Utility Week

UTILITY WEEK | 16TH - 22ND FEBRUARY 2018 | 19 Policy & Regulation Bonfire of the regulations? "We should face Brexit head on, seize the opportunity to cut down the forest of red tape threatening our industry, and create new standards." Opinion Alex Graham and Jamie Harrison C hange is coming and we need to get ready. Other industries, from financial services to aviation, are ramping up their Brexit teams and coming together with industry peers to plan for the future. Yet as a sector, we the UK water industry seem to be sleepwalk- ing towards Brexit. The last time Water UK published a Brexit Update was August 2014. Now is not the time to sit back and wait to see what happens. We could be heading towards a perfect storm where Brexit uncertainty combines with a new regula- tory cycle causing a ra of short-term shocks and risks. Are you ready for: • The financial impact of a credit downgrade for UK combining with a credit warning for the water sector? • A stalled EU supply chain, delayed by trade negotia- tions? What if chemicals and pumps are held up in customs? Have you considered the impact on the security of clean drinking water supply? • Your skilled workforce of electrical and civil engi- neers suddenly becoming attractive targets for sectors with deeper pockets (such as oil and gas), whcih may lose "foreign" employees because of new European labour laws? These are short-term risks, but a lot can be achieved long term by working smarter together. Current regulation is a multi-layered mess of red tape, where siloed government agencies, oen enacting EU directives, have piled on more and more rules over time. Creating laws where one size fits all (27 EU countries) has led to an uneven landscape of over and under- regulation. One good example of this is the effectiveness of the Freshwater Fish Directive and Water Framework Direc- tive, where the nature of EU directives taking a (well- meaning) singular stance to improving standards for a diverse set of countries has resulted in over-regulation for the UK. The measures that needed to be put in place to meet the new regulations such as asset creation (that is, concrete pouring), increased use of energy for aeration and increased chemical use, may have had a detrimental effect on the environment in some areas of the UK. Two steps forward but at least one step back. Let's challenge regulatory orthodoxy with a more nuanced UK-specific (catchment by catchment) approach to improving river water standards. This way, it will be possible to get value for our investment and perhaps more importantly, a better overall environmen- tal impact. Reducing regulation should be possible because unlike most of our EU neighbours, the UK water sector is a competitively regulated market. Therefore, each water company is already incentivised to ensure fair competi- tion in procurement and good value for money. The UK naturally requires less procurement regulation and bureaucracy in comparison to countries where water is provided by the state or a single entity. That, aer all, is the beauty of the invisible hand of the market. Take the myriad regulations that govern biosolids-to- land recycling. These are ripe for a review without relax- ing standards. The UK is unique, given our population density, in the level of energy-generating digestion and sludge-to-agriculture recycling it has. With hardening attitudes in the EU to the use of biosolids in agricul- ture, we should look at how we can protect our existing disposal routes. Furthermore, by taking a lead on a risk versus benefit assessment of the legislation on the recy- cling of sludge to land, we can work out how to open alternative disposal routes that are more cost-efficient, better for the environment, improve stakeholder and public confidence, and ultimately lead to lower bills. For a government that aspires to create a greener, more environmentally friendly country it's a win-win. What about areas that have been under-regulated? All the major political parties are united in their ambi- tions to clean up our natural environment, the recent banning of microbeads in cosmetics being a good exam- ple. Yet precious little effort has been made to tighten regulation on sewer network abuse. It has been hard to miss the press coverage about fatbergs caused by care- less disposal of fats, oils and grease combined with the rise in popularity of flushable wet wipes. These beauty products are causing chaos in our sewers, costing the industry hundreds of millions and resulting in serious environmental damage. Surely, this is an area where we can lobby the government to create new regulations to stop these products entering our environment. Finally, and perhaps most exciting of all, it is worth remembering that in the UK we have one of the old- est and most competitive water industries in the world. We have the opportunity to reshape our national ambi- tions, pioneering and innovating as we reset the rules of the game. Together we can create an agenda that incen- tivises every UK water company to take a lead on the world stage in the efficient and environmentally sound provision of water and wastewater services. There are no reasons why we should not seek to export our water expertise as a nationally and internationally celebrated industrial success. The future is there for the shaping, so let's face it head on together. Alex Graham and Jamie Harrison, Egremont Group

• Cover