OFWAT 20 years of regulatory failure

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Today’s claims from the water industry regulator CEO David Black that they have set challenging targets for water companies to drive down leakage and end the scandal of wasted water has triggered a strong response from the Angling Trust who have accused OFWAT of presiding over ‘20 years of regulatory failure’.

The Trust have today published figures drawn from OFWAT’s own data showing clearly that for many years they gave water companies a ‘licence to leak’ with the introduction in 2002 their ‘economic leakage level’ (ELL) criteria. Under the OFWAT rules, which remained in place in various guises until 2019, leakage plans put forward by the industry would only be approved if the value of the water lost to leaks outweighed the cost of repairing those leaks. In other words the environmental consequences of wasting water were discarded as irrelevant in favour of screwing down water bills.

Prior to the introduction of the discredited ELLs system, strict targets were introduced following the 1995 drought which saw significant reductions in leakage levels. The impact of ELLs saw leakage first rise and then fail to fall appreciably until a new target-setting regime was reintroduced as part of the 2019 price review for the industry.

As well failing on leakage OFWAT has failed to approve investment for the new reservoirs the country needs to cope with both climate change and population. No new reservoirs have been opened since the water industry was privatised in 1991 and since that time the population of the UK has expanded by over 10 million.

Angling Trust Policy Chief Martin Salter said:

“The way water in this country is managed and regulated is a complete and utter shambles and OFWAT have been a major part of the problem. For years they gave water companies a licence to leak while ministers failed to demand the levels of infrastructure investment needed to enable us to store water in times of surplus in order to protect consumers, the environment and the economy in times like these. For years OFWAT were happy to see water wasted and were a block on building new reservoirs. They are just one part of botched water privatisation that is clearly not fit for purpose.”

Stuart Singleton-White, Head of Campaigns at the Angling Trust added:

“The comments from David Black were both disappointing and insulting to all of us who have been campaigning to protect our rivers, whether that is from the devastating impact of the drought or the chronic problem of pollution. The reality is OFWAT are complicit in our broken water sector and seems to be acting as an apologist for a situation that it bears responsibility for creating. The facts are there for all to see and show that the water regulator has prevented a lot of the investment needed and allowed companies to take huge profits, put public supply at risk and to screw up the health of our rivers.”

NOTES ON ELLs

The change to ‘ELL’ based targets was in about 2002 and reflected a change in regulatory policy. It’s notable that all companies in England and Wales met their targets from 2007-08 through to 2010-11 illustrating a zero impact on leakage levels.

The chart below shows the history of leakage targets. OFWAT brought in ‘economic level of leakage’ targets in the early 2000s. The chart is for both England and Wales.

ELL-chart-300x148.png


The post OFWAT 20 years of regulatory failure appeared first on Angling Trust.

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squimp

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‘The water regulator prevented a lot of investment needed’.

What an absolute disgrace.
 

Arry

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Shoot em inna face
 

Simon R

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Goes to show, once again, that the Angling Trust really don't know what they're talking about when it comes to the water industry.

The current system simply means that the biggest leaks are tackled first.
Some leaks may amount to a couple of pints a month - far less than a dripping tap - but may cost twenty grand to fix - thats's not good value for money.

And water that leaks from the system is not 'lost' - it doesn't vanish - it re-enters watercourses via overland flow or the local drainage system - or if it's an underground leak it replenishes the water table.

Simon
 

squimp

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Goes to show, once again, that the Angling Trust really don't know what they're talking about when it comes to the water industry.

The current system simply means that the biggest leaks are tackled first.
Some leaks may amount to a couple of pints a month - far less than a dripping tap - but may cost twenty grand to fix - thats's not good value for money.

And water that leaks from the system is not 'lost' - it doesn't vanish - it re-enters watercourses via overland flow or the local drainage system - or if it's an underground leak it replenishes the water table.

Simon
I think you are missing the point.

OFWAT has been tasked to limit water company investment to keep water prices down (and water company profits up).

Of course the biggest leaks are fixed first; the issue is how many aren’t fixed and/or how long it takes to detect and then fix them. More investment would shorten those lag times. The figures in the AT press release don’t lie.

OFWAT has also stopped investment in our sewage system and that is part of (a big part !) the reason why we had nearly 400,000 releases of untreated sewage last year…..MOST of which were illegal.
 

Simon R

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OFWAT has also stopped investment in our sewage system and that is part of (a big part !) the reason why we had nearly 400,000 releases of untreated sewage last year…..MOST of which were illegal.
Sorry but that's rubbish
I can't speak for other areas but in NWL the expenditure on new or improved sewerage infrastructure in 2021/22 was around £20million.

And not forgetting the £4billion that is being spent on the Thames Tideway sewer

The banner headlines about releases of untreated sewage, do not take into account the legal and consented releases of storm sewage which prevent sewers backing up and flooding the streets. And the many illegal discharges do not get investigated because the organisation that is supposed to police these discharges (The EA and nothing to do with OFWAT) has been starved of funds for decades. There simply aren't enough inspectors to carry out routine inspections and not enough funds available to carry out successful prosecutions.
Have a read of this that was posted recently:

Simon
 

squimp

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Sorry but that's rubbish
I can't speak for other areas but in NWL the expenditure on new or improved sewerage infrastructure in 2021/22 was around £20million.

And not forgetting the £4billion that is being spent on the Thames Tideway sewer

The banner headlines about releases of untreated sewage, do not take into account the legal and consented releases of storm sewage which prevent sewers backing up and flooding the streets. And the many illegal discharges do not get investigated because the organisation that is supposed to police these discharges (The EA and nothing to do with OFWAT) has been starved of funds for decades. There simply aren't enough inspectors to carry out routine inspections and not enough funds available to carry out successful prosecutions.
Have a read of this that was posted recently:

Simon
It’s all relative - as the AT stats tell you.

OFWAT have allowed the water companies to do a bare minimum. If NWL spend £20 million, that is from a likely programme of work that would have cost £50m…..

OFWAT tell the water companies what they are allowed to spend.

I’m well aware that the EA is the regulator and yes they have been starved of funds. BUT I’m also well aware that the water companies can legally dump sewage in times of flood. Unfortunately most of the time they do it in normal flows and that is entirely unacceptable.

It’s also unacceptable that concerned private individuals have had to do Their own own testing to highlight the flaws in the system. 15 years on Thames RFERAC and the Upper Thames Consultative demonstrated that to me……..we would question the system, the EA would listen and then do nothing.
 

Wrongfoot

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And water that leaks from the system is not 'lost' - it doesn't vanish - it re-enters watercourses via overland flow or the local drainage system - or if it's an underground leak it replenishes the water table.
Rather a strange interpretation. If you are so informed you will know that the leakage usually goes into a different part of a catchment so it's typically not returned where needed. Aquifer water and upper level groundwater are not the same reserves at all and geology means they often aren't connected where leaks occur.

And the cost of wasting treated potable water is significant in terms of energy and resource such as treatment chemicals.

Also with the greatest genuine respect NWL are not a typical water company being only one of 3 to maintain a 4star rating this year and not being resource pressured (Kielder), not subject to recent huge prosecutions for pollution and mismanagement and not taking water from chalk aquifers in southern drought zones. Significant continued shareholder drawdown to their sole Chinese owner may eventually take a toll, or maybe not?

I wouldn't use the Cooperative Bank's model to excuse HSBC money laundering and you shouldn't use NWL to excuse the behaviour of other water companies. I appreciate it hurts to be associated with baduns and you want to explain how you do things, but it's not big picture correct.
 

Wrongfoot

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OFWAT have allowed the water companies to do a bare minimum. If NWL spend £20 million, that is from a likely programme of work that would have cost £50m…..

OFWAT tell the water companies what they are allowed to spend.
Couple of years back NWL appealed the OFWAT decision to refuse a significant investment in their asset management program to reduce pollution and keep infrastructure up to date. It went through the courts and was successful.

So you had a Water Co fighting the price regulator in order to do the more of the right environmental things... Other Water Cos were criminally under investing and wilfully polluting for 7yrs (Southern Water) and obstructing justice with deliberate destruction of records after notices were sent demanding it the EA. This is why NWL are not a case study for the worst of the Water industry.

It's also an example where OFWAT were more than complicit in sustaining pollution levels in the NE. Perverse stuff from a regulator, but their mission was low bills not environmental protection and the EA is hamstrung with funding cuts.
 

NoCarpPlease

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they played a clip of a spokesperson from Southern Water on GMB this morning ... who was saying something along the lines that "it's only 5-10% untreated sewage, it's diluted by rainwater" and "members of the pubic should exercise their judgement about whether to swim in the seas when there is a pollution incident".

Absolutely pitiful ...
 

Total

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they played a clip of a spokesperson from Southern Water on GMB this morning ... who was saying something along the lines that "it's only 5-10% untreated sewage, it's diluted by rainwater" and "members of the pubic should exercise their judgement about whether to swim in the seas when there is a pollution incident".

Absolutely pitiful ...
^^(y).......I believe there was seven such events on the south coast alone yesterday....As you say 'absolutely pitiful'.....They need banging up and throwing away the key.....
 

Wrongfoot

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^^(y).......I believe there was seven such events on the south coast alone yesterday....As you say 'absolutely pitiful'.....They need banging up and throwing away the key.....
According to their recent criminal convictions they (Southern) were under investing in repairs and improvements for at least 10yrs so they're currently about that far behind other better Water Cos as they work to the current 2030 improvement plan. They were recently fined £226M by OFWAT for defrauding customers by charging for treatment and improvements they didn't do and fined £90M for the pollution this caused in an EA case. Biggest fines ever, but still probably a lot less than the benefit of their criminal behaviour. Arguably they were (and still are?) the worst Water Co in the UK.

So yes you should be pissed off about events like this. I'm glad you care.
 
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