This year we saw sewage flooding social media, the Competition and Markets Authority raise the cost of capital for four companies’ business plans; and M&A activity brought Bristol into the Pennon Group as well as Macquarie back into the sector.
As 2021 draws to a close we look ahead to what the sector hopes for from the new year. This will be the midway point for AMP7 and the performance commitments the sector signed up to in PR19. Minds across the sector will be focused on creating plans for the next asset management period beginning 2025, which Ofwat has already said should be seen as a building block for longer term plans.
The newly passed Environment Act will be pivotal to those PR24 business plans, which will need to reflect the policies passed under a bill that itself reflects a growing public concern for the natural world and the impact society has on it.
Utility Week speaks to water company bosses to find out what their priorities for the coming 12 months will be and how they intend to overcome any barriers.
Sarah Bentley, Thames Water’s chief executive, says 2022 will see the business continue with the turnaround plan she launched in March, which means improving performance will remain top of the agenda.
“The plan has already begun, with a new executive leadership team in place who are dedicated to ensuring our success. Together, we’re taking a ‘frontline first’ approach to support our colleagues to deliver brilliantly. Over the last half year, our plans and focus have also resulted in some successes in our water side of the business and a reduction in our overall customer complaints.
“Next year we will continue our focus on fixing the basics. This will include strong emphasis on improving our customer service, alongside reducing leakage and pollutions. We’ll also be making sure we invest in assets and systems, maintaining those that already exist and building new ones where needed.
“Our plans for 2022 also focus on continuing our work around improving river quality. I’m passionate about protecting our precious rivers and streams and any spills into these natural environments is unacceptable. So, we will continue to work hard with local communities and groups to reduce and in the longer term prevent these pollutions altogether – whether permitted or not.”
“There are challenges we face, for example stopping wastewater entering rivers will take time and money, as much of our infrastructure is not designed to cope with the scale of population growth and climate change. So we will continue directing our investment and operations to safeguard these natural environments. We’ll also work closely with local communities and groups who share our passion to prevent pollutions, whether permitted or not, to build a collaborative approach.
“We also face ongoing challenges of both running and turning around a business in very uncertain times. We’re about to enter the third year of delivering against a very difficult price review plan with stretching targets. Alongside this, we’re continuing to run our essential service – keeping customers taps flowing and toilets flushing – in the backdrop of the pandemic and with the emerging and devastating challenges of climate change starting to really take their toll. We faced the fuel crisis earlier this year, which impacted our tankers and colleagues out and about serving our customers and maintaining our network. We’re also seeing some difficult trends in the recruitment arena – with Brexit and Covid movements in the market starting to leave us with shortages in some areas.
“Overcoming these challenges, involves collaboration, planning, investment and commitment. It also requires determination and patience to do things ‘once and well’ at a sustainable pace. We’ll keep engaging, listening and adapting to ensure we progress things as needed. We’re also making sure we ruthlessly prioritise, so we deliver the right things in the right order for our longer term success. While our turnaround will take time, Team Thames is committed to our performance improvement and we’re already starting to see small shifts in the right direction which is where we’d expect to be at this stage.”
Susan Davy, whose first big move in 2021 was overseeing Pennon Group‘s acquisition of Bristol, is looking ahead to the new year in which she says group will do all it can to demonstrate environmental leadership.
“We have achieved much over the last 12 months to protect and enhance water quality and the wider natural environment across the South West and we know there is more to do. As we look to 2022 and beyond, we remain committed to safeguarding the South West’s natural environment, helping tackle climate change, whilst delivering further improvements to water quality right across our region.
“For the first time ever, our analysis shows that 100% of our regions’ beaches will have passed the stringent bathing water standards. We achieved significant improvements to bathing waters by investing in our sewer network and treatment works alongside partnerships which deliver nature-based solutions which restore, protect and enhance land and thereby prevent run off of pollutants into rivers. Building on our track record of developing solutions to improve bathing beaches in the South West we will reduce our impact on river quality by one third by 2025.
“We face the challenges of climate change, and our customers’ expectations of how we protect the environment in our region are higher than ever. We recognise the role we have to play in reducing emissions, targeted at slowing climate change and we are on track with our commitment to achieve net zero carbon emissions by 2030 as outlined in our climate adaption report, launched in December 2021.
“Climate change has multiple impacts on our operations and in 2022 work will continue on our long-term plans for water resources for our region and our drainage and water management plans to mitigate these risks.
“However, making long-term and sustainable improvements is only possible through all parties working together. We are continuing with our Upstream Thinking catchment management programme which has set the standard for innovation and incentivisation of good water quality outcomes. We are active in 80% of our region and working with around 1,700 farms, have restored c.91,000 hectares to date, and have plans to do more.
“As a purpose-led business we think differently about the relationship we have with our customers through our innovative and pioneering WaterShare+ scheme. With 1 in 16 households in the region now shareholders we are planning a second WaterShare+ share option in 2022.
“Communities rightly care about their local environment and we must build on this passion to bring together relevant stakeholders to collectively deliver tangible action on climate change to protect our planet and enhance the places people love, for generations to come.”
This year not only saw the first round of funding from Ofwat’s innovation competition, it was also the return of Northumbrian’s Innovation Festival after a fallow year to get creative minds flowing.
Heidi Mottram, chief executive of Northumbrian Water, calls for clarity from government ahead of PR24 and what will shape the coming decades for the sector and the waterways of the country.
Mottram says: “We want to continue to improve on the brilliant work we’ve done in 2021 around supporting our customers, communities and employees – in what has been an incredibly tough year for us all.
“And, we want to drive forward the work we’re doing around climate change and achieving net zero. As we go into 2022, events like Storm Arwen, which really tested our water supply system, bring home the need for resilience to be built into all infrastructure going forward.
“As we begin the work for PR24, it’s important that the government set out really clearly what they want from the industry and what they think is important to move forward against environmental performance and resilience targets. This should be built into the regulatory framework for not just five years, but for the next 25 years.
“Northumbrian Water Group are working hard to deliver the highest standard of service and we’ve done some really great things for our customers in 2021, which we’ll continue in 2022. Providing we get the right regulatory framework to attract investment into the industry then we can continue to build for a sustainable future.”
Bob Taylor, chief executive of Portsmouth Water, tells Utility Week of the business’ pride at being named by Ofwat as one of the top water companies in the UK this year and ranking top for its levels of customer satisfaction. The business saw work begin on the country’s first new reservoir in 30 years following lengthy planning processes permissions were granted in October.
Reflecting on the accomplishments of 2021, Taylor says: “In 2022, we aim to build on these achievements and to continue delivering the very best value water with some of the highest levels of customer service. We are also progressing our landmark project: Havant Thicket Reservoir.
“As the first new reservoir to the built in the UK for decades, it will provide a sustainable source of water for the South East, as well as protecting some of Hampshire’s world-renowned chalk streams, the River Test and the River Itchen.
“The reservoir will also bring a whole range of environmental and community benefits to the area, including a new visitor centre, wetland and green leisure facility. Final permission was granted in October 2021, with work starting on site straight away.
“In 2022, Portsmouth Water is looking forward to progressing with the next stages of the project. This will include appointing the contractors who will carry out the main works, finishing site clearance and building a new access route to the site.”
He explains that climate change, a growing population and the need to protect rare habitats and sensitive rivers, are just some of the challenges facing the company.
“We need to find new, sustainable ways of supplying our area with water in order to reduce abstraction from world-renowned chalk streams in Hampshire.
“We also need to maintain the support of our customers and stakeholders as we progress with Havant Thicket Reservoir. Ensuring they are consulted and engaged as plans develop in 2022 will be vital to the success of the project.
“Havant Thicket Reservoir will help to increase our resilience in the face of climate change and a growing population. Fundamentally an environmentally-led project, current plans involve filling the reservoir with water from the Bedhampton springs, which would otherwise flow straight out to sea.
“This will create a new, sustainable source of water for our area, allowing us to share more water with neighbouring Southern Water. This in turn will mean Southern Water can reduce its abstraction from world-renowned chalk streams in Hampshire – the River Test and the River Itchen.
“In order to ensure the reservoir is a success, we will continue to work closely with local stakeholders, customers and residents. We will be holding regular stakeholder group meetings and will be consulting with a range of people and groups as we develop our Water Resources Management Plan in 2022.
“As part of Havant Thicket Reservoir, we have started to work with local group, Stop the Chop, who initially protested against the project. Together, we have agreed to translocate 80 trees from within the reservoir site and replant these locally. We have already identified these trees and will be moving these in 2022.
“Building and maintaining relationships such as these will be instrumental in finding solutions that suit our whole community.”
Affinity Water has seen a change of leadership this year as Pauline Walsh stepped down and chief financial officer Stuart Ledger assumed the top job on an interim basis. Asset director, Steve Plumb tells Utility Week the environment will remain at the heart of everything the business does next year and beyond.
He explains: “At the start of this AMP, we made a bold commitment to help protect our environment for future generations in the face of climate change, population growth and an increasing demand for water.
“We have been acting at pace to transform our processes, test and adopt innovative technologies and new ways of doing things. We have also been working in collaboration across sectors and with our regulators to learn from each other and ultimately make sure we continue to deliver for customers and adapt to the challenges we face.
“This approach is helping to set the foundations to ensure we are on the right path to meet our performance commitments for the AMP in 2025 and beyond, which we will continue to build on in 2022.
“We were thrilled to see mandatory water labelling included in the Environment Bill, an initiative we helped to campaign for passionately. This will bring water on par with energy in this space and give customers a more informed choice on what appliances will help keep their bills down, whilst leaving more in the environment. In 2022, we hope to see good progress on this as well as the development of a roadmap towards greater water efficiency in new developments and retrofits and that underlying legislation can accommodate potential future expansion of rainwater harvesting, water re-use and storage options.
“People are our biggest asset and it is really important we look after our peoples’ well-being. We will continue to offer webinars, training, including Health and Safety training and support so that anyone that needs a helping hand knows where to go.”
Anglian Water demonstrated its commitment to the climate and decarbonization in the year that saw it host the water pavilion at COP26 and break ground on a 500km pipeline with carbon reduction at the heart of its design.
Alex Plant, Anglian’s director of strategy and regulation, says the company finished this year in a strong position with Ofwat recognising its performance on leakage and sewer flooding incidents. For the coming year Plant explains the company has bigger plans.
“There is no time for complacency, looking forward to 2022, there’s much more we want to achieve,” Plant says. “In 2019, we became the first water company to embed wider community and environmental purpose into our Articles of Association. Three years on, we’d like purposeful companies to become the dominant form for utilities and seeing others take similar steps. And to see the value of purposeful companies being recognised by regulators and Government. That is why we, along with other leading companies and NGOs, have worked to support the development of the BSI Publicly Available Specification, a new standard against which purpose-led organisations can be tested.
“This year, the public and government has rightly set the bar even higher in terms of the environmental standards expected by the water industry, especially around river water quality – and we will rise to the challenge.
“However, in order to make this a reality, we will need to work with Government and our regulators to ensure we can bring forward efficient new investment and innovation.
“A good starting point for this will be for Defra’s Final Strategic Policy Statement to Ofwat to provide a stronger focus on priority areas for investment in PR24, including tackling the root causes of sewers overloading;
“Other policy changes that would make a huge difference would include removing the automatic right to connect drainage from new homes to existing sewers, and tighter building regulations to require water efficient new housing and incentives for rainwater reuse.
“To drive this work forwards we look forward to working with the Storm Overflows Task Force to develop a plan that will both reduce the impact of storm overflows and promote SuDS and other nature-based approaches as the best way to progressively reduce harm to our rivers and seas.”