Photo: Mogden sewage treatment works courtesy of Thames Water
Welsh Water is to undertake the biggest re-structuring of the company since it was bought by Glas Cymru and became a “not-for-profit” company – to meet Ofwat’s demand that water bills be cut by £30 per household over the next five years. The move is expected to lead to 300 jobs being cut.
The company has torn up a fifteen year £1.5 billion outsourcing contract with United Utilities. It is also in negotiations with Kelda over the future of its £450m contract for water services.
“We aim to achieve a reduction of 20 per cent in our day-to-day running costs. We will do this by exploiting our recent large investment in new technology, by eliminating duplication in management and by investing in ‘green energy’ to reduce power costs ,” Mr Annett said.
The move marks a radical change of strategy for Welsh Water, the company that pioneered the outsourcing model. It means it will revert to managing a large number of staff with almost a ten-fold increase in the number of employees on Welsh Water’s books.
Meanwhile South West Water and Thames Water are going down very a very different route to Welsh Water to reduce costs. SWW with its Puros project is looking to centralise control of its sites and move to pro-active management of staff. Thames also has a major automation project underway. These type of projects do not have a good success record in the chemical industry. If they are to work they do require an excellent understanding of the process technology and key control points prior to implementation – not something that most water companies are traditionally good at.
What is clear is that water companies feel under tremendous pressure after the Ofwat final determination to reduce costs. Becoming more efficiency is a laudable objective but will it really be in the best long term interest of consumers?
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