Nearly half of the participants said the timetable for abstraction reform was too slow. The remainder said the plan to introduce a new regime by the mid to late 2020s was “about right”.
Bill Easton, Ernst & Young utilities director, called for pragmatism: “Although we are instinctively nervous of any change process that is planned to take over 15 years to complete, it is important to be realistic about how difficult change will be.”
The intention of the Department for Environment, Food and Rural Affairs (Defra) not to compensate abstractors for lost rights risks stranding assets, panellists warned. Water companies could well get “backdoor compensation” through price controls or interim determinations, but other abstractors – such as power stations – may not have that advantage.
Brendan Murphy, policy adviser at the Association of Electricity Producers, said: “Electricity companies will not be able to recover their costs through price controls. For an existing power station, it is likely to be uneconomic to consider changing the cooling system, therefore stranding the asset.”
However, Easton said: “Trying to design a compensation scheme to deal with as yet unspecified and unknown impacts would be a pretty thankless task – indeed, we are not even sure it is possible.”
Increased interconnectivity is key to building up resilience, said Daniel Klemm, stakeholder engagement manager at Yorkshire Water, with Easton suggesting a central co-ordinating body to manage the process over the longer term and link the markets in the short term.
How the public will react to the proposals – once their impact is understood and widely communicated – was another concern.
One participant said: “The water companies are supposed to engage extensively on their business decisions. How on earth will they cope with managing the process? And how will the relatively uninformed consumer make sense of it all?”
Another asked the panel if they were concerned about the lack of mainstream media coverage on the topic.
“Ofwat says it wants future regulation to be focused on outcomes for customers,” he argued. “But the general public’s awareness of the Water White Paper and industry changes is close to zero, isn’t it? Am I alone in finding this deeply ironic?”
Ben Piper, technical director at Atkins, agreed that there had been little attention outside the industry, with consumer engagement only just beginning on elements such as draft drought plans. However, he warned that too much consumer engagement could lead to “consultation fatigue”.
See the debate at: http://bit.ly/z3c2k9
by Megan Derby
This article first appeared in Utility Week’s print edition of 13 January 2012.
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