New Water White Paper

Before the year draws to a close here are some of my initial impressions of the new Water White Paper that came out earlier this month, back on 8 December.

It opens with two irksome boasts: first, that the UK water privatisation is a ‘success story’; and second that £90 billion has been spent since 1989. A neutral tone about the reality of the post-privatisation performance of the England and Wales water companies would be more appropriate in a piece of policy. It’s also rather crass to keep going on about how much money has been spent by ‘the industry’. These investments have been funded by higher customer bills and taking on staggering levels of debt for future generations to worry about, after all. These are not exactly things to be proud of in the current global economic climate!

Beyond this rather shaky start though, there’s much interesting material in the White Paper. It covers a lot of ground. There’s a whole new approach to abstraction. There’s limited movement on competition. Sustainability and integrated planning are emphasised. Time will tell how much finally gets picked up in legislation and regulation. But there are at least things that could lead to some interesting changes…

I’ve grouped my initial thoughts as the ‘good’, the ‘bad’, and ‘undecided’:

The Good

• It’s good that the resource-intensive Cave, Walker and Gray independent reviews have not been left hanging by the Coalition, and have been taken up in the White Paper
• Current pressures on water resources and harm from over-abstraction are prominently noted
• It’s highlighted that future likely increases in water stress due to climate change will not just be limited to the South East of England (an increasingly common myth)
• There’s a call in the Paper ‘to innovate and develop expertise’, specifically on leakage and water efficient technologies/treatment, even though the driver is noted as the ‘global water market’ – a nebulous concept, as market fragmentation and political uncertainties mean it doesn’t really exist!
• It’s recognised that ‘new technology and new ways of working’ are needed – another boon for innovation champions in the sector
• A £3.5 million water competition fund via the Technology Strategy Board is announced, to launch in March 2012
• Affordability measures are dealt with
• The Government don’t plan to compensate abstractors for losses during transition to a new abstraction regime, as the changes are motivated by a need to protect better the environment – a bold stance
• A partial (local) ‘water national grid’ is discussed, and its carbon implications are raised (Roger would remind me though, that cross-border water sharing is nothing new, and happened pre-privatisation)
• Integrated planning is stressed – to encompass the differing timescales and objectives of RBMPs, WRMPs, drought plans, and the Price Reviews – and longer term guidance will be provided to Ofwat and the water companies
• There’s a commitment to take forward promotion of anaerobic digestion (AD) – albeit after a pending EC report on the Sewage Sludge Directive

The Bad

• The Paper talks about increasing the innovativeness of the sector and yet stresses it should low-risk for investors – a contradiction in terms?
• There’s no mention that the sector got locked into an unsustainable capital, energy and debt-intensive paradigm after privatisation
• The impacts on the supply chain of cyclical investment patterns are not highlighted – even though they were mentioned by the recent Gray Review (and have been the subject of research by UKWIR and others)
• Apparently the new proposed abstraction regime will only be in place by the mid- to late-2020s – this is too slow and subject to too much political risk
• The metering approach is very weak, and there’s no universal adoption goal
• The Paper is also weak on customer bad debt, although the Walker Review stressed it was over £1 billion in 2008/09 – three times higher than bad debt in the UK’s electricity and gas sectors combined!

Undecided

• There’s going to be a Government-funded rebate for South West Water‘s customers (as their network was apparently worst off at privatisation, and has needed disproportionate investment funded by higher than average bills). Shouldn’t there be some qualifying test first? Shouldn’t this rebate be wholly or partly funded by SWW if its investments since privatisation were not as efficient as the sector’s benchmark leaders?
• For competition there will be no retail and distribution business separation. There’s still a certain pandering to ‘investor confidence’. The Paper recommends an ‘evolutionary’ approach even though approaching competition this way has achieved practically nothing since privatisation
• The large user supplier-switching eligibility threshold will drop from 50 megalitres to 5Ml, putting 10 times more business customers into the ‘market’ (26,000 instead of 2,200). The threshold will eventually drop to zero – via an as yet non-timetabled ‘future Water Bill’ – but domestic customers still look unlikely to ever be able to switch water suppliers
• There’s a desire to learn from the Scottish competition approach but the timetable is key – when will it happen? There has been too much procrastination, e.g. the years wasted whilst Ofwat split hairs over whether it should ‘promote’ or ‘facilitate’ competition
• The Government might make sustainable development a primary duty for Ofwat, as the range of ‘challenges the sector faces‘ it says make a ‘strong argument‘ that ‘sustainable development must be central to everything that Ofwat does‘ (p.97) – this might be good if it happens… but will it?

With these first few thoughts we’ll close by both wishing you a very Happy New Year. Here’s hoping some of the positive ideas in this new Water White Paper will mean it’ll be more a promising, innovative and sustainable year ahead for the UK’s water sector!

Duncan Thomas

What to make of a Gray watery outlook

A few weeks after I stopped following it the Gray Review of Ofwat and consumer representation was finally released. This was back in July. It may well have been picked up in the trade press, but I had other things on my mind at that time (namely preparing papers and presentations on some of our fascinating work on publicly-funded researchers who have potential to do pathbreaking/frontier research, from our EURECIA project, to take to conferences in Italy and the US).

After looking at the role of Ofwat and its interaction with key stakeholders, the main conclusion in the press release of the Gray Review was this:

‘[R]egulation in the water sector has worked well since privatisation … major change is not needed to the statutory framework or regulatory landscape; but … to achieve continued success, Ofwat needs to see through the changes it has embarked on to reduce the burden of regulation it imposes on the water industry and work constructively with the other organisations in the sector.’

What a predictably bland, unambitious and narrow outcome! It’s all fine but Ofwat should reduce the paperwork a bit. I’m flabbergasted there wasn’t anything more constructive to say!

Two small saving graces for the Review were its mentions of innovation and renewable energy. As we know, these are both long-standing, significant challenges for the UK water sector. The recent Martin Cave and Severn Trent report pointed this out quite emphatically (the full report is here). On innovation, the Gray Review largely relies on the earlier Cave Review’s findings, and says:

‘Concerns about the lack of incentives for innovation were raised in responses to our call for evidence … in the sense that the regime is seen as suppressing R&D activity …’

‘…companies will tend to see R&D expenditure as an easy area in which to cut costs, particularly if there is no strong driver for innovation at the time or if the potential returns are not clear…’

‘…it is not necessarily true that the water companies are best placed to pursue R&D activities. This may be a more natural activity for supply chain companies who may have a wider national and international market in which they can benefit from innovation in design of equipment etc.’

‘To the extent that specific R&D investment is required, the Cave proposals (on a new R&D vision, research body supported by funding, and excluding R&D expenditure from comparative efficiency tables) seem to be an appropriate response.’ (p. 47)

The Review then goes on to hold out hope in Ofwat’s move to more outcome-based regulation and less micro-management of inputs and outputs.

Addressing the third quote above – i.e. whether water companies or suppliers are best placed to do R&D – this is a strange and rather dated, linear view of innovation (that it moves from basic research through a chain to application). Our UKWIR work on innovation in the UK water sector rejected this picture. We considered innovation as a shared activity – and a common responsibility. All parties take part in the development, helping to tailor it to specific needs. All have something to bring to the table. Without this joined-up approach, many inventions fail to get adopted as innovations. Without a shared vision for the sector, priorities and strategies are all over the place and there is significant wastage. I had thought these points had diffused through the sector. Evidently I was wrong.

On renewable energy, the Gray Review has this to say:

 ’…there is considerable scope for a wider range of renewable generation on sites owned by the regulated companies. … such generation is already incentivised quite separately through the Renewables Obligation … 

It is not obvious that such investment needs to be incorporated within the RCV [Regulatory Capital Value] of the water and sewerage companies with the added protections that would entail. This appears to be another example of the risk-averse nature of the companies and their distrust of the regulatory regime. It would be understandable if the owners of the companies saw an unregulated generation business as a high risk activity to enter into; but the risks could be mitigated, for instance by way of a joint venture with a renewable generation specialist. Part of their reluctance to do this seems to be related to uncertainty over how the interface between such schemes and the regulated business will be treated by Ofwat in the future.’ (p.44)

There is really quite staggering scope for a better treatment of energy efficiency overall, and renewable energy in particular, in the UK water sector. If the water companies have failed to do this – through lack of regulatory and commercial pressures – shouldn’t there be action to remedy the situation? According to Gray, no. Ofwat should simply keep its approach ‘under review’. Marvellous.

The Review also has an extremely cursory treatment of Ofwat’s sustainable development duty, recommending it does not move up from a secondary to a primary position (pp. 52-53). About the only constructive point made here concerns:

‘…how the commitment to sustainable development is turned into individual regulatory policies and decisions. The essence of many of the criticisms … seems to be that, at the decision stage, Ofwat is driven too much by a desire to introduce market mechanisms and by cost-benefit analysis which focuses on the ratio of quantified benefits to quantified costs, and does not take into account the unquantifiable benefits considered under a broader impact assessment and the longer-term policy goals these might contribute to. Ofwat might usefully consider whether it properly takes such wider impacts into account in its analyses.’ (p.53)

I imagine this superficial, hands-off understanding and practice of sustainable development in the UK water sector will have to change before long. Looking at some results of water supply and demand under future climate scenarios from our CREW project there is simply no way the current system can continue unaltered. Demand will simply outstrip supply without efforts in both mitigation of climate change and better adaptation to it.

Two other aspects of the Review caught my attention. First, the Review considered the role of the supply chain and impacts upon them from the cyclic nature of investment in the UK water sector (pp. 49-51). Similar to our UKWIR work, the Review noted that skilled people are retiring but not being replaced, that staffing levels are hard to maintain from investment peak to peak (a feast or famine situation), and that there are ‘hidden costs and intangibles such as maintaining facilities for peak staffing levels and the permanent loss of sector expertise to more stable industries’ (p.49). The Review offered no real solutions. But at least these important points were raised.

Second, the issue of the value for money of Ofwat was addressed. This revealed Ofwat cost 17 million GBP to run in 2009/2010 (p. 62). It also shed some light on a claim I’ve been seeing here and there, about customers’ bills now being a third lower than they would have been without Ofwat’s efficiency drives since privatisation in 1989:

‘Ofwat … [looks] at the effect of the efficiency challenges it applies in the price review process … to strip out the effect of overbidding and assess the impact of the ongoing efficiency improvements required by Ofwat relative to the companies’ own plans. On this basis Ofwat estimates that customer bills are now, on average, £110 lower than they would otherwise have been. The equivalent cumulative savings for customers since privatisation would be about £2.5 billion. 

Ofwat also noted that its enforcement action had delivered £385 million of net benefit to consumers since April 2005 (when it was given powers in this area). These are helpful indicators, but they do not provide an assessment of the effectiveness of the organisation in achieving these benefits for consumers.’ (pp. 63-64)

The last sentence is the real killer here. The indicators do not causally attribute any of these savings to actions by Ofwat. If this can be done, I would really like to see the details – methodology, data, the lot. What’s the control group in this instance? What other alternative scenarios are considered to compare to? E.g. a far more innovative water sector since privatisation? A far more sustainable one? One with actual competition? (I’ve asked Ofwat about this point, and hope to hear back soon.)

All in all though, the Gray Review is a weak, unchallenging input for the forthcoming Water White Paper (which Defra has now committed to publish next month, December 2011). The Gray Review paints a picture – inaccurate though we think it is – of a UK water sector in good health, in need of only incremental tinkering. And yet some people were expecting ‘the most radical overhaul of the UK water sector since privatization in 1989′ from the imminent White Paper that will use the Review as an input.

With such insubstantial Gray Review ‘evidence’ hot-off-the-press, can a ‘radical overhaul’ be justified with recession, unemployment, national strikes, the Euro and the like grabbing headlines? Sadly, as much as it is sorely needed, I think Defra will conclude it cannot…

Duncan Thomas

Video: Watercourse way in action

Over my varied summer one of the things I got up to was filming some friends performing a new interpretation and application of an old karate kata.

The practice belongs to a school of karate very much associated with the so-called ‘watercourse way’. Essentially it means not returning force with force but rather deflecting it without prejudice. The idea is a lot easier to explain with a video:

I should say that this video stars accomplished karate researchers Dave Franks (left, initially) and Daniel Langton (right). They have a new website here. The kata being demonstrated is a provisional version of Nai Han Chin No Shinzui from the karate school Kodo Ryu. It’s kind of a world-premiere, in fact. The idea of the research has been to try to explain the application of every action within the kata. The side-by-side kata and application view here shows that most of even the most intricate aspects of the kata can be explained if this is the kind of application that was intended for it. Few other application explanations have been so comprehensive. But such things are always the subject of hot debates, and this provisional version is not final. Nevertheless it’s been very interesting to observe and find out more about!

I also know the practice from my time with ‘pushing hands‘, a partner-based form of moving meditation. The idea is to maintain a constant pressure or ‘silk’ between two partners in motion. It takes quite a lot of concentration and a rather ‘empty’ state of mind for the ‘receiver’ partner not to respond aggressively (or clumsily!) to a range of forces input by the ‘driver’ partner, and to maintain the ‘silk’. It can look a bit frantic but it’s very enjoyable to do!

There’s a lot more authoritative info about the practice and its roots in a range of books by the school’s chief instructor, Nathan Johnson - including Barefoot Zen (my favourite), the more recent The Great Karate Myth, and the earlier Zen Shaolin Karate.

The reason for me posting this up on Waterstink is the water metaphor link. I recall back in a Water Policy journal article in 2000, by Jerome Priscoli, an invitation to think about the history of reflective, symbolic and spiritual aspects of water. Well I’ve always liked the metaphor of ‘watercourse way’ when practising non-violent pushing hands, and meditating on dealing with forces in a detached way. For me it’s yet another part of water’s deep and rich cultural embeddedness.

Duncan Thomas

In (solar) hot water?

Back in January I posted about some of the eco-friendly kit installed in my house. I’ve now had chance to get to grips with my solar water heating after quite a few months of use. So, what’s it like?

First, the lack of instructions meant there was some trial-and-error involved in getting to know how to use the system. An important factor turned out to be to switch off the ‘mains’ hot water system. Of course, no one had told us this! Without that step, the solar hot water system doesn’t get a chance to run fully. The ‘mains’ gas will heat up the tank and the solar hot water will never – or very rarely – be pumped in to top up the tank with the ‘free’ hot water from the sun.

Second, in the climate of the North of England, even with quite a lot of sun, the hot water seems unlikely to ever go above 45 degrees C. By contrast, the ‘mains’ hot water is set to heat water to about 65. It’s an interesting test of what’s necessary and what’s tolerable to my family and I though. We get on fine with 45 degrees C for showers, washing and so on. It is noticeably cooler than, and not quite as relaxing as ‘mains’ heat. But it’s not a problem. Only when the temperature of the stored solar hot water drops to the low-30s do things get a bit uncomfortable – although this does shorten our shower times so we save on water then!

Third, three days in a row of overcast skies necessitates returning to the ‘mains’ system – albeit switching it on for 10 minutes is usually enough, given that the tank is not stone cold due to the buffer from the solar system.

I must say that having the kit has made me more acutely follow the daylight hours and cloud cover. From about March to mid-September I managed, by rationing and timing usage to sunny conditions, to switch off the ‘mains’ hot water completely. The solar hot water on its own was enough. I can’t say how much money – or gas – we saved yet. I haven’t lived here long enough to tell our seasonal usage and cost patterns. But the summer quarterly gas bill was quite low (about 30 GBP). Of course the central heating was off too during that period.

I’d say the cash saving seems modest at present. With regular price rises though, the benefit may increase in future… ‘Carbon’ still has only the weakest of roles in our economy as well. Were that situation to change the financial aspect might get stronger too.

Fourth, we’ve now reached a time of year – and temperatures – that the solar hot water will struggle with. The roof-mounted panel temperatures are getting so low that the system will not feed the solar system’s liquid into the flow. So for about half the year, in our climate, the system will be effectively dormant.

Overall though I’m impressed with the system. The feeling of having ‘free’ hot water is great – though there are pumping costs involved (you can hear it going when it’s working). The cash saving appears modest, and the system is only going to be usable – in this part of the world – for about half the year. Still I’m glad the system came pre-fitted on the house, as I think my experience makes a fairly weak case for a retrofit cost-benefit analysis so far…

In sunnier climes though, first-hand experience of a system like this does make me feel that it’s insanity not to have solar hot water installed as standard, by law.

I spent several weeks last month in two far sunnier places than the UK – Rome (Italy) and Atlanta (Georgia, USA). (Hence the lack of posts these past 6-8 weeks!) With long hours of daylight and strong, warm sun, I expect you could switch off your ‘mains’ hot water for about 9-10 months in a year – even with fairly heavy demands on a system. Solar hot water systems are still a rare sight in the UK, it’s true. But sadly I saw no evidence of any during my trips abroad – in spite of the benefits they’d likely bring.

Well, here’s hoping for some positive change in this direction. After having lived with the results for a little while now, I can say I think it’d be worth it!

Duncan Thomas

Musical interlude: Northern Soul

My occasional music-related activities have another red-letter day today. A track I produced for the band Sentimentalists is now available on iTunes. It’s a quirky number called Northern Soul. The band’s singer, Phil Fowler, describes it thus, ‘the song tells of keeping warm in the cold winter of 2010, and how Northern Soul played a part in keeping warm.’

I managed to shoot and edit a video for it, starring Phil. You can watch it direct on YouTube or it’s embedded below:

Enjoy!

Duncan Thomas

Should we really hope for water mergers in the UK?

A newspaper piece two months back, in the Monday 13 June print edition of the Financial Times (the online version is here) optimistically proclaimed ‘hopes rise for end to water deal dry spell’. I was immediately struck by this article about water company mergers in the UK. Do people really think this is something to get excited about?

The FT article was prompted by Agbar’s apparent intention to sell its holding in Bristol Water – which Agbar bought back in May 2006 and, at the time of writing, still owns. The article talked about barriers to mergers due to Ofwat’s desire to retain as many separate and independent, privatised water companies in England and Wales as possible. It does this to benchmark more robustly the performance of each against the others.

Opposing this stance, Colin Skellet, executive chairman of Wessex Water was quoted as saying, ‘What benefits customers in the long run is efficiency. There’s absolutely no doubt that if you made some sensible combinations [between companies] you would get efficiencies.’ Severn Trent’s chief exec, Tony Wray, also reportedly believes in ‘potential economies of scale’ from sharing administrative functions across newly merged companies.

Some scepticism was noted by an analyst at RBS, who commented that large water mergers would be ‘very hard to justify‘. Colin Skellet was also quoted as noting that large sums have been paid in the past for water companies, and already ‘one wonders how people are going to get a return on that.’

Nevertheless, nowhere in the FT article did it point out that generally speaking most mergers and acquisitions fail. Very few generate truly positive outcomes. Research on the UK water sector specifically, covering data available for the period 1985 to 2000 (by Saul, Parker and Weyman-Jones) has shown very uneven – and overall negative – efficiency ‘gains’ from scale for the England and Wales water companies. So why all the excitement and enthusiasm? It beats me.

Even this month, in The Independent on 3 August, news of the purchase of Northumbrian Water by ‘Hong Kong billionaire Li Ka-Shing’s Cheung Kong Infrastructure (CKI)‘ and the consequent sale to HSBC of Cambridge Water (that CKI had originally bought in 2004) to satisfy anti-competition conditions, has led to increased fervour about the prospect of ‘more takeovers in the water works.’

Earlier this year, Utility Week had talked about an approaching era of ‘merger movement’ (back in February). That piece led with how the Cave Review recommendations might affect Ofwat’s ‘anti-consolidation stance’ – perhaps leading to more developments in the wake of the acquisition (in 2010) of the American owner of Bournemouth & West Hampshire by Singapore-listed Sembcorp Utilities, and the transfer of Bristol Water’s owner Agbar to sole control by the French Suez Environnement.

The UW piece asserted ‘a more rational geographical grouping‘ of consolidated UK water companies would take out ‘significant costs, starting with half a dozen boards of directors, human resources functions, billing systems and regulation departments‘ and lead to ‘a lower cost of capital‘ in the long-term – wryly noting this might even ‘warm the cold economic cockles of Ofwat’s heart‘. There would also be strategic benefits for dealing with climate change and predicted water shortage in the South East of England, the UW article claimed. Given the points I’ve already noted above, let’s just say I remain to be convinced.

One interesting thing the UW piece did note was the influence of the ownership patterns of the water companies. Only four of the big ones (Northumbrian, Severn Trent, South West and United Utilities) are publicly quoted. The rest are owned privately, by private equity, by pension funds, by a mutual or combined companies, or by overseas utilities. This state of play, allied to the water companies’ long-term covenants and highly geared financing arrangements, count heavily against mergers and consolidation. The Government’s water White Paper – now due in November or December this year – is an apparent barrier too, due to risk and uncertainty about its, as yet unrevealed, regulatory changes for the UK water sector.

All in all, given the largely questionable benefits of water mergers though, I’m surprised at the current climate of general positivity about them. I also find it bizarre how eager industry insiders are for them, and how excited outside commentators and speculators get. These are risky, low to negative benefit options we’re talking about.

Now, if we could only get the same kind of buzz around increased innovation in the sector, who knows? In the long run we might actually get far more sustainable, long-term outcomes from this water industry…

Duncan Thomas

Untapped Potential: Highlights

The Untapped Potential report, written by Dr Simon Less and published by Policy Exchange (apparently one of David Cameron’s favourite think tanks) on Monday this week is outstanding. It goes to the heart of many of the problems the UK faces in balancing increased water use with the need to maintain a sustainable environment. It makes some really creative suggestions as to how the problems may be overcome with organisational changes rather than the massive capital plans to which the water companies normally turn.

It is not often that a report of this type gets such a rave review, particularly from me. But I strongly believe this is a report that goes to the heart of many of the difficulties being experienced and how aspects of our existing financial and environmental legislation are exacerbating the situation. (In addition, even as a former Director of Ofwat Dr Less has, where appropriate, not spared the blushes of his former colleagues at Ofwat – or those of the Environment Agency.)

The Report tackles many headline-grabbing topics – particularly with respect to over-abstraction from rivers causing unsustainable pressure on the UK’s water resources and damaging the environment. The situation is aggravated by water companies using the ‘cheapest’ sources rather than the most environmentally-sustainable ones. The Report indicates that the present abstraction license system brings a level of future uncertainty that actually encourages water companies to hoard their licenses and to use them without regard for the environment.

The highlight of the Report for me though is that it deals with one of the subjects that has concerned us for many years – i.e. the ‘cathedral building’ bias of water companies:

‘Problems with current water supply regulatory arrangements

 

Some aspects of current water supply regulatory arrangements are a legacy from a period when the options were simpler for developing new water supply sources and infrastructure, and were generally cheaper. A simple regulatory approach focused on scrutinising different capital supply projects put forward by the monopoly water company was acceptable.

 

Such a process is now insufficient to identify and select the best ways to bear down on the costs of matching water supply and demand. The regulatory framework needs to deal with greater complexity of options and information, including options for dealing with the peak versus average demand shortfalls, comparing demand- and supply-side options, operational expenditure versus capital expenditure solutions, new sources versus greater interconnection and promoting innovation.’ [p.60]

The Report also points out an incentive for water companies to prefer a capital solution:

‘Bias in favour of capital-intensive supply side solutions

 

Monopoly water companies have their prices regulated by Ofwat. The process for establishing prices incentivises companies to try to maximise their Regulatory Capital Value (RCV) on which Ofwat allows them to earn a regulated return. Companies grow their RCV by securing Ofwat agreement to new capital investment. Ofwat’s approach to price regulation also incentivises companies to become more efficient by minimising operational expenditure, a further incentive for companies to choose capital over operational expenditure. [...]

 

Other, non-regulatory, factors may also contribute to a capital bias. Companies may be culturally more comfortable with their traditional role of building supply infrastructure (largely unchallenged by competitors), investors may have become used to the size of the RCV being shorthand for a company’s value, and companies may prefer to have ‘control’ of their own supply rather than enter into contracts for bulk supplies with others. (Regulation may also be a factor driving the latter.)’ [p.61]

The Report deals with many other specific aspects of the problems faced by over-abstraction, related long-term problems, and how these will best be addressed. But I believe these three short paragraphs sum up the problems the UK faces in terms of its water regulatory framework (not only for water supply but also for wastewater treatment).

Surely a system that so encourages capital spending and minimizes operational expenditure is well past its ‘sell-by date’? If only we had come to these sorts of conclusions earlier perhaps the UK would not be saddled with such a heavy long-term debt from the water utilities. We also might have a system more able to cope with the vagaries of climate change and increased demand.

Roger Ford

Gray by name, grey by nature?

Although I’m not sure if I can forgive myself the rather corny title I must admit to feeling ‘grey’ about the Defra-commissioned Gray Review of Ofwat in three ways.

First, things are murkily grey for me in terms of not knowing what is actually happening with the Review. It launched some 10 months ago, back in August 2010, and was due to report around March this year – or at least in time for the new Water White Paper for England, originally due out this Summer. Is it ongoing? Has it concluded? Has it been affected by the White Paper being delayed until December 2011? Who knows…

Second, things are grey for me in a lack of transparency about the Gray Review in-progress, as compared to recent high-profile water-related reviews. There’s no review ‘in progress’ website, no reports from evidence sessions, no summary report of consultation responses and the like. Nothing. Perhaps I set my hopes too high after being quite impressed by the conduct of the Cave Review in 2008/09 and the Walker Review in 2009! (Incidentally, their content is still publicly available, via archived websites – reflected in these new links. The Walker Review has also been followed by a water affordability consultation, which closed just two days ago. It’s also not as if there haven’t been responses to the Gray Review consultation. There are definitely very detailed responses, e.g. this one by Water UK.)

Third, the Gray Review does not seem to be heading towards very bold or breakthrough changes – at least judging by the snippets of information that have leaked out to date, such as this February article in Utility Week based reporting a 25 January meeting of the All Party Parliamentary Water Group, on ‘Regulation in the Water Sector‘.

Looking at the article, and the minutes of the APPWG meeting, David Gray seems to assume: people believe water regulation works well; there’s ‘no pressure‘ to change Ofwat’s main duties (it’s just about how the duties are applied); changing sustainable development from a secondary to a primary duty would rock-the-boat too much; maintaining investor confidence is paramount, whatever changes are made; people are nervous about the possibility of more competition; and some people feel Ofwat needs to consult more and be more transparent.

Further from the minutes, during Q&A, there was mention of the water sector’s R&D culture suffering under regulatory burdens. A response was that Ofgem’s Innovation Funding Incentive is an interesting model. (That’s been the case for many years now, of course, and the water sector remains no nearer to adopting such an approach!) Whether Ofwat should exist at all – and the suitability of the original privatisation settlement – were both questioned, and were answered as being outside the Review’s terms of reference.

All in all, this is quite disappointing. The Review seems to be taking a rather bland and narrow interpretation of its in fact quite broad terms of reference. The ToR allowed it to address the Government’s objectives and guidance to Ofwat, whether Ofwat’s duties and processes are fit-for-purpose, and Ofwat’s contribution to sustainable development. With the right motivation, one could cover a lot of ground indeed from this as a starting point!

Whenever the Gray Review finally does report, it will feed into the forthcoming Water White Paper. Given what we’ve seen so far though, I can’t say I’m very convinced that White Paper is ‘likely to produce the most radical overhaul of the UK water sector since privatization in 1989‘, as some commentators claim. I also can’t agree with the Gray Review being presented by Water UK as a ‘rigorous review‘ that has ‘reflected on the deeper implications of Ofwat’s “hands on approach” and the extent to which it can constrict companies and influence their decision-making‘.

Perhaps when more about the Gray Review is made public, my opinions will change. For the moment, with this seemingly rather grey, Gray Review as an input, I’m not currently crossing my fingers for any breakthroughs from the 2011 Water White Paper.

Duncan Thomas

Happy chappie

Recently some of the snags on my new eco(ish) home have been sorted. Interestingly this has meant I’ve been able to access my water meter for the first time! Not one to only harp on about what’s wrong with the UK water industry, I thought I’d share a quick report of a positive experience I’ve just had, now that I can read my meter.

When I moved in, of course, my water company had very little usage data to base our payment estimates upon. So they took the usage in my previous property as a guide. This was reasonable, I thought. At least it was from a metered property – i.e. far better than estimating from an unmetered property to a metered one. Still, I had been wondering whether the eco features in my new place would make a difference. My old and new properties are roughly the same size, and my water consumption habits have changed little. The only variable would seem to be the water-delivery technology.

Happily, it turns out I’m using far less water in the new place! Even better, my water company has just revised and reduced my water bill after I let them know this. Every penny counts at the moment, so that’s a welcome response and good customer service, in my view. (Well done Yorkshire.)

So, what’s the difference? Well, my previous annual usage was a bit over 100 m³. With the low-flow shower, tap-aerators and so on in the new place, it’s looking like it will be more like 60 m³ or so. Quite a saving. I’ll report back when I know for sure. If it turns out to be true then that’s quite a turn-up for the water-saving kit.

In the meantime, I’m still hoping to be able to find a moment away from my current intensive survey analysis on some other research I’ve been doing, to post about recent water-related news. (This explains the lack of posts during April too, sadly…) In particular I want to catch up with the Gray Review. I’m hoping to post back soon about it… although I must say it’s been frustratingly hard to find the relevant materials, that is, apart from minutes and a news story about a meeting of the All Party Parliamentary Water Group. This is truly bizarre given that David Gray was meant to have reported a month or so ago! Ah well…

Duncan Thomas

Public (in)convenience?

As ever, it’s been a busy month and I’ve struggled to post up all my recent water-related news and views here at Waterstink. Part of the reason has been that in early February, I started teaching again on ‘Water and Sanitation Planning and Policy in Developing Countries’, led by Professor Dale Whittington. This year I’m contributing material too, which is exciting and has been a great way to pull together and update material that I haven’t really had time to revisit in detail since writing The Crisis of Innovation in Water and Wastewater with Roger, back in 2005. In April I’ll be teaching on ‘innovation and sustainability’ and Australia and Singapore case studies too. The former part will be a great way to share insights from the work I did with Roger back in 2006 for UKWIR on Barriers to Innovation in the UK Water Industry. The latter part involves some new reading and digging around. All in all, lots of fun!

A few things did catch my eye in the news though. Most of them I’ll post back on soon. One in particular is very topical indeed, so I’ve chosen to write about it a little bit today. It starts with two stories the BBC put up this past month or so. One reported from Wales on how businesses are now seen as the main ‘public’ toilet provider in town and city centres there, given wide-scale closures of many public conveniences. The other noted that Manchester city centre now only has one public toilet left, in stark contrast to its ‘boon years’ for public loos in Victorian times.

It was ironic to read about all this, only a few weeks after hearing international expert on sanitation planning, Barbara Evans, talking on the above course led by Dale. She highlighted various social exclusion – and, of course, health – problems related to poor public toilet facilities and inadequate provision in developing countries. But would you really imagine age discrimination, discrimination because of family status, or discrimination on the grounds of belief, as big problems with the state of public toilets in the UK?

At first it may sound unthinkable. Sadly, it’s exactly what’s happening, according to the two BBC stories. Here are some indicative quotes that explain the situation:

‘Women, disabled people and elderly people feel the most angst over the toilet drought. And many people are shy about cheekily using toilets in shops, restaurants, bars and pubs.’

[From Age Cymru] ‘Public toilets are a lifeline for older people. “If there’s not toilets in their towns or cities, they can’t leave the house. We can’t underestimate the importance of public toilets in our towns and cities.” ‘

[From Jenny Randerson AM, Baroness Randerson of Roath Park, views] There are ‘issues such as opening times if the toilet was provided in a pub. “Obviously, if it happens to be in a pub, there are a lot of people who wouldn’t choose to go into a pub – elderly people, mothers with children, Muslims, so it’s not necessarily ideal…” ‘

[From Clara Greed, University of the West of England]‘ “Toilets aren’t compulsory. They are always one of the soft options to cut, it has been endless decline. There is very little understanding of the value of toilets. Areas that have got public toilets attract more shoppers. People can stay.” ‘

So that’s women, disabled people, elderly people, and Muslims affected by the sparsity of public toilet provision these days – and shopping time reduced for some people too.

For the past two and a bit weeks, I’ve had a rather personal taste of this situation. How so? Well, as most of you probably know, today is the first day of spring, the vernal equinox. You may or may not know that it also happens to be Baha’i New Year, a.k.a. Naw-Ruz. Baha’i New Year marks the end of a period of fasting, which is performed daily during this time, from sunrise to sunset. This meant I was getting up early to eat and drink, before heading off to work as per usual. Given how long and convoluted the commute from my new eco-ish home is these days, this sadly meant I was travelling almost straight away after eating and – crucially – drinking a fair amount of water, to avoid dehydration during the daytime… And hence, let’s just say, I was then looking for public loos en route before too long…

This is not my normal routine, of course, so I didn’t really know where to start. Could I rely on public toilets on the train part of my journey being open and clean? Some days yes; others, no, it turned out. (At times rush-hour overcrowding on the trains made it impossible to even get near any onboard toilets too…) Could I depend on an open/clean toilet at my destination train station? Often, yes; but sometimes ‘no’, due to random closures without advance warning. Would there be toilets on the remaining part-bus/part-walk part of my commute? Nope. Not one.

Instead of walking around with your average UK citizen’s ‘flush-and-forget’ mentality of obliviousness to toilet issues common to most people of my age and situation then, I was jarred outside my comfort zone – at least for a few weeks – and became acutely aware of the issue of a shortage of suitable ‘conveniences’ in UK town and cities. It was a real eye-opener, in fact. I must say, it’s something I think town and city council officials might actually want to try for themselves before cutting this ‘soft option’ any further in future too!

It’ll be another year before I’m in the same situation, of course. I’m not optimistic about the quantity and quality of toilet provision I’ll face in 12 months time, I must say. After all there are more ‘austerity’ cuts for local authorities on the horizon. Sadly, to combat the issue, I’m not quite ready to ‘get on my bike’ to campaign yet, as one Welsh councillor indeed did last year to raise awareness (although back in 1997, of course, I did walk from John O’Groats to Lands’ End for cancer research, so I wouldn’t say this is entirely beyond the realm of all possibility!).

Perhaps I’ll just have a look at how the long-standing British Toilet Association are doing on the issue, for now…

Duncan Thomas