Ofwat mulls universal pollution commitments at PR24

Ofwat has launched a consultation on extending its serious pollution incidents performance commitment to include water-only companies in the next price review.

The discharge permit compliance commitment is based on the Environment Agency’s (EA) annual Environmental Performance Assessment (EPA) definitions for pollution incidents associated with wastewater activities. This means that although the commitment does cover water assets, it only applies to water and sewerage companies (WaSCs). 

Following feedback from stakeholders, Ofwat’s draft framework for PR24 business plans suggested replacing the current performance commitment with a new one that applies to water-only companies (WoCs) as well.

In its consultation, Ofwat proposed that the target for compliance should be set at 100% for both sets of companies, in line with the current target for WaSCs, with companies incurring penalties for subpar performance.

Ofwat said data shared by the EA showed there had been failures to comply by WoCs in 2021 and “slightly poorer” compliance for its water assets than by WaSCs, suggesting opportunities for the sharing of best practice between the two groups.

Although there have not been any serious pollution incidents relating to WoCs in the past two years, Ofwat said there previously have been occurrences. Due to the low number of treatment works WoCs generally operate, any failure can mean a reduction in permit compliance of up to 25% – depending on the company size.

This, Ofwat said, would need to be considered when looking at the overall balance of risk and return for all companies.

The consultation, which runs until 11 November, will gather stakeholder opinions on whether performance commitments on serious pollution incidents and discharge permits should apply to all companies, and if so, whether there should be separate commitments for WoCs and WaSCs.