Utility Week

30 | FEBRUARY 2023 | UTILITY WEEK Water Analysis PR24: Water efficiency and CSOs come into focus Utility Week examines key takeaways from Ofwat's final methodology for the PR24 price control. M anaging demand and preparing for a drier future emerged as central themes to the final methodology for PR24 from Ofwat, with water efficiency finally getting recognition and, importantly, funding in the form of a £100 million dedi- cated fund. Following a summer of drought and hose- pipe bans being implemented for the first time in a decade by six water companies, managing demand was called into sharper focus. Ofwat's blueprint for 2025-30 will set sep- arate performance commitments for leakage, per capita consumption (PCC) and business demand with "stretching but achievable ser- vice levels" in line with relevant industry commitments and statutory government tar- gets. Companies will be set enhanced incen- tives for leakage and PCC. Reductions in business consumption will be incentivised for the first time. All compa- nies will be expected to set out how efforts in this Asset Management Plan (AMP) period will build towards the 2050 goal of cutting leakage by a minimum of 50% and driving PCC down to 110 litres daily from the current average of 145 litres. Nathan Richardson, head of strategy and policy at Waterwise, tells Utility Week the organisation is very pleased to see water effi- ciency getting some prominence. He says: "It's something we have been advocating for a lot over the past year because a lot of action and money has been dedicated around supply-side schemes but there's been a gap on the demand side and water efficiency, despite regional plans showing such large deficits." He adds that some solutions hinge on reducing demand in the coming decade without clear routes to do so. Details of a proposed £100 million fund for water efficiency are yet to be confirmed, however Ofwat said it would be designed to facilitate the development of transformative improvements to water efficiency at regional and national level to help reduce demand for water. Waterwise will work with the regula- tor on what format would be most effective. Richardsonsays he envisages it being similar to the Ofwat Innovation Fund launched as part of PR19 to encourage companies and other participants to bid for collaborative projects. Waterwise is equally pleased that non- household water usage will for the first time be set a standalone performance commit- ment. At PR19 companies were first set PCC reduction targets, which have been tough for all to meet. Lockdown caused an increase in household demand as customers spent more time at home. This was countered by a fall in usage by commercial customers. "Non-household usage seems to have been ignored over recent years," Richardson says. "It has been leš to retailers to do out of their already really tight margins, so we are really pleased there's an expectation on wholesalers." Within PR19 business plans for the cur- rent AMP7, Richardson describes many companies as having "stepped away from demand management for non-household consumption" because it was not incentiv- ised in PR19. When the market was estab- lished in 2017, water efficiency consideration was "handed over to retailers" but will be picked up once more by wholesalers. Another positive for demand reduction is the shiš in tone regarding smart meter- ing, backed up by data from Water Resource Management Plans that indicate a move towards smart meter rollout over "dumb" meters. Ofwat said all companies will be expected to consider smart meter solutions as the standard installation type. Richardson says any rollout plans should be coordinated with business users as well as household customers because many non- half hourly meters are old and unreliable. Companies will need to work together to introduce national standards for the data collected from smart metering to ensure interoperability across the sector and use such information to best manage demand. CSOs rise up the agenda Combined sewer overflows (CSOs) have become a part of the wastewater system that is well-recognised by the national press – if not fully understood – and they are used by

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