Droughts with clout

Southern Water has taken the bold step of proposing to spend more on securing water resources than convention demands. Why? Because it's what customers want. Karma Ockenden wonders how the regulator will respond

The only thing on the front page of Southern Water’s Water Resources Management Plan (WRMP) consultation is a quote from the government’s white paper Water for Life. It simply states: “We need to take a fresh look at the options we have for managing future supply and demand, and ensure that we build in flexibility and resilience to uncertain and changing conditions.”

This pretty much sums up what the company has tried to do in its WRMP. In spite of the much-­criticised neglect of resilience measures in the draft Water Bill, Southern has been getting on with building resilience in to its water resource planning in a practical way. Indeed, Meyrick Gough, water strategy manager, describes Southern’s WRMP (out for

consultation until August) as “our answer to the resilience question”.

In a brave and innovative move, Southern is proposing to increase the average bill by £3 more over 25 years than would be needed to fund basic requirements because it wants to deliver a more resilient resources strategy for 2015-40. In so doing, it is raising its head above the parapet as far as regulatory scrutiny at the next price review is concerned. The saving grace? Southern says it’s what customers want. And that’s what the 2014 price review (PR14) is supposed to be all about.

Let’s go back a few steps. In their 25-year plans, water companies essentially compare future demand with how much water they can supply during a drought, and then decide how best to make up any shortfall. Conventionally, firms draw up plans based on droughts that have already happened, examining how historical rainfall patterns affected water sources.

Southern is proposing to use a new approach from 2019 that plans for a range of droughts that haven’t happened yet (but are as likely to happen as droughts we have experienced) and which would have a greater impact on water resources. Gough explains: “It’s about understanding ‘what happens if…’ Last year we had a second very dry winter. Groundwater was in the drought trigger zone and there was a 300mm rainfall deficit. We put water restrictions in place in April. Then the heavens opened in summer! But if the summer had not been wet, what would have happened?”

The company started work back in 2010 with the University of East Anglia and Newcastle University to plan for more than 2,000 different types of weather patterns, rather than just referring to the past 100 years as in conventional planning (see graph, Planning for a wider range of droughts).

It subsequently undertook a range of pre-­consultation initiatives to get a measure of how its thinking sat with customers and stakeholders. These included a series of workshops with key interested parties; in-depth panel sessions with customers; and an online survey which was completed by more than 1,000 respondents. What emerged was a clear appetite for greater resilience and – more surprisingly – a willingness to pay for it. Specifically, customers were found to be willing to pay an extra £3.40 on the average bill over the coming 25 years – equal to investment of £37 million – to cut the risk of hosepipe bans being introduced from one in six years to one in ten years and the risk of emergency measures such as standpipes from one in 80 years to one in 200 years.

The research also gauged what type of resource schemes customers preferred. In order of most to least preferred, these emerged as: aquifer storage and recovery; water reuse; leakage reduction; desalination; water efficiency; new reservoirs; and different ways of charging for water to reduce demand.

Consequently, Southern has put a WRMP out for consultation that both reflects these customer preferences and shores up water supplies to 2040. The choice of favoured actions is important here, because different options perform differently depending on the severity of drought (see graph, How water sources perform during drought). The plan includes a mix of schemes to both reduce demand for water and increase the amount of water in supply (see box, overleaf). Gough notes there is a “very different outcome because of the new model in terms of the choice of solutions”.

Over the 25-year period, the plan will cost £88.7 million, which equates to an average bill increase of £13.10 over the 25 years. Had it used a conventional resource planning approach, the overall cost would be £67 million, increasing the average customer bill by about £10.10. Southern notes that “this would not, however, deliver the increased resilience our customers have asked us for”.

So does how does Gough rate his chances of getting the plan past Ofwat? He acknowledges that Southern is going out on a limb somewhat. “We have applied the same principles as all other companies in terms of how we cost and select water supply solutions and so on, but we are different in applying the ‘what if?’ modelling,” he says. “But we are in a water-stressed area, so this is important for us. Plus it’s timely in terms of public awareness following the two dry winters. In five years’ time, our approach might become the norm.”

Gough is optimistic the current consultation will yield the same positive response as the pre-consultation. The company has a back-up conventional WRMP in reserve if need be. It will publish its response to the consultation feedback by November and a final WRMP in early 2014. That will direct all resource planning until the next update in five years’ time.

The plan

The WRMP is broken up into three periods: 2015-20 (key, as these options will be included in Southern’s PR14 business plan); 2020-25 (these options will be investigated more fully in 2015-20); and 2025-40 (preferred options at the moment, but earmarked for review in due course).

It factors in customers’ wishes for a more resilient network; continuing work on leakage, metering and water efficiency; and proposals from regional plans to share water resources across the South East. It used mathematical models to weigh up which of a feasible 139 schemes were the most resilient, sustainable and cost effective and would provide the best overall value for customers and the environment.

A full breakdown of the schemes proposed for each of the three periods can be viewed at http://swhaveyoursay.co.uk/wrmp. Key options for the immediate 2015-20 period are:

Abstraction

· a nitrate removal plant at Twyford so groundwater can continue to be taken.

· operation of the Candover augmentation scheme so groundwater can be used to increase flows in the River Itchen by 2019.

· restructure its groundwater “well field” near Pulborough in Sussex by 2019 so the wells operate more efficiently all year round.

· use full abstraction licence of up to 136 million litres of water a day when needed at Testwood water supply works and pump via a new pipeline to Otterbourne water supply works, Hampshire, from 2016.

· change licence at Danaway in Medway to take more groundwater from 2019.

· change licence on the River Medway to take more water in the winter and less in the summer by 2016.

Transfer

· up to 10 million litres of water each day from Portsmouth Water to Hampshire from 2019.

· stage one of a new pipeline in Sussex by 2018 to move water around the region more easily and help preserve storage at the Weir Wood reservoir during droughts.

· build a pipeline to move more water around the Medway region by 2019.

· supply 6.1 million litres of water each day to South East Water from Bewl Water as part of the Water Resources in the South East regional plan from 2015.

Leakage reduction

· on the Isle of Wight to save 0.4 million litres of water each day by 2017.

· in Sussex North to save one million litres of water each day by 2017.

· in Worthing to save 0.5 million litres of water each day by 2017.

Investigations

· water efficiency studies.

· trials for metering tariffs.

· catchment management.

· river restoration projects.

· water re-use at Ford water treatment works and at Aylesford.

· abstraction studies.

· licence trading.

· National Environment Programme studies on the sustainability of water sources.

This article first appeared in Utility Week’s print edition of 21st June 2013.

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