As we rapidly approach the end of the year, the Utility Week team looks back at some of the highs and lows for utilities.Water sector
By Katey Pigden, news editor
“Storm clouds are gathering – both real and metaphorical.”
The past year has been a perfect storm for the water industry. Weather extremes are increasingly becoming the norm and the cracks of an ageing infrastructure are starting to show.
If water companies were hoping to quietly go about delivering quality water to customers while head office teams focused on the final details for their PR19 business plans in 2018, Mother Nature had other ideas.
Back in January some water firms, particularly in the South East were hoping for above average winter rainfall to avoid having to impose water restrictions later in the year.
Then as the first day of the meteorological spring was expected to have sprung the country was plunged into arctic conditions as the Beast from the East struck.
The subsequent rapid thaw caused widespread disruption to the network which left more than 200,000 people without water for up to four days.
Ofwat instructed water companies across England and Wales to submit plans by 28 September detailing how they intend to address the shortcomings identified in their handling of the freeze-thaw incident.
Four companies in particular – Thames Water, Severn Trent, Southern Water and South East Water – had to submit a detailed externally audited action plan of how they will address the issues identified in Ofwat’s “Out in the Cold” review which was published on 19 June.
The review painted a mixed picture of company performance. It found some companies responded well and protected customers while others fell short with their advance planning, response and communication with customers.
The Consumer Council for Water (CCWater) has since published new guidance for the water sector about how companies can improve how they deliver priority support to consumers in vulnerable circumstances.
CCWater said consumers who found themselves in such a predicament were among the worst affected during the severe cold weather. The vast majority (93 per cent) said they did not get any additional support from their company.
Things started to heat up for the water sector and the country as the hottest summer on record was recorded. The prolonged dry period didn’t do any favours for water companies with some struggling to cope with the increase in demand.
United Utilities had indicated it was going to impose a hosepipe ban but called it off at the 11th hour as slightly cooler temperatures and the heavens opening for enough time ahead of the looming date helped reservoir levels.
No such luck for customers in Northern Ireland hoping to water their gardens as NI Water’s country-wide ban was in place for around three weeks.
September proved to be a busy month for the submission of hefty documents to the regulator. The 3 September deadline for business plans covering 2020 to 2025 would have been circled on every office calendar.
Collectively the industry has put forward proposals to invest £50 billion during the five-year period. Water UK’s manifesto for the sector, published on the same day water companies submitted their proposals to Ofwat, said the business plans are the result of an “extensive consultation exercise” with 5.3 million customers.
Ofwat wasted no time in getting down to business to scrutinise the plans. It continues to assess the nitty gritty of the documents which stretch to around 5,000 pages.
Just a week after receiving them, the regulator put together a chart comparing the data that companies provided about how: customers’ bills will change, leaks will be tackled, and daily water use per person will change between 2020 and 2025.
And if the weather and business plans wasn’t enough to contend with, Labour continued with its message to renationalise the industry.
The shadow chancellor of the exchequer John McDonnell lined up water as the first industry Labour will bring back into public ownership if the party gets elected to power.
The government has also dished out its fair share of criticism to water companies in 2018.
It’s been quite a year for the sector and for Rachel Fletcher, Ofwat’s new chief executive who took up the post in January. She’s certainly had plenty to keep her occupied and ensure she gets to grips with the sector, having joined from Ofgem.
Next year will be busy too. The regulator will remain tight-lipped about individual plans until 31 January 2019 when it will publish an initial assessment. Then it will be all systems go. Again.
Ofwat will categorise companies’ plans according to the level of quality, ambition and innovation they have demonstrated.
It expects plans to cover a range of matters including what companies propose to invest and what they will charge customers, how they will support vulnerable customers and how they will ensure the long-term resilience of their infrastructure and operations.
With the lessons learnt from this year, water companies will be hoping to weather the storm in 2019.
Read Utility Week’s full round up of 2018 here.