drain TRADER

that will not be won without intervention by a higher power because of the levels of investment that are involved and the requirement from investors that returns are maximised irrespective of what that means for the industry customers? That is for industry, Government and the Regulator to sort out.

These leaks however are costing the customer dearly, not just through loss of water and the cost this brings but also the extra cost and inconvenience that pipe bursts and even gentle leakage can bring with them through damage to other vital infrastructure and the impact this has on everyday life.

There is the argument that, because of the aforementioned factor, ageing pipe can be as much of the problem as time progresses as current leakage levels, making it is almost impossible to catch all the leaks that occur and repair them and so bring the losses down to what might be termed an ‘acceptable’ level and in an way that is economically viable. This is because the resources necessary are simply not there given the customer protection that is imposed by OFWAT on bills and therefore revenues from which the costs of such repairs must come as well as the availability of man-power and materials to meet the demands placed on the water companies by the deteriorating pipeline system that change almost constantly. It is a very difficult balancing act yes, but still to have almost 1 litre in five lost to the environment even after the leakage target has been reached does not go down well with ‘Joe Public’ when they see the profitability of many of the Water Companies involved.


What is highlighted in terms of actions that are deemed to be targets for the various individual water companies appear to be listed as figures on the 100s of millions of pounds, with no more than one appearing to have plans for an operation with a billion pound price tag (even then it only just qualifies). So, it may be that the network spend is, whilst not an insignificant figure in absolute terms, far less than might be expected given the £51 billion headline that has been pushed out at the start of the AMP 7 season.

So, where does this leave us in terms of how we view the current AMP 7 programme? OFWAT has a difficult balance to achieve given the privatised nature of the water sector in the UK. However, to simply think that showing reduced bills to the public will be enough is just wishful thinking. Water companies do not want to give too much away to the public or even to its contractors in term of what they are making in profit or what they may have on hand to spend on contracted works. To get this

sort of information normally means contact with Companies |House or some serious research online. This allows

them to limit any potential back-lash that might occur should prices increase or if they appear to be overly profitable, not that that is a problem this time around as no water company has been given the power to raise its prices, they must all target price reductions.

Furthermore, whilst the current presentation of the AMP and the Price Review process does do the job it is supposed to do, it does very much reflect that the process is internal to the industry and therefore in this age of transparency does come across to some as a process that is not as transparent as it might be, given the complexity of the documentation as seen when looking to prepare this article. This is very much due to the fact that most of the documentation is couched in accountant-speak and full of numbers that to most are simply gobble-de-gook.

The system does work for the industry, but it could leave a bitter taste in some mouths that would like to see the process presented in a broader and less accountant-like way. Whilst much of the industry uses what may be termed ‘pet’ contractors for much of the works involved there has been some change to this over the years and the water companies are spreading their tenders to a wider field often in an effort to reduce costs. But to effectively compete there must be more information for new contractors trying to enter the fray to work with. This does not seem openly available to any great extent in current presentations.

One the other hand, customers, whilst they like to see bills falling, are often just as interested in where their monies are going as the contracting fraternity so the presentation to the public may need to be adjusted to reflect more of what the ‘paying public’ wants to know. It may be that the current system will suffice going forward for the water companies to get together their agreements for each new five year AMP cycle. But it may be necessary for OFWAT to come up with a way of presenting this data and these agreements in a form that informs the public more directly as to what this means for them. This can only be a good thing for the industry to consider given that when discussing this article with an acquaintance recently whilst looking into the OFWAT papers the response was simply ‘Oh they are looking at the water price again that means another price rise then!’. This is how many people see the process, even when the target for the next AMP is price reduction and when the process has already been completed and agreed.

In this age of information dissemination, there must be a better way than the one we have today of letting the paying public know what is going on in their water industry and with their money given the overriding reliance on the supply of fresh clean drinking water and the need for effective sanitation. The modern world has made many people in the greater world hungry for information – can we try to let them have some please in the simplest way possible – thank you.

Article Written by Ian Clarke

10 drain TRADER | June 2020 |

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