Water & Wastewater Treatment

WWT August 2019

Water & Wastewater Treatment Magazine

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The Talk: August ROUND UP 4 | AUGUST 2019 | WWT | www.wwtonline.co.uk Ofwat mulls £200m innovation fund Ofwat has launched a consultation that could allow companies to raise funds for innovation activities through customer bills. Ofwat has proposed an annual contest in which companies pitch projects to be financed by the mechanism as well as an end-of-period reward for the successful rollout of innovative projects over the course of the AMP. If both were progressed, £200 million would be shared between the two projects. The consultation also looks at the potential for a sector-wide joint innovation strategy, a company-led centre of excellence and how the industry can gain greater insights from the data it holds. Ofwat said it believed £200 million "strikes the right balance between driving company behaviour and delivering for customers". Companies failing to address bill concerns - CCWater Water companies are failing to convince enough households their bills are fair and they provide value for money, according to a new report by the Consumer Council for Water. Approximately six out of 10 households across England and Wales think what they pay their water company is fair, despite the vast majority (nine out of 10) of customers being satisfied with the service they receive when they turn on the tap or flush the loo. "Customers' perceptions over the fairness of their bills have languished behind satisfaction with service for almost a decade and companies cannot afford to ignore people's concerns any longer," CCWater's Dr Mike Kell said. Welsh Water and Yorkshire Water CEOs to retire Welsh Water chief executive Chris Jones has decided to retire from the company at the end of March 2020, with managing director Peter Perry to take over from 1 April. Yorkshire Water's Richard Flint retires with effect from September 12 and will be succeeded by Liz Barber, who is currently the company's chief financial officer. OFWAT PROPOSES EXTRA £12BN INVESTMENT TO BUILD 'NEW ERA' Ofwat has proposed that water companies invest an extra £12 billion over the course of AMP7 while cutting bills by an average 12.7 per cent as it revealed its dra determinations for PR19. The regulator has published its dra determinations for 14 of the 17 water companies in England and Wales, with Severn Trent, South West Water and United Utilities having been fast-tracked in January. Its proposals allow companies £49 billion for both 'business as usual' services and new investment but involve spending an extra £12 billion to improve services for future generations, which works out at an additional £6,575,342 every day. Companies had initially proposed to spend just over £50 billion in AMP7. The added investment is intended to improve the industry's preparedness for population growth and climate change, and includes £2.3 billion to improve resilience and security of supply, which may include new reservoirs. Ofwat is also funding up to £450 million for companies to collaborate on long-term strategic water resource solutions. The collective leakage target is also now at 17 per cent, with companies having initially been tasked with cutting it by 15 per cent by 2025. Five companies' targets have increased from their initial proposals in September, with Thames Water's rising from 15 per cent to 25 per cent. United Utilities, Affinity Water and Portsmouth Water's targets are now 20 per cent, while South East Water's is 15 per cent. The regulator said the plans signalled a "new era" that would bring "better services for customers alongside environmental improvements, backed by increased investment and with lower bills". In addition to the new leakage target, the industry is expected to achieve a 40 per cent reduction in sewer flooding, a 64 per cent drop in supply interruptions, and provide extra help for almost 2 million more vulnerable customers. Ofwat chief executive Rachel Fletcher said: "The package we are unveiling signals a brighter future for customers, with better services, a healthier natural environment and lower bills. To get there, we are calling for extra investment of £6 million each and every day to improve the environment and provide services for a growing population. At the same time, we expect to see customers' bills cut by an average of £50. "These are seriously stretching goals for the sector, but we know they can be achieved. We have seen three water companies leading the way and we now want the rest to show the ambition and drive to deliver this new era for customers and the environment." Ofwat said its expectation that bills will fall by an average £50 before inflation is based on falling financing costs and its demand for more efficient business-as-usual services from companies. The regulator had previously written to Anglian Water, SES Water, Thames Water and Yorkshire Water to give them early notice that it had substantial concerns about their proposed costs for maintaining business-as-usual service. "Our analysis – and comparison with the more efficient 'fast track' companies – shows that most water companies can be run more efficiently than their plans suggest," Ofwat said when publishing its dra determinations. "Greater efficiency and productivity, together with the fall in financing costs, are what will deliver this new era of service, innovation and environmental improvement. "Water companies now have a further opportunity to provide new evidence if they consider our dra determinations will prevent them from delivering for customers and the environment." Ofwat will publish final determinations for all companies on 11 December. Water companies then have until 11 February 2020 to decide whether to accept their final determination or request an appeal to the Competition and Markets Authority.

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