Private sewer transfer goes ahead

Changes being introduced today (1^st July) by Defra mean that from October responsibility for private sewers will transfer to the water companies. This change has been a long time happening and will remove the uncertainty and risk from householders. For water companies it means a doubling in the length of sewers for which they are responsible and also a massive increase in workload.

The change may have unexpected consequences for the water companies. The condition and repair history of the sewers being transferred is not known. Currently repair work has been done on a short term fix basis with no incentive to solve the underlying long term issues. This is where the real benefit to society lies. Hopefully wasteful repeat visits to repair reoccurring blockages will become a thing of the past. Finding and justifying long term solutions wont be easy given the complete lack of knowledge of the private sewer system and the lack of historic records. There may be significant opportunity for the water companies to reduce repair costs but until a repair history is established this may be hard to justify.

There will certainly be a huge increase the number of calls with customers. Managing this well will be crucial if water companies are not to see their Service Incentive ratings plummet. As yet no one knows what the cost of all this will be. it is likely that some water companies will push for an interim determination and that may bring fresh problems. 

Failed Italian water privatisation

Picture source: Thames Water - long term investment in 1920's

The news that Italians had rejected in a referendum a new law that would have required cost recovery pricing across the Italian water sector and allow privatisation of water operating companies was not a surprise. Turkeys don’t wont for Christmas! But it only puts off a problem that wont go away. Greece is already suffering from a lack of investment in its water infrastructure. Water shortages are becoming more common. They may get a temporary reprieve if as seems likely their economy collapses and demand for water falls. But this only postpones the inevitable need for investment.

This political stalemate over water pricing is common across the world. Close to home it’s the key issue facing Northern Ireland Water as the winter water supply failure starkly highlighted. It means that if long term solutions are so unpalatable to the politicians then crisis management will become the order of the day.  Water tankers, and bowsers will become a regular feature. It will create market opportunities for quick fixes like portable desal plants and may drive up the cost of water. But it will only lead to a more unstable world. Putting off important decisions on water investment will mean that the options open to solve the problem will be more limited and expensive and make the economic situation for Governments worse.   

UK water sector drought - opportunity or threat?

The news this week that parts of the UK were suffering from drought came as no surprise to those living in the south west or east and it was closely followed by the wettest day for months! But one wet day does not change the seriousness of the long run of exceptionally dry weather.

One strand of Thames Water’s strategy to answer water shortages was to construct its  £270m desalination at Beckton. In its first year the controversial Thames Water desalination plant ran for only three days – proving trials only - as there was insufficient demand to justify running this very expensive way of producing water. This must make the water produced some of the most expensive in the world!

It does sharply question whether having highly capital intensive and expensive desalination plant on standby is really the best way to tackle the growing water shortages. Water leakage in London is still around 25% and in some areas much higher still. Investment in replacing the 100 plus year old water network has increased but still the rate of replacement assumes much of the existing old pipework will last another 100 years. Other European countries have shown that achieving leakage rates of 5% is feasible albeit it would require massive investment. Would it not be better to increase investment in pipe replacement if we are to have a sustainable solution? 

Water White paper delayed further

It is disappointing to report that Defra have announced the water white paper has been delayed further. As this blog reported it was delayed to the autumn and has now gone back to December. Having raised expectations for water customers in the South West that their bills would be reduced it is not surprisingly proving difficult to find a resolution to how to have a more equitable charging system.

Black Swans in the water sector

Ever since Nassim Taleb wrote his book, “The Black Swan” the world has been aware of the need to consider low probability but high impact events. This has proved true yet again in the nuclear industry with the Fukushima disaster – a supposedly extremely low probability event and as is now becoming clear with very serious consequences.

The water industry also needs to think carefully about low probability, high impact events. The lessons from Fukushima and the Gulf of Mexico BP oil disaster are clear – it is vital to prepare for the worst. In both cases much could have been done to alleviate the impact if thought had been given in advance about what to do if these low probability events occur. Now belatedly BP and the oil industry are investing in emergency devices to cap a blow out.

With events like cryptosporidium contamination the water industry has already given much though to its emergency plans. But as a report by UKWIR has made clear much more needs to be done. Not only will this make the water industry safer it will also reduce costs as investment and effort is targeted where it makes a difference.  

Innovation priorities in the water sector

Photo: Rainwater harvesting in Botswanna

The innovation working group set up by Defra has published its views on the key areas where innovation is needed in the water sector. The top three are:

• Reducing leakage
•  Adapting infrastructure to climate change
•  Economic regulatory reform to incentivise markets and innovation

It will not come as any surprise that leakage is still one of the biggest challenges the industry faces, especially as more plastic pipework is used in the network. In the view of the blog the biggest issue is actually changing the culture so that innovation is accepted and welcomed.

Tesco, market leaders in a totally different field have a traffic light system for assessing innovation. Within three weeks of an idea being first mooted, it is tried out at the store level, reviewed at area level and if promising it is escalated straight up the line see if it should be rolled out nationally. Contrast this with the one month needed in the water industry just for an idea to be submitted and typically at least 6 months to be assessed.

The water industry needs to learn from other sectors. Rapid assessment and feedback on new ideas is vital and just as importantly suppliers need to have confidence they will be properly rewarded – otherwise they will turn to more attractive business sectors like oil and gas.  

Adapting to climate change in the water industry

Photograph source: Thames Water

The government has today published the water company’s plans to adapt to climate change. These set out how water companies are approaching the climate change issue and what impact they expect it to have on their business.

The biggest issue is the uncertainty. Trying to predict the impact of climate change is inherently uncertain and this poses huge dilemmas’ for everyone and creates several barriers hindering progress. Customers are not sure what impact climate change will have and consequently and in many cases unwilling to accept yet higher bills. Support from Ofwat for the cost of adaptation was sadly lacking from PR09 – again they did not want to see step increases in customer’s bills when the likely impact of climate change is so uncertain. The other big issue is the lack of any national design standards again because no one is willing to say for certain what impact climate change will have.

But this uncertainty must not be an excuse for doing nothing. There is no doubt that we are getting greater extremes in our weather – what ever the cause. This combined with population growth particularly in the water stressed South East means that our industry is being seriously affected. Add in the possible impact of climate change and its clear that its absolutely essential that action is taken.

Just look at the current concerns over water shortages in the south of England. Government needs to provide clearer guidance and It is vital that work continues to mitigate the impact. While at the same time more research is needed into the likely effects of climate change.