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UTILITY Week 18th December

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10 | 18TH - 24TH DECEMBER 2015 | UTILITY WEEK Policy & Regulation Analysis T he resilience taskforce, created by Ofwat, has published its recommen- dations for water resilience and Ofwat has responded. Resilience is a priority issue for the water and wastewater sector. So, to help it improve co-ordination of the plans which will ensure such resilience, Ofwat created an arm's- length body with 12 water experts chaired by Waterwise managing director Jacob Tompkins. This task and finish group worked for a year producing a series of short reports before producing a final report outlining ten recommendations for the sector designed to help meet the challenges, which will feed into the regulator's thinking for the policy framework. The ten key points were: 1) Agree a shared definition of resilience for the sector. One of the first activities of the taskforce was to develop a definition of resilience for the water sector. Members decided that resilience is the ability to cope with, and recover from, disruption, and anticipate trends and variability in order to maintain services for people and protect the natural environment now and in the future. In its official response to the report, Ofwat's said that it thought this recommenda- tion was "a helpful starting point, although the wording of our resilience duty remains paramount for our work". 2) Increase public engagement and educa- tion. The group suggests that public engage- ment should be twofold: it should involve the provision of pertinent information on a wide scale and on an ongoing basis, and it should aim to ensure this information is transformed into active engagement. Ofwat's response: "Ultimately, we propose to link the quality of a service provider's cus- tomer engagement directly to our assessment of its business plan quality in the risk-based review." 3) Ensure clear routes for funding legiti- mate resilience measures. The taskforce recommends that Ofwat provide water com- panies with a clear framework for their busi- ness plans, as well as offering clear guidance on its treatment of resilience investments when it considers these plans. Additionally, water companies need to do more in-depth engagement and deliberative work with all of their customers to build and maintain a real understanding. Ofwat's response: "We want to be clear that we see service providers work to deliver resilience extending beyond what would tra- ditionally have been considered 'investment' – that is, capital expenditure – and into all areas of their activity." 4) Ensure coherent planning for resil- ience at both a national and regional level. A newly-formed project group, under the auspices of Water UK, is considering the long-term planning needs of the England and Wales water sector. Ofwat's response: "We are involved with, and supportive of, the work led by Water UK on the long-term resource planning needs for England and Wales, for up to 50 years, and the practical steps required to meet them." 5) Establish wastewater, sewerage and drainage plans. The group argues that there must be national wastewater and sewerage strategies, and each company should have a wastewater and sewerage plan which should link to sustainable drainage systems, wider drainage issues and rainwater and greywater harvesting through the parallel development of drainage plans. Potentially these plans should be statutory. Ofwat's response: "Wastewater services are not subject to a statutory planning frame- work, but we support the recommendation that service providers should have long-term strategies in place for PR19." 6) Improve understanding of risk and failure. An agreement must be reached on the level of service that should be planned for in each area, based on the risks faced by the water sector, the costs of failure, and the costs and benefits of measures to avert, man- age and recover from failure. Ofwat's response: "We agree that manag- ing risk is at the heart of delivering resilience of systems and services." 7) Ensure services are resilient under dif- ferent water sector structures. The group asks three key questions when it comes to delivering resilience: who within each struc- ture is responsible for resilience planning; is there structural capacity to deliver this; and will the regulatory regime enable resilience? Ofwat's approach and assessment of impacts needs to enable and incentivise resilience in a fragmented and evolving sector. Ofwat's response: "This recommendation raises questions about our capacity to regu- late a fragmented and evolving sector where not all the stakeholders are within the regula- tory, licensed, framework. We recognise these are important questions and commit to build- ing this into our thinking." 8) Develop benchmarking, standards and metrics. Ofwat and water companies need to work together to develop a method of com- paring resilience, reflecting customer views, local context, the environment and company ownership of plans, the taskforce says. Ofwat's response: "We agree that water companies should develop better measures of resilience as we look to PR19 and beyond and that we need to consider how we take these into account in our assessment of busi- ness plans, building on current approaches. We will consider the use of measures as part of our work on outcomes and customer engagement." 9) Ensure existing plans are stress-tested. All companies need to have a process in place, including board assurance, to review and stress-test plans as widely as possible. Ofwat's response: "It is for companies to consider such a framework and build this into their approach to meeting their resilience obligations." 10) Establish a water and wastewater resilience action group. The group could be hosted by a recognised sector body such as Water UK and should include water compa- nies, governments, local government, regu- lators, customer groups, community groups and social and environmental groups, and should be independently chaired. Ofwat's response: "We look forward to working with all water stakeholders in this area." Ten ways to improve resilience The independent taskforce, created by Ofwat, has finished its deliberations and come up with ten ways the water sector can improve resilience. Lois Vallely reports.

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