Being taken to task is proving to be a common theme for water companies in 2018. If being lambasted by the economic regulator and both sides of the House of Commons wasn’t enough, the environmental regulator has now waded into the mix for good measure.
England’s water industry is “not doing enough” to prevent the most serious pollution incidents and comply with permits, the Environment Agency (EA) warns in its latest report published on 11 July, which assesses the environmental performance of the nine water and sewerage companies in the country.
The report comes after record fines for the sector, with more than £21 million issued in 2017 on the back of 16 successful prosecutions by the EA, driven by changes in sentencing guidelines. Thames Water forked out most of the total as it was ordered to pay fines of almost £20 million in March 2017 following a series of “significant pollution incidents” between 2012 and 2014.
With criticism being hurled at the water sector from left (Labour’s call for renationalisation), right (Michael Gove’s signal to crack down on “concerning behaviour”) and centre (Ofwat’s reform agenda), water companies have had little time to lick their wounds and come back fighting. If they were hoping for a less fraught second half to the year, they are already out of luck.
Not doing enough
Emma Howard Boyd, chair of the EA, is quick to warn that the sector is not doing enough to reduce serious pollution incidents and ensure compliance with discharge permits.
“Pollution incidents cause distress to local communities, blight our rivers and beaches, and damage the reputation of the water industry. We will take tough action against any company, or individual, who causes significant pollution and damage to the environment,” she says.
On a more positive note, she does however acknowledge “there’s much to celebrate this year”, with the majority of companies delivering “good” or “leading” performance.
“In February, I called for fines for the most serious pollution incidents to be proportionate to the turnover of water companies.
“In March, the secretary of state said the public see ‘an industry slow to stop leaks, slow to repair them, slow to stop pollution and slow to say sorry’.
“In April, Ofwat set out an agenda for rebuilding public trust in the sector and the National Infrastructure Commission said if they don’t improve infrastructure and water efficiency there won’t be enough water to meet demand in the future.
“All of this could lead you to believe that England’s water is in dire straits, but water quality is better than at any time in over a century, thanks, in part, to the hard work and investment of water companies,” she says.
Call for improvement
South West Water and Northumbrian Water found themselves bottom of the class in this year’s Water and Sewerage Companies’ Environmental Performance Report. The EA highlighted the “urgent need” for both companies to improve their performance.
Meanwhile, for the third year running, Wessex Water and United Utilities were the top-performing water companies. They have been joined by Severn Trent and all three received the highest four-star rating, having achieved “green” status in six of the seven metrics.
Richard Hargrave, head of compliance at Wessex Water, says: “No other company has been such a consistent performer since the introduction of the EPA .
“This achievement has resulted from a lot of hard work across the business, not just the sewerage and sewage treatment operational staff but other parts of the company such as the compliance team, engineering and construction and water resources.”
Liv Garfield, chief executive of Severn Trent, adds: “We know that our customers want us to be great custodians of the environment, which is why we put such emphasis on our performance in that area.
“But the fact remains that we can always do better – we constantly strive to be best in class and I’ll be challenging everyone to continually improve our performance in the years to come.”
Worst performing
South West Water was rated the worst performer for pollution incidents in 2017. “The continuing poor performance of South West Water is not acceptable,” says Howard Boyd.
The company was placed in the red category for pollution incidents (Categories 1-3) and serious pollution incidents (Categories 1 and 2), with 109 sewerage incidents per 10,000km for the former and 1.9 reported for the latter.
Its performance was significantly below target for the two metrics. In the remaining five metrics, it received amber ratings for discharge permit compliance and self-reporting of pollution incidents.
However, it did score 100 per cent and a firm place in the green performance category for satisfactory sludge disposal, AMP national environment programme delivery and security of supply index.
The pollution problem meant the company’s overall performance rating was only two stars. Data from the EA shows South West Water was in the red category for both “pollution incidents” and “serious pollution” incidents in 2012, 2013, 2015 and 2016. In 2014 it was rated red for pollution incidents and amber for serious pollution incidents.
A spokesperson for South West Water says: “We remain on track to deliver our business plan by 2020 and have achieved our best ever performance in wastewater in several key areas. However, we fully recognise that more needs to be done and have an action plan in place to drive improvement.
“Under our revised pollution reduction strategy, we remain absolutely determined to achieve 100 per cent compliance with wastewater permits, zero serious and significant pollution incidents, a big reduction in other incidents and a further increase in self-reporting.
“Our continued focus on compliance at challenging sites and ongoing monitoring of their performance will ensure that our numeric compliance improves significantly during 2018.”
South West Water maintains 17,439km of public sewers and operates more than 650 sewage treatment works and more than 1,200 pumping stations.
It says it has experienced “significantly fewer” pollution incidents than several other companies, but its performance “looks relatively worse” when incidents are measured per 10,000km of sewer network.
Two-star rating
Northumbrian Water also only received two stars for its overall performance. Howard Boyd says the company needs to improve its permit compliance, for which it was placed in the red category with a 96 per cent compliance rate. It was deemed significantly below target and was shown to have deteriorated a class for discharge permit compliance for water treatment works and sewage treatment works.
Northumbrian was rated amber for serious pollution incidents and was in the green threshold for the remaining five metrics.
Richard Warneford, wastewater director, Northumbrian Water Group, says: “We are pleased that the report shows our industry-leading pollutions performance in 2017 and that we had 25 per cent less incidents than our nearest competitor.
“It has also outlined how we have improved in protecting and improving the environment; and minimised the environmental impact of our assets and activities – while delivering good performance and sharing good practice. This is demonstrated in that overall we achieved five ‘green’ ratings out of seven.
“However, our performance on discharge permit compliance was disappointing this year, although the issues related to only seven of our sites, and we still achieved 96 per cent compliance.”
He adds: “Six months into 2018 with zero compliance failures we are confident in turning previous issues around and we are pushing for 100 per cent discharge permit compliance.
“We have an ambitious approach to achieving our goals and will be aiming for four-star rating in 2018.
“While we recognise we have areas in which we must improve, in many areas our pollutions performance is industry leading and we will carry this forward.”
Overall performance
Howard Boyd says: “Overall, the environmental performance of the water industry is good and improving, however public trust in water companies risks being eroded each time performance expectations are not met.
“In a world of increasing environmental threats, the key to improving performance and building and maintaining trust is seeking partnerships where this delivers the best results.”
The financial regulator Ofwat says it is encouraging companies to meet their environmental challenges with a greater focus on long-term resilience with real incentives as part of its price review PR19.
A spokesperson for Ofwat says: “From treating and pumping our water to taking away our wastewater, water companies can have a significant impact on the environment. Customers rightly expect their water company to manage their operations in a responsible and environmentally sustainable way.”
Industry trade body Water UK notes the report “rightly highlights” that the majority of the companies in the sector have a “good” or “leading” performance when it comes to protecting and enhancing the environment.
Michael Roberts, chief executive of Water UK, says: “By 2020, water companies will have invested around £25 billion in environmental work since 1995, and this action will mean around 10,000 miles of UK rivers have been improved and protected since then.
“In addition, the water industry has invested well over £2.5 billion since the 1990s to protect UK bathing waters, with the result that two-thirds of UK beaches are now classed as excellent, compared with less than a third 25 years ago.
“Companies are looking to go further and plans for substantial investment in the environment are currently being finalised.”
The Environment Agency recently set out a more ambitious programme of environmental improvements that water companies will have to make between 2020 and 2025 – and will total £5 billion of investment.
Toby Willison, executive director of operations for the Environment Agency, says: “One serious pollution incident is one too many. We will always work closely with companies who want to do the right thing but we will take action against those who don’t.”
The water sector will need to rise to this challenge as well as the others it is facing if it wants to rebuild public trust. Maybe then it can hope for less criticism in the coming months and years.
How pollution incident performance is rated
The Environment Agency expects water companies to prevent and reduce pollution incidents and works with them to minimise damage when these incidents occur. It says: “Incidents lead to the release of harmful substances into air, land or water, and some can cause significant harm to the environment.”
Category 1 – has a serious, extensive or persistent impact on the environment, people or property and may, for example, result in a large number of fish deaths.
Category 2 – has a lesser, yet significant impact.
Category 3 – has a minor or minimal impact, with only a limited or localised effect on water quality.
The total number of water quality pollution incidents in 2017 was 1,827. This was a slight reduction from 1,902 in 2016, but not as low as 1,742 in 2015.
In 2017, the number of serious pollution incidents (Categories 1 and 2), reduced slightly to 52, compared with 57 in 2016, 59 in 2015 and 61 in 2014. These four years saw an improvement following the “disappointing performance” in 2013, when the sector was the cause of 88 serious pollution incidents.
The EA says performance has “appeared to plateau” – contrary to its expectations.
Last year, five companies had reduced the number of serious pollution incidents compared with 2016.
The report shows there was a rise in the most serious incidents last year to 11, compared with nine in 2016, after the lowest levels of four per year in 2014 and 2015.
Although performance could be better, the agency notes water companies are getting better at reporting the incidents to the EA before a member of the public or a third party does.