The Government’s independent advisory Committee on Climate Change has flagged up the challenges of keeping the taps running and water bills affordable.

Commenting in the CCC’s latest blog, Alex Townsend, Economic Advisor, Adaptation, CCC said that over a longer time period, climate change and population growth will put upwards pressure on bills if appropriate action is not taken. Managing water demand, and adopting more flexible approaches to improving resilience, will help maintain affordable bills and secure water supplies over a longer period.

He said important and positive changes have been made to the water industry by the regulator, Ofwat, with positive signs on demand management that have emerged from the water industry as part of the price review process, including:

• Consumption per person has fallen from a high of 155 litres per person per day (l/p/d) in 2003-04 to around 140 l/p/d. In PR14, 13 of 18 companies have made commitments to reduce consumption per person through water efficiency programmes. In total, this will save 215 million litres per day by 2020, roughly equivalent to a fall of 4 l/p/d.
• The number of customers with water meters is increasing at a rate of 2% per year. By 2020 around 61% of households are projected to have a water meter. Metering will ensure households pay a price for water that reflects the amount that they use.
• Leakage losses from pipes have remained relatively stable at around a fifth of total public water supply. Companies have made modest commitments to reduce leakage by 158 million litres per day by 2020, equivalent to a 5% fall relative to current levels of leakage. This represents an increase in ambition relative to commitments made in the previous price review.

However, Alex Townsend said that any regulatory regime also creates its own risks and that a welcome focus on outcomes could make it more difficult to understand how these commitments are being delivered.  He wearned that if water companies are not consulting effectively with their customers they may still default to capital intensive solutions to deliver the required outcomes (e.g. large sewers instead of SuDS). 

Townsend said Ofwat has a crucial role under the new regime to ensure companies’ consultation with their customers is meaningful and that customers understand the full consequences when they express their preferences.

In addition, as PR14 draws to a close it will also be important for Ofwat to evaluate how well the regime has worked and to consider, in part, whether the positive commitments made in water companies’ five-year business plans are translating into greater ambition over the longer-term. 

Commenting on a comparison undertaken by the CCC on the latest round of long-term 25 year plans prepared by the water companies with those published in 2009, Townsend said this shows there has been no noticeable shift towards more water efficiency and demand-side measures.

He concluded by reiterating the conclusion in the recent Green Alliance report Cutting the cost of water that there may be opportunities for greater roll-out of water efficiency that are yet to be fully exploited. This could help to manage the pressures on customer bills, whilst also making water supplies more resilient to future changes in climate.