Water & Wastewater Treatment Magazine
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10 | OCTOBER 2016 | WWT | www.wwtonline.co.uk Barriers still remain for water trading, experts warn W ater trading between utilities could be a vital tool for building the UK's supply resilience but there are still a number of barriers that need to be overcome before it can become a reality, industry experts have warned. Upstream reform - including the facilitation of bulk water transfers between water companies - is one plank of Ofwat's Water 2020 regulatory reforms, yet there remain several practical obstacles to it taking place, speakers said at the WWT Integrated Water Resource Management conference, held in Birmingham on Sep 14th and sponsored by Amec Foster Wheeler. "There is still considerable scope for water trading to take place but many of the constraints to this that were identi‡ ed 20 years ago are still around," Tony Ballance, Director of Strategy and Regulation at Severn Trent, told the conference. "We have relatively poor connections between water companies and the funding and ‡ nancing of the work to improve them is a complex issue." He told delegates that there are ‡ ve main barriers to water trading: weak regulatory incentives; asymmetries in the information to be shared between companies; contractual complexities; an adequate pricing model; and the physical piping to interconnect water company areas. While the regulator and industry groups had made progress on negotiating the complexities of pricing and developing standard contracts and incentives, the poor connections between water companies were the biggest issue. He said that the six most important connecting pipelines that would need to be built – with the most signi‡ cant involving links between the Severn Trent, Thames Water and Anglian Water regions – would cost £1.5BN. A Water UK report on building drought resilience was released before the conference. Jean Spencer, Regulation Director of Anglian Water and chair of the steering group for the report, said that funding resilience projects presents a key dilemma. "Clearly water companies need to step up to balance today's needs and the needs of tomorrow. But 'who pays' and how we balance a™ ordability and resilience remain the key questions. Customers may have a view of how much they are willing to pay for resilience, but we can't a™ ord to have a situation where our water supply is threatened," said Spencer. THE SPEAKERS "When it comes to catchments it's co-operation, not regulation, that will provide the greatest return on any investment." Robin Milton Uplands Chair, National Farmers Union "There is still considerable scope for water trading to take place but many of the constraints to this that were identifi ed 20 years ago are still around." Tony Ballance Director of Strategy and Regulation, Severn Trent "In the past abstraction policy has been le out in the cold. Now we have a chance to move it to a new level." Henry Leveson Gower Defra James Brockett reports from Birmingham To take away 1. With a growing risk of severe drought, the funding of resilience projects and their aff ordability for today's customer is a key question that needs to be addressed by government, regulators and water companies 2. While some progress has been made on facilitating water trading, major infrastructure investment is required in the form of interconnecting pipelines before it can become a reality 3. Bringing farmers on board with environmental protection measures in catchments remains diffi cult while supermarkets' pricing policies, for example using milk as a loss leader, are putting them under fi nancial pressure 4. Rainwater harvesting could be the link between SuDS and drainage and water supply, adding a key element to resilience. Greater work is required with developers to incentivise this in future 5. Despite calls to 'think big' on drainage and fl ood protection, the most eff ective projects that are currently being completed are local, collaborative and bottom-up, providing positive examples of what can be achieved "A lot of attention has been on SuDS but this is only part of the picture – we need to think about water as a multi-functional resource." Chris Hughes Water Sector Director, Amec Foster Wheeler Events