Changing waterscapes in PR19

In its final determinations for PR19, Ofwat has given the green light to a number of major infrastructure and resource sharing projects.

In recognition of the scale of projects needed to build long term resilience, Ofwat has allowed water companies to use different procurement as well as offering Portsmouth a 10-year price control period to construct the country’s first reservoir for three decades.

As part of PR19, Ofwat introduced direct procurement for customers, allowing water companies to competitively tender for a third party to design, build, finance, operate and maintain infrastructure projects.

The construction of major projects from United Utilities, Anglian, Welsh Water, Southern and Affinity is expected to begin throughout the 2020-25 period. The schemes are anticipated to come into use in the following regulatory period.

Each has been approved to build using direct procurement with allowances from the regulator.

Anglian will build Elsham treatment and transfer – a 500km pipeline running north to south through its region to redistribute water across areas with surpluses or deficits. It will run between Lincolnshire to Essex to alleviate the problems of varied rainfall throughout the region. The £500 million project will redistribute water from north to south across Anglian’s region. The project was approved in Ofwat’s determinations as being suitable for direct procurement and to provide value for money.

In the north east, United Utilities was given the go ahead for a long-term £750 million project to boost water resilience. The Manchester and Pennines Resilience scheme will be delivered by direct procurement with £57 million allocated for the company to carry out the work in the next five years as well as £44 million for long-term drought resilience.

Welsh Water will construct a water treatment plant at Cwm Taf as part of its water supply strategy. The company said the site will futureproof water supplies in the face of a growing population and deteriorating water quality. In the final determination, Ofwat allowed £13.6 million for the project with the funding coming via direct procurement.

Affinity Water will embark on a water resources scheme under direct procurement to meet the requirements of changes to the abstraction licence in the Brett region. Ofwat said it would expect regional trading and source development options to be considered more fully between Affinity and Essex & Suffolk Water. The decision is expected in 2021 for the solution size and method.

For Southern Water, Ofwat approved two direct procurement projects for the period. The company will assess and progress with a desalination plant at Fawley and, or effluent reuse centre at the River Itchen – a chalk stream where Southern’s abstraction licence has been vastly reduced to protect the river.

Work on another long-term large project will begin in Portsmouth to build a reservoir at Havant Thicket. It will be built by Portsmouth Water to supply to neighbouring Southern and ensure water resilience in the water stressed south.

The scale of the project prompted Ofwat to approach it with a separate 10-year price control that the regulator felt better aligned with the cost and risk sharing arrangement between Portsmouth and Southern.

Ofwat’s proposed price control included a limit on what Portsmouth can charge its customers, but not on what Portsmouth can charge Southern for the bulk supply arrangement.

Portsmouth’s catchment area benefits from boreholes and chalk aquifers so has surplus water, while Southern has seen greater restrictions on abstracting from chalk streams in the west of its region.

Portsmouth will spend £124 million over the next 10 years from the new reservoir. Portsmouth awarded the first design contracts for the project in October and anticipates work will commence on the project in 2021 and the reservoir filled by 2030.

Further to the projects approved for direct procurement, Ofwat set out a number of schemes as potentially suitable: Thames Water North East London Resilience, Affinity Water’s Brett Sustainability Reduction scheme and Bristol Water’s Cheddar Reservoir. It said these would be subject to further analysis for feasibility and desirability.