Albion Water                            WQR0016

Written evidence submitted by Albion Water Limited

In 1999 Albion Water became the first new regulated water company established since privatisation. It operates under the competitive NAV arrangements introduced by the Water Industry Act and regulated by Ofwat. Albion currently provides water and sewerage services to new communities, including being the first to install local non-potable dual supply networks to domestic properties for WC flushing and garden irrigation. In this way per capita potable consumption of 80 lpd (litres per person per day) can be achieved (compared to the current industry average of 142 lpd).

Albion Water appreciates the opportunity to respond to the Environment Audit Committee’s inquiry into urban diffuse pollution along with the water industry’s contribution to water pollution, to water quality failings and to failures in good ecological status of rivers. This response focusses on the following specific questions upon which the EAC invited submissions:

•                   How could drainage and sewage management plans, introduced by the Environment Bill, play a role in reduced sewer discharges?
  
  Whilst long term, consistent planning to provide drainage and wastewater services that accommodates collaboration is to be welcomed, there is a danger that future infrastructure provision will primarily be guided by the location of existing regional wastewater treatment works. The opportunity to serve new developments at a local community scale runs counter to regional undertaker planning, their continued drive for centralisation and current regulation.  Local innovation, recycling and service provision requires an open optioneering exercise seeking the most resilient approach to new development; currently the plans will fail to achieve this outcome and will exacerbate storm overflows.
  The Drainage and Wastewater Management Plan Framework rightly establishes a need for regional undertakers to consider third party options to address capacity constraints. For instance, section 5.3 of the DWMP Framework sets out:
  ‘A key principle in the development of the DWMP is that the Option Development and Appraisal (ODA) process should be undertaken for any Level 3 Tactical Planning Unit (TPU) where an issue is identified within the overall planning period. In addition to options developed by companies alone or in association with other Risk Management Authorities (RMAs), consideration needs to be given to those risks that could be addressed by other non-RMA third parties. As outlined in the description of Level 2 Strategic Planning Group (SPG) members (section 3.4.1.3), companies should seek to engage and enable the involvement of third parties in L2 SPGs. Such third parties should be provided with the opportunity to propose alternative options to be considered alongside those identified by the incumbent company. It is envisaged that any third-party options would be included in the unconstrained options list and assessed in the same manner as other options. Incumbent companies will need to ensure, and be able to demonstrate, consistency in approach to their options development and that appropriate comparative assessments of all options, including those proposed by third parties, has been undertaken. This transparency of approach is essential to demonstrate that the third-party options have been appropriately assessed.’
  Unfortunately this does not stray far from the centralised regional water company solutions. Correctly applied this requirement should be addressed by asking the question ‘Is a development best served by a new local water recycling works or by connecting into a regional network?’ for all new greenfield sites. An appropriate options appraisal should then seek and compare market-based solutions with the ‘business as usual’ incumbent solution, the most resilient and sustainable option being selected and funded. For all those greenfield sites best served locally there would be no additional CSO discharges linked to housing growth, in addition, local treatment and disposal would maintain flows upstream and reduce nutrient discharges downstream.
  Failure of water companies to engage fully with the market will result in none of the benefits described above being delivered and, therefore, raw or partially treated sewage discharges unnecessarily increasing with housing growth.
•                   How effective is Ofwat’s remit and regulation of water companies? Does it facilitate sufficient investment in improvements to water quality, including sustainable drainage systems and nature-based solutions such as constructed wetlands?
  
  Ofwat is well aware of the potential benefits of NAVs providing local wastewater treatment and recycling to greenfield developments, including the benefits associated with local non-potable resources and reduced network pumping and pressure (leading to reduced leakage). It also understands that the existence of significant cross subsidies in the water industry tilts the playing field towards connecting into regional assets (with associated CSOs) even if this costs the undertaker (but not the developer) more than a local (CSO free) solution. Were Ofwat to regulate this aspect of the water industry effectively, there would now be more sustainable drainage systems functioning today and greater use of nature-based solutions as well as a developing market in products and processes capable of leading to solutions internationally. Additional work also needs to be undertaken by Ofwat into the costs, benefits and charging schemes to support local nature based solutions. Ofwat has failed to open up the market for the provision of alternative, sustainable wastewater infrastructure and services.

Albion Water remains committed to working with the regulators and regional water companies to develop sustainable new communities. Reducing water pollution is one benefit amongst many of embedding a local approach. This approach requires the right challenge to be set through the DWMP process and regulatory support to enable industry cross-subsidies to flow to the most resilient solution.

David Knaggs
Director of Sustainable Development
Albion Water Ltd.

February 2021