Thames Water reviews Tideway Tunnel scope

Photo Thames Water

Reports in the New Civil Engineer suggest that Thames Water is reviewing the scope of work for the £2 billion London Tideway Tunnels scheme to reduce costs. Consideration is being given to cutting the length of the 32km Thames Tunnel that currently ends at Beckton Sewage Treatment Works. Instead it would be diverted to join the Lee Tunnel which would then need to be increased in diameter.

Work on the Lee Tunnel is due to start early in 2010 to ensure the work is completed before the Olympics start. Murphy/Hochtief and Morgan Est/Vinci/Bachy Soletanche joint ventures are currently vying for the £430m Lee Tunnel contract.

It is disconcerting to see that the scope of this project has not yet been frozen. Getting the scope right is absolutely essential to delivering the project on budget and time. It is the biggest single project in the water industry and given its location will be under huge public scrutiny. It seems incomprehensible that alternative route options weren’t fully explored at a much earlier point in the project. It does not inspire confidence for stakeholders and especially the general public if on the eve of awarding a £430m contract the most basic aspects of the design have still not been agreed. 

Marine and Coastal Access bill receives Royal Assent

Photo: Defra

The news that the Marine and Coastal Access bill has received assent marks a major milestone in marine conservation. The bill will lead to the establishment of an uninterrupted coastal path and conservation areas.

It also creates a new body called the Marine Management organization (MMO). The MMO is tasked with marine related issues, such as plans for offshore wind farms. The bill also introduces a coordinated approach to coastal and estuary management that aims to simplify the current arrangements.  

This new bill that has been 8 years in evolution while not perfect is a major step forward. Moves to simplify and streamline the management of our coastline are to be welcomed. We all value our leisure time and improving access to the coast will enable more people to enjoy our world beating coastal environment.  But it will mean that our coastal regions will be under increased scrutiny and this may increase pressure to improve. 

United Utilities sells stake in Manila Water

United Utilities (UU) has today announced that it is selling the bulk of its remaining interest in Manila Water to its main Philippine partner Ayala Corp.for $73 million. UU is to continue to provide technical services. UU partially exited Manila Water in 2005 when it sold shares at PHP 6.50 each. The company has made big strides since then and the stock is now trading at PHP16.00.

When United Utilities first became involved Manila Water was in a bad shape, with numerous unregistered connections to an aging infrastructure and water losses of over 65%. It has been a rocky transformation with included a currency crisis in 1997, the El Niño phenomenon in 1998, an arduous arbitration process a little after that, and a myriad of political uncertainties on the national front that increased regulatory pressure on the company.

Now performance has been transformed. Water losses have dropped to 24%, customer numbers have increased by 2 million to about 5 million and the percentage of customers enjoying 24-hour water availability increased from 26% to 99%.

It may not have been an economic success for United Utilities but it is a positive example of the benefits of privatization. All those involved should be congratulated in their efforts to turn the situation round. It is an excellent example of the skills of the UK water industry in transforming the supply of drinking water and sewage and consequently the lives of those in a third world country.

Environment Agency annouce 5 year strategy

The Environment Agency (EA) have just published their 5 year strategy for 2010 onwards. It includes a series of measures aimed at safeguarding from flooding and tackling climate change over the next five years.

The EA plans include protecting an additional 200 000 properties in England and Wales from costal erosion and flooding by 2015.

Plans to protect more homes from flooding are to be welcomed. But is it enough investment? The EA states that over half a million homes are at high risk of flooding from the rivers and seas. Risk is a concept that the general public struggle to understand. If the appropriate level of investment to protect homes are to be made (and justified in a tough economic climate) the industry needs to get better at explaining what high risk really means to the public. 

Increasing competition in Anglian region

Ofwat confirmed today that it proposes to appoint Independent Water Networks (IWN) as water and sewerage supplier for the vast Brooklands development near Milton Keynes. IWN will replace Anglian Water in supplying water services to around 2500 properties mostly households.

IWN will buy a bulk water supply and bulk connection to the sewers from Anglian Water and offer its customers a 5% price discount on their water bills (but not sewage bills). This will be the fourth win for IWN in the Anglian region and helps confirm IWN and its parent the Inexus Group as the market leader in independent utility networks. 

It is by no means clear yet whether the increased competition for Anglian Water is actually a good thing for all water customers. It is very difficult to be sure that the price IWN is paying Anglian really reflects the true cost of the water and sewage service in the locality.  This may not matter while these deals are relatively small but it is a crucial issue as competition grows. 

Climate change talks must include water

This week (Nov 3^rd) saw the UN sponsored Water Day in Barcelona held to bring attention to water as a critical concern for climate change adaptation and mitigation. It is being held as part of the negotiation and preparation leading up to next months UN Convention on Climate Change (COP15) at Copenhagen.

As was highlighted at the Stockholm World Water Week, water is a key medium through which climate change impacts will be felt. Yet the current text of the agenda for COP15 removes any specific reference to water management as part of a climate change adaption strategy.

This should be a concern for all those in the water industry. While the primary focus of the Convention must be on greenhouse gases and mitigation measures. The vital importance of water must not be overlooked.

Changing economic landscape

In a recent article published in the chemicals press and for ICIS Chemicals Business, my colleague Paul Hodges through his excellent blog Chemicals and the Economy shares his view on the changing economic landscape and its implications for companies.

The article looks at the key influences which will shape the chemicals industry as they emerge from the current destocking/restocking phase.  It concludes that the competitive landscape is changing as a result of the downturn, and that companies therefore need to re-position themselves as being either low-cost or solution-oriented.

With the sharp downward pressure on prices coming from the Draft Determination it is essential for suppliers to the water industry to be very clear about the value they provide. Suppliers must demonstrate that they offer the low- cost solution or be able to clearly quantify and articulate the value added if they are to be successful.