21/10/2010

Sustainable Water- will it lead to a smaller Ofwat?


The Sustainable Water review that Ofwat is currently undertaking is looking at how regulation needs to change to reflect the major change affecting the industry and ensure a sustainable long term business. Ofwat is currently looking at price regulation and its impact on maintaining financial stability, especially the vital importance of reputation to water companies, as well as social sustainability and environmental sustainability.
With external pressures on Ofwat, like the move to smaller government and less regulation and the David Gray review, Ofwat is proposing to take a more risk based approach to regulation. This has to be a sensible move. Its clear the burden of data reporting is getting excessive, for example the June return guidance has gone from about 65 pages to 800! A risk based approach would mean Ofwat only focusing in depth on the vital areas and in others regulating with a light touch. 
Directors from the water companies made it clear yesterday that they support the steady evolution from input based regulation through output based regulation (where we are now) to outcome based regulation. They see this as giving more room to water companies to manage their business and focus on what is really important to stakeholders. The difficult bit is defining the outcomes we all want from the water sector in terms that are not so broad as to be meaningless. A move to a risk based approach with clear prioritisation reflects what every good business does and has to be a step in the right direction. 

18/10/2010

Otters back in rivers


Photo source: Environment Agency
Otters, which almost most disappeared from England’s rivers in the 1970’s are making a welcome return. They are now found in every region of England except Kent. This is due to the ban on harmful pesticides put in place in the 1970’s and also a significant improvement in river water quality.
 This excellent news is to be welcomed and comes at the same time as the River Thames has won a prestigious international award for outstanding achievement in river management and restoration.
However Joe Public may find it hard to understand why Thames Water is at the same time seeking to gain support for the vast Thames Tideway Tunnel project and will need to raise bills substantially to cover the cost.  Good news stories are to be welcomed but there is a tricky balancing act to ensure the public is kept on side.

15/10/2010

Phosphate recovery first for Thames Water

Photo source: Thames Water
It’s a common theme in the water sector that people are trying to do more with less. Reduce costs, increase efficiency, reduce energy use, recover resources. To succeed a different mindset is needed.

This is about costs. Just looking at phosphate recovery as a way to manufacture fertiliser wont work as it will inevitably have a much higher cost base. Nor will it be economic as a way to reduce the cost of struvite build up on pipework . But combine the two and you have a winning proposition.

This is what is happening at Thames Water ‘s Slough wastewater treatment works where Phosphorus is to be extracted from sewage on a commercial basis for the first time in the UK. The new £2million facility, from Canadian company Ostara, meets several goals. Its estimated it will save £130k to £200k a year in chemical dosing, bring in an income stream from selling the fertiliser produced and help Thames Water meet environmental regulations on nutrient levels in waste water.

To succeed in this area you need to know two markets. The wastewater treatment market and possible cost savings and environmental requirements and the market for the product being produced. It is vital to simultaneously build an outlet and channels to market for the product being produced.

08/10/2010

A thirst for innovation


After the Tata Nano car comes the Tata Swach, a ground breaking water purifier that seeks to address the problem of waterborne disease at a cost that makes it available to “have-nots”.
Safe drinking water is a basic human need. The World Health Organisation estimates that a child dies of a waterborne disease every 15 seconds. The vision for the Tata Swatch is to make water purification available for all - not just the rich.
Developed by Tata Chemicals, the innovative domestic appliance not only takes advantage of nanotechnology but also offers a creative use for a common byproduct from rice production. The Tata Group have found a way to enhance the action of the rice husk ash by adding nano particles of silver, a well established biocide. The filter unit incorporates a clever patented fuse that shuts off the water supply before the Swach becomes exhausted. 
The Swach is a commercial product but its development was also driven by Tata’s strong commitment to corporate responsibility says Sabeleel Nandy, Tata Chemicals head of water purification.
This is a brilliant example of chemical expertise being combined with innovative product design to satisfy a basic human need. Exactly the sort of innovation we need to see a lot more of in the water industry.

05/10/2010

Strong performance by water companies


Photo source: Ofwat
The annual report by Ofwat on the financial performance and expenditure of the water companies in England and Wales shows they performed strongly in 2009-10. The companies operating profits rose to £3.5 billion an increase of 7% on the back of higher revenues. The companies overall return on capital was up at 7.2%.
Investment was £4 billion higher than assumed in the 2004 price limits but down 14.9 % from the peak in 2008-09.
The strong performance and figures so close to predictions underlines why the sector is so popular with infrastructure investment funds and pension companies. However in the current harsh economic performance customers may start to question whether they are getting value.
The 2010-2015 final determination means that sound, predictable performance will continue. Harold Macmillan, the former UK Prime Minister when asked about “his greatest worries” famously replied, “events , dear boy, events”. Its extreme weather events that are most likely to cause an upset in the industry and put it back under the spotlight.