the need for this work but the costs and benefits and the robustness of costs. A lack of funding does not change the obligation on the company to complete this work but may complicate the matter and lead to delays. We are urging companies to take this opportunity to provide further evidence.”

Commenting on United Utilities’ Thirlmere transfer scheme, the Agency said it expects the company to be able to continue to fully fund delivery of the Thirlmere transfer scheme, along with any other measures that might be required in order to allow it to meet its obligations under the Habitats Regulations.

On the companies’ Water Resources Management Plans, where in the main, funding for the company’s WRMPs has been approved, the Agency flagged up the main exception as Anglian Water, where Ofwat believe that the company has failed to demonstrate the need for its enhanced water efficiency and metering programmes. The Agency said:

“These programmes form an important part of Anglian Water’s WRMP and we are disappointed that they have not been included in the determination.”….."As identified in its final WRMP, we expect Anglian Water to reduce company-wide leakage and to implement demand management."

On water efficiency, metering and leakage reduction, the Environment Agency said the draft determination would help the water companies improve their performance in all of these areas and that  metering would increase from approximately 48% to 61%.

 Outcome delivery incentives – water cos should not be rewarded to deliver basic requirements

 The Environment Agency has raised specific concerns over some of the water company outcomes and outcome delivery incentives (ODIs), which did not meet its expectations, commenting:

“ Whilst the majority of water companies’ are setting ambitious performance targets to improve compliance and reduce pollution incidents Thames Water and Southern Water have ODIs that do not meet expectations for 100% wastewater compliance and zero serious pollution incidents.”

“Setting targets below these levels implies the companies are planning to fail. Wessex Water, Southern Water and Severn Trent are also proposing to give themselves rewards for meeting statutory compliance; we don’t believe they should be rewarded to deliver their basic requirements.”

Commenting on environmental performance assessment, in several instances the Agency said it did not support the use of a reward by companies to meet statutory requirements on pollution incidents.

On the draft determination for Thames Water, the Environment Agency noted that the Thames Tideway Tunnel has not been fully funded and said that while it could not comment on the costs allowed, it reiterated the statutory need for the scheme as “the best solution agreed by government.”  The Agency said it will expect the work to go ahead as planned.

Ofwat expects the companies will continue to be open and transparent and is expecting them to publish the remaining documents that make up their representations on their websites to ensure that they keep their customers and stakeholders engaged and informed through the process.

Click here to download the  Environment Agency’s representation.

Click here to access the water companies’ and Natural Resource Wales representations online.