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Operations & Assets Analysis Is leakage a cause for concern? Water companies have submitted their leakage data to Ofwat, and by some metrics it's rising, but does that matter? Conor McGlone trawls through the figures. 2011/122012/13 19.07%19.15% 25.37% 26.65% 17.07%17.42% 31.65% 31.15% 23.26% 24.38% 16.84%17.47% 30.57%31.44% 32.12% 33.15% 24.55%25.29% 26.34%26.23% reckons the metric is inappropriate. He says it is more useful to look at the amount of leakage per kilometre per day, because this is "not distorted by varying consumption". The amount of leakage per kilometre per day is another metric analysed by Utility Week, and here UU has the third-highest percentage increase (0.85 per cent), with South West Water the highest at 3.36 per cent. Waterscan's managing director, Neil Pendle, has no qualms with the data and says the numbers were "truly shocking" "The problem is that the water industry is incredibly conservative. There is plenty of innovation going on, but it takes too long to bring new solutions to the market," he says. Known as the sustainable economic level of leakage (SELL), the leakage target set by Ofwat on an individual basis for water companies does not necessarily require water companies to reduce leakage. It merely requires them to meet the level of leakage that gives consumers the best value for money. Blackwell, who points out the UU has hit its leakage target every year for the past seven years, says water companies in less water-stressed regions are sometimes allowing leakage to continue where water companies in more stretched regions would make more of an effort. It is a pragmatic approach – UU receives in excess of 100 megalitres a day more water than it can process – and as Blackwell puts it, "there is no benefit to customers in reduc- ChangeDirection 0.40% 5.05% 2.09% -1.57% 4.81% 3.77% 2.82% 3.19% 3.02% -0.41% Source: Utility Week analysis of Ofwat figures Company Anglian Dwr Cymru Welsh Water Northumbrian Severn Trent South West Southern Thames United Utilities Wessex Yorkshire 24 | 24th - 30th January 2014 | UTILITY WEEK Leakage as % of water delivered L eakage does great damage to water companies' reputation, according to a Utility Week analysis, the latest statistics suggesting it is stabilising may not be all they seem. There are numerous ways of measuring leakage, each with its adherents and critics, and none of these metrics tells a good story. One measure, leakage as a percentage of water delivered, is particularly concerning. As we revealed online this week, this figure rose in 2012/13 for eight of the ten water and sewerage companies. According to an analysis of data submitted to Ofwat by the water companies in preparation for the price review, Welsh Water and South West Water had the highest change in leakage as a percentage of water delivered, rising 5.05 per cent and 4.81 per cent respectively from 2011/12 to 2012/13. Ofwat and the water companies dispute the use of this metric, pointing out that 2012/13 was wetter than the previous year, so people used less water, skewing the percentages. However, while acknowledging this, independent expert David Lloyd Owen points out that it can be offset by a fall in network pressure as a result of less water delivery, which eases leakage. Measuring leakage is a complicated and problematic art, already pondered on, rethought and altered by Ofwat in 2000. Leakage data is described as "annoyingly inconsistent" by Duncan Thomas, research fellow at Manchester Business School. So are we looking at the right comparison? Not according to South West Water, which says leakage measured as a percentage of water delivered does not take into account factors such as network size or operating pressure (South West Water's is the highest in the UK due to the topography of its region) and is "inappropriately influenced by customer demand". "If customer demand is higher, leakage as a proportion is less and companies that have customers that use more water will therefore appear to have correspondingly lower leakage," a spokesperson says. Richard Blackwell, United Utilities (UU) water supply and demand manager, also ing leakage further, so why should we have to ask them to pay for that reduction?" Indeed last month, UU and another company that sees plenty of rain, South West Water (SWW), said they would maintain leakage levels at 2014/15 target levels, while all the other water and sewerage companies pledged to improve theirs. Unsurprisingly, companies with the most ambitious targets cover regions described as "water stressed" by the Environment Agency. The most compelling reason for water companies to shrug their shoulders at leakage is a lack of customer appetite to pay for it. Customer Challenge Group surveys for PR14 have suggested an unwillingness to pay for improved performance on leakage. At the annual leakage conference last year, Deryck Hall, head of policy and research at the Consumer Council for Water, said customers were not general willing to foot the bill. Affordability is the $64,000 question, says Lloyd Owen. "Customers and certainly politicians… will get excited about leakage figures for many reasons. Some of them are very good reasons. But who is prepared to pay what for which outcome?" he asks. Utility Week's full analysis of the leakage data submitted to Ofwat is available on our premium content site, Utility Week Intelligence. For more information or to sign up for a trial, see www.utilityweekintelligence. co.uk or contact helen.simpson@fav-house. com, quoting "leakage".