23/10/2009

Wessex lead OPA league table


Photo: Ofwat
The publication today of the Ofwat Service and Delivery Review for last year will have been keenly awaited by many. Wessex Water are top again closely followed by Anglian and Yorkshire. United Utilities continue to bring up the rear. With the exception of Severn Trent whose performance has improved significantly there has been remarkably little change from last year.


While OPA scores may distort some priorities there can be no doubt that they have been very effective in driving up standards and creating competitive pressure. This has benefited many customers directly and is a good news story that the water companies need to shout about.

Run for water

Its all too easy to take for granted having safe water to drink in our homes and offices but around 1 billion people or one-eight of the population have no access to clean, safe drinking water. Dow Water and Process Solutions have teamed up with Live Earth (backed by Al Gore) and Global Water Challenge to launch the Dow Live Earth Run for Water to raise awareness about and help combat the global water crisis.


Dow's decision to support the "Run for Water' comes on the back of bullish statements from Ian Barbour General Manager Dow Water and Process Solutions. Their strategic intent is to continue to grow their $1 billion business by 12-15% a year primarily through organic growth.
Dow see considerable scope to reduce costs with the drive to achieve a 35% reduction in the cost of water reuse and desalination by 2015 through component technology advances. This implies a significant investment in R & D and a continuation down the cost curve for technologies like membranes.
   
The global event takes place on Sunday April 2010. It includes six kilometre races and walks, plus concerts, in cities around the world (including London of course) to draw attention to the water crisis, promote water conservation and raise money for freshwater projects. Why six kilometres? Because that’s the distance on average people must walk to get water in areas where its not readily available. This bold initiative should be applauded. 
Image courtesy the Dow Live Earth Run for Water

22/10/2009

Is trickle flow the answer to rising debt?

The possibility of using introducing trickle flow meters to water customers who don’t pay their debts came a step closer this week with the news that Ofwat backed plans for a review. This idea was first raised in the Walker Review (published in June).


Rising debt is a big issue for water companies with unpaid bills currently over £1 billion and rising fast. It is also a concern for all customers as those who don’t pay add £11 to everyone else’s bills. The problem of rising debt certainly need to be tackled as every £1 sent subsidising debt is £1 less on investment in the water sector.

19/10/2009

What message does Victorian water main replacement give?


Walking through Bayswater this weekend the extent of work underway by Thames Water and its contractors to replace London’s aging and leaking water network was very apparent. But the question posed is what message is it intended to convey to the public by this work?


The contractor is to be applauded for clearly labelling the work “Victorian Water Main replacement. The site itself was clearly barriered off but was a ‘sea of tranquillity’ with no work underway. The surrounding streets were a bustle of activity with all the shops open and workmen on another unrelated job resurfacing the road.


Work at this particular Bayswater site has been underway for two months to apparently replace just 50 m of Victorian water main. We all know that modern pipelaying techniques don’t require two months to replace a short length of water main so clearly the scope must be bigger or other problems must have emerged. But what impression of the UK water industry is conveyed to the general public by this apparent inactivity and inefficiency? 

15/10/2009

Climate Change Debate Continues



At the forthcoming carbon sequestration conference in London, US Energy Secretary Steven Chu will be speaking about carbon capture and storage (CCS). Mr Chu has talked of 'overwhelming scientific evidence' that carbon emissions from fossil fuels are causing climate changes.

Although most national governments take the same line, sceptics point to the fact that global temperatures have fallen since 1998, which was the warmest year on record.

In Paul Hudson's fascinating BBC blog, the various arguments are spelled out. There are many points of view regarding the causes of global warming (natural vs man-made) and the validity of the various studies.

Very interesting and very pertinent as we approach the Copenhagen summit and the introduction of the various emissions trading bills around the world. To quote Paul Hudson ' The debate about what's causing global warming is far from over. Some would say it's hotting up.'

09/10/2009

Cyanide river poisoning highlights importance of contingency planning


The vital importance of effective contingency planning was shown again when news broke last week of cyanide leaking into the River Trent killing thousands of fish. Severn Trent Water were forced to deal with the consequences when the polluted water knocked out sewage treatment at Strongford wastewater treatment works.


The Guardian  reported today that the source of the pollution had been identified and the company concerned Red Industries - ironically a company that specialises in the disposal of hazardous waste - had suspended all sewer discharges. Severn Trent Water had an established contingency plan that enabled newly appointed  Waste Water Services Director Simon Cocks to take prompt effective action to mitigate the impact of the incident 


This incident does highlight the vital importance of contingency planning and well rehearsed emergency procedures. Biological waste water treatment works are of course particularly vulnerable to poisoning. The fact that Severn Trent Water were able to lay on over 200 tanker movements in such a short period of time is a tribute to their effective contingency planning and a salutatory reminder of the importance of thoroughly reviewing potential disaster scenarios and drawing up contingency plans.




07/10/2009

Vision for water under threat?


As negotiations over the Final Determination with Ofwat continue ahead of November’s announcement Water UK has claimed that the Government’s excellent water strategy Future Water could be jeopardised by a harsh Final Determination in the current price review.


Pamela Taylor, Water UK Chief Executive was quoted as saying: “Everyone accepts that sustainability requires continuing investment at a high level. But Ofwat’s proposals put financial stability at risk by setting aside the long-term in favour of a short-term approach to prices. Short-term decision making could affect service quality and prove a poor bargin for customers” 

What is clear is that massive investment will continue with Ofwat proposing £21 billion of investment over the next period. There is no doubt that the Final Determination will be challenging for all. But with this level of ongoing investment there must be scope to make significant progress towards the Government’s vision. The challenge will be to ensure that the money is invested sensibly and effectively.

06/10/2009

Stable outlook for UK water sector: challenges ahead


The outlook for the water sector is stable, reflecting its resilience despite declining consumption and increasing bad debts over the last 12 months, as well as risk mitigants inherent in the regulatory framework, Moody’s Investor Service said in an industry report just published.


However the sector faces challenges going forward, especially if the draft determinations for prices limits recommended by the Ofwat are implemented, the rating agency added.


Furthermore, Moody's noted that the sector's regulatory framework provides operators with protection against falling demand and bad debts, both of which occurred over the last twelve months. A substantial effects clause is embedded in each water company's licence which allows them to submit a request to review the price limits with a a regulatory period if circumstances beyond prudent management control results in an adverse impact above a minimum materiality threshold.

Moody's view wont come as a surprise to UK water sector professionals. The key question it begs is the extent to which the regulator will listen to the views of the water companies and change its draft determination. 

Challenges facing the water sector



Many of the challenges facing the water industry are clear. Climate change, population growth and the need to mitigate and adapt to these changes are key. Recent droughts and floods have shown the need for a resilient water and sewerage infrastructure. The wet summer has highlighted again the pressures caused by intermittent storm discharges on bathing water quality. The need to developing sustainable, locally sensitive schemes to cope with urban drainage is starting to be accepted.



All these factors mean that the water industry will have to look very different by 2050. This will require forward thinking, innovation and continuing massive investment. It will also mean taking some risks to ensure schemes are both affordable and can adapt to an uncertain future.


Delivering this will require some of the country’s best young graduates to be attracted to work in the water sector. The concern must be that the current pause in the investment cycle, compounded by the economic recession wont allow companies to recruit the most able staff or invest in the training needed.