Members of the public of a certain age will always remember a certain cheeky Heineken advert. Aired in 2002, it depicted workers from utility companies digging up a road and being joined by other trades asking if they could lay their pipes in the same trench. Viewers smiled and were left contemplating how great it would be if utility companies and local authorities communicated, shared resources and worked together.
Fast forward 18 years and Peter Simpson is thinking along the same lines – what could be achieved through greater collaboration between water, power and communication firms. Only here the prize is a more sustainable environment. By working in consort utility organisations can ensure that new developments enhance rather than detract from their surroundings, he says.
“An example that springs to mind is we’ve recently formed a Utilities Alliance, to focus the utilities that are in the Cambridge to Oxford corridor, where a huge series of new developments are planned. We’re looking at what we might do collectively to seek biodiversity and become more climate resilient.
“If we joined our strategies together, we could put infrastructure in with minimal impact on the environment, and even improve it rather than detract from it,” he says, giving a number of other examples, which we’ll come on to later.
The CEO of Anglian Water is one of the main exponents of Build Back Better. As the co-chair of the Prince of Wales Corporate Leaders Group, he was one of the organisers and signatories to a letter from 200 business leaders demanding urgent action from government. Their letter in early June urged prime minister Boris Johnson to deliver a Covid-19 recovery plan that builds back a more inclusive, stronger and more resilient UK economy.
Sitting alongside Yorkshire Water’s CEO, Liz Barber and her opposite number at Northumbrian, Heidi Mottram, he also sponsors the Water UK Net Zero Carbon Objective, under Water UK’s Public Interest Commitment, whose pledge is for water companies to reach net zero carbon by 2030. He chairs the Business in the Community Adaptation Task Force as well, which also focuses on climate change and is another organisation set up by the heir to the throne.
The crisis has, he says, presented, “an opportunity” (a word he uses 26 times in the course of a 45-minute zoom call) not only to take forward the net-zero agenda, but create a different way of working.
But what does building back better mean for the utility sector – and Anglian Water? What more could firms be doing to walk the talk and what do they need from government and Ofwat?
Do you think the pandemic will have profound effect on society or do you think the impact is more short term?
I think it is profound. I think the nature of this, and how long it has lasted, and the sorts of changes that we’ve all had to make means that we’re not going to go back to anything close to what we’ve had before.
The obvious thing is working from home. That is not the entire solution to anything, the opportunities in terms of reducing the carbon footprints of the way we operate, and travel in particular, is significant.
And I think we’ve all seen the way we’ve embraced technology – that has given us a great opportunity.
As a company, all of our work is being scheduled on systems that are being operated by people in their own homes, all of our calls are being handled by people in their own homes, all of our meetings are being done remotely, all of our collaborations are being done usual virtual systems, all of our designs for new treatments works are being done that way.
What about team identity and team spirit?
The key is not to lose some of the really positive things from the way we used to work. Some of those are about the human contact, and the team, the culture, how you develop that. And it’s difficult to see how you do all of that remotely. But that doesn’t mean that you can’t have something that is perhaps more of a hybrid operation moving forwards, where you get most of the benefits of reduced travel and reduced occupancy of lots of buildings, which all have their own footprints, and come up with something that is better.
What about the idea that lockdown has made us more aware of each other and how we live together in society?
We know the committee on climate change has repeatedly said that one of the things that we’ve got to achieve is some behavioural changes, in the way that people think about what they consume.
Without some of those things happening, we won’t be able to address some of the big challenges of mitigating the impact of climate change.
And what we’re seeing globally now is that for the first time in a long time, we’re all being affected by the same thing. And now any idea that people have that you can sit in glorious isolation away from global issues, has been banished. There is an opportunity to embrace that narrative. Clearly, we’re thinking now very differently about infectious disease and global risk and the climate emergency is no different to that.
What are the possible impacts of the pandemic on your immediate strategy at Anglian, and in the longer-term?
We’ve done a lot of work as a company with Business in The Community (BITC), trying to help communities in the grip of Covid-19. I chair the regional leadership team for BITC, which is across multiple companies, and we have been applying that locally.
Very early on in, along with lots of other organisations, we set up the National Business Resilience Network (NBRN) and with that a matching/brokering service between companies who have resource and communities that need it. There’s been about 1,500 matches so far.
And it ranges through everything from schools needing laptops for kids who don’t have computers at home to work remotely, through to food deliveries to food banks. All sorts of things like that. It’s still going on.
Within Anglian we’ve doing the usual things like setting up a range of different tariffs, including social tariffs, and making sure they are advertised and promoted to help people who are struggling to pay.
How have you been supporting the supply chain?
We’ve been making sure our tier 1s are paid, and making sure the tier 2s and 3s get paid too. And making sure all the people who provide products and services to Anglian are paid promptly. That was important.
We’ve also kept our building programme going. In the very early days, as we all tried to get a handle on what was going on, the best way to safely go about our work was a small stop to a couple of programs we were running.
But we’ve quickly picked those back up again. So we’re running pretty much everything we would normally run in terms of our big programs. And that’s important, because coming back to long term strategy, some of those big capital schemes are particularly important for the adaptation to climate change.
For example, we’ve launched a strategic pipelines alliance, which aims to lay a very large diameter pipe from the north of the region down into the west and into the east. It’s called our interconnector pipeline.
It’s designed to enable us to transfer water to areas of future demand, and particularly demand driven by the growth of housing in Anglian’s region, but also to interconnect it with existing systems. And that gives us much greater resilience to the impacts of climate change, particularly the changing pattern of rainfall we’re seeing, which is increasingly something we’re having to manage.
We also have a large-scale smart metering program, where we’re planning to put 50 per cent our customers on smart meters within the next five years, and a very ambitious leakage reduction program. Both are pivotal to ensuring that we’ve got a resilient system to cope with the impact of climate change.
You said at the results announcement last month that delivering the resilience and safeguarding the environment would require more than Ofwat’s final determination, which was £750 million less that Anglian planned for. Would you care to elaborate?
I don’t really want to get drawn into a discussion about the CMA. It’s a process, and the CMA will reach its decision ultimately on redetermining our price review. Within our business plan, we’ve got some really important things to do. We’re cracking on with those things now, because we have to accept the final determination until we see if we get a redetermination.
Are you bringing any of your building programmes forward?
Yes and no. We’ve got a huge programme already in this AMP period, it’s the biggest capital program we’ve ever had. We’re doing everything we can to do the maximum we can on that sooner rather than later, and not see too much shift back as I’ve just been saying.
We’ve also suggested to government and to the Environment Agency that if we wanted to bring some further things forward, then the water industry’s national environment program (WINAP) amber schemes, that is, schemes that were in there as potential schemes, these could be turned green and brought forward as additional stimulus.
For Anglian, that would be another £300 million or so of capital programme, and about £1 billion over the industry.
Will water companies generally be doing more to ‘build back better’?
I think water companies are well placed to do that, because they’ve already got a fantastic supply chain, and lots of opportunities, particularly in terms of resilience schemes for the future.
Will they be doing more? To some extent, it also depends on what government and regulators want to signal as well. If Ofwat, for example, signal that they’re happy to bring forward some AMP8 investments, as I think they’re minded to, and if they then said to Anglian, could you bring forward some more smart metering, then I think there’s opportunities there.
Do you think there is scope to bring forward AMP8 spending?
I think it’s quite possible. And Ofwat are certainly thinking about that.
And likewise, with the WINAP ambers example, that would be another example of a project that can be done. And water companies have got long-term investment programmes – we don’t just think in terms of five year periods, we tend to think in 25 year periods, so the ability for water companies to do that is probably unparalleled with any other sector, not only in terms of planning for the future, but also the supply chains that are able to deliver it.
What would a ‘build back better’ success look like for you then?
In general terms, we should all be seizing the opportunity to see if we can shift the behavioural side of things. So, if we can instill some positive behaviours, particularly in terms of water efficiency, link that to energy efficiency, link that to our climate mitigation and adaptation – that’s got to be a priority.
It would be very positive if we can use this as a platform for pushing the Natural capital so-called Green Solution. When we look at the new developments that are planned for Anglian’s region, it’s important that we ensure that they add to the environment, and don’t take away from it.
Do you envisage water and energy and communication companies coming together more?
In terms of the Utilities Alliance, it’s been nothing but positives. We’ve had fantastic engagement from the likes of Western Power Distribution, Cadence, UK Power Networks, Thames Water, Anglian Water. And everybody is saying ‘why wouldn’t we?’ And everybody sees build back better as a really important catalyst to that kind of thinking.
Another thing we’re involved in is Future Fenland. The Fens are drained by three significant rivers into the Wash, and we’ve been doing quite a lot work there with other organisations, the Environment Agency, inter-drainage boards, agriculture, local authorities, and other water companies, wondering if is there an opportunity here to not only flood-defend the Fens by putting in barrages on those rivers, but also use that water for potential public water supply, and for irrigation into the future, and for power requirements as well, and maybe for navigation?
You start thinking about if there’s a way to make better use of the money the Environment Agency was planning to spend, that Anglian was planning to spend on a new reservoir, that the highways authority was planning to spend on raising the height of a road, or that agriculture was planning to spend on smaller reservoirs in Lincolnshire? Can you get a bigger bang for your buck? And can you use that to develop more resilience, and be more adaptive to climate change?
What’s the big ask to government?
Our big ask to government is that it stops thinking in silos. It’s what we as businesses are doing, and it’s very important that government does what it says it’s going to do and doesn’t think about thing in departmental silos.
Also, as we move into a lower carbon economy, we’ve all got to make sure we don’t leave people behind. We’ve got to help people adapt to this. We’ve got to continue to invest in the skills agenda, and the retraining agenda, and make sure that everybody has opportunity off the back of this. Otherwise it could potentially be quite short lived.
And what about the water sector’s own net zero aims – is it doable?
It’s very ambitious. And it’s right that we should be ambitious. Probably the biggest the issue that faces us is trying to reduce the carbon intensity of emissions from our water recycling processes – the waste water treatment processes.
The research and development into what changes we need to make to processes, and what technologies might exist to help us with that, is going to be a big part of achieving that objective, right the way through to what we can do to maximise our renewables.
Can we expect to see an industry road map published?
We’re all working together. Myself, Liz Barber CEO at Yorkshire, and Heidi Mottram CEO at Northumbrian, sponsor this particular public interest commitment. We’re all working together as companies, working with our supply chains, with consultants, and the idea is that we’re going to publish the roadmap after the summer.
Is your enthusiasm for tackling climate change driven by ideology or does it make better business sense?
The reason I’m in the water industry is because water is at the heart of the environment – that’s what attracted me to this industry in the first place, 30 plus years ago. I thought this is an industry which is important to society, but also pivotal to the environment. I’ve always felt that way.
So, when you present me with things that say ‘this is not good for the environment,’ I’m not happy about it, and when I get an opportunity to improve the environment, I’m very happy about it.
Anybody who thinks a water company could operate in glorious isolation without impacting on the environment would be short lived in their role. We’ve really only got one choice, which is to engage with it, and try and set the agenda.
Build Back Better Forum
Peter Simpson is a speaker at our Build Back Better Forum October 20-21 – a digital event to explore the role and shape of utilities in the world beyond coronavirus