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UTILITY Week 15th January 2015

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utILIty WEEK | 15th - 21st January 2016 | 21 Operations & Assets Analysis I n a recent report, the Consumer Council for Water (CCWater) says the water sector saw a "disappointing" increase in leakage of 0.7 per cent in 2015. With less than half the companies managing to reduce their leakage levels, CCWater questions whether the rate of decline is good enough. Some customers, particularly in areas where resources are more stretched, say they want companies to do more to reduce leakage – but don't want to pay more for it. Despite a drop in leakage levels of almost a third since its worst point in the mid-1990s, the problem of remains a large one. "Stretched resources is one of the biggest challenges facing the sector," says Ofwat. "And we are now looking to learn the les- sons from our 2014 price review by having the conversation about how we can ensure the approach to leakage helps contribute to resilient services in the future." Water firms acknowledge that leakage is a key concern for customers and have made commitments in relation to leakage for the next five years, says CCWater. But chief exec- utive Tony Smith says that if the sector wants consumers to take water efficiency seriously, companies "need to show more ambition in tackling leakage". The regulator currently requires water companies to fix leaks as long as the cost of doing so is less than the money lost by not doing so – the sustainable economic level of leakage – which Ofwat says gives con- sumers the "best value for money". How- ever, companies can go beyond this point if they can show they have customer support. And, Ofwat points out, some companies are already doing this. "Overall the majority of companies have committed to reductions, committing to a drop of 5 per cent by 2020," an Ofwat spokes- man tells Utility Week. "Yet now companies need to deliver. If they don't meet customers' expectations, they will lose out, with penal- ties totalling up to £500 million across the sector for underperforming on leakage." Companies have individual targets based on the sustainable economic level of leakage in their distribution network. If companies do not meet their leakage targets, Ofwat can take action. But CCWater questions whether the targets themselves are stringent enough, and suggests companies strive not only to meet them, but to beat them. The group's head of policy and research, Deryck Hall, says that while customers accept there will be some leakage in the system, many want to see companies doing much more. But they have also made it clear they are not willing to foot the bill, because they see leakage reduction as part of the company's day-to-day activities. "Having heard this message, water companies are having to decide how they can meet customer expectations while not increasing bills," he says. "This includes being innovative in finding and fixing leaks, but also demonstrating to customers that they are taking leakage reduction seriously." Firms insist they do take leakage "extremely seriously". "The recent price review, and the extensive customer consul- tation companies carried out as part of that process, enforced the message that leakage is a lens through which customers view a lot of company activity," a spokesman for Water UK, tells Utility Week. Severn Trent Water is noted in the report as having reduced leakage by 10 per cent over the past five years. However, the com- pany says it wants to do better yet, telling Utility Week that driving down leakages is one of its "top priorities". "[This] is why we aim to cut leaks by a further 6 per cent in the next five years and are the only water company that has commit- ted to fixing all visible leaks within 24 hours by 2020," a spokesman says. "We're looking to drive greater innovation and efficiency by investing in new smart network initiatives and develop improved leak detection tech- niques to find and fix issues more quickly." Despite efforts like this, overall leakage levels have continued to creep up since an industry low in 2011/12. CCWater's report points out that since then, only three com- panies have been able to maintain leakage below their reported 2011/12 levels: Severn Trent Water, Bournemouth Water, and Ports- mouth Water. And in terms of actual leak- age levels, only six companies have seen a decrease in 2014/15: Dee Valley Water, Ports- mouth Water, Southern Water, Welsh Water, Anglian Water, and Bournemouth Water. The last word should go to CCWater: "Companies have got to reduce leakage, and beat – not just meet – their targets. Some companies are committed to doing so. All should be." How important is leakage? More than half of all water companies in the UK reported a rise in leakage levels last year, yet all of them met their leakage targets. So are the targets set too low? Lois Vallely reports. Dwr Cymru Northumbrian Severn Trent South West Southern Thames United Wessex Yorkshire ToTal daily leakage as a percenTage of waTer puT inTo The sysTem (waTer and sewer- age companies) 30 25 20 15 10 5 0 2010/11 2011/12 2012/13 2013/14 2014/15 Industry average WaSCs average Anglian and Hartlepool

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