Ofwat: Wastewater plans must reflect CSO targets

Water regulator Ofwat has told companies to provide detailed evidence and prioritise the use of use nature-based solutions in their drainage and wastewater management plans (DWMP), which have been devised for the first time by water and sewerage companies in England and Wales.

Senior director Aileen Armstrong wrote to chief executives welcoming the draft plans but added the regulator had several concerns to address and proposed a two month extension to the deadline.

The aim of the DWMPs, submitted in draft format in June, is to provide consistent, structured and collaborative long-term planning approaches to ensure the resilience of wastewater systems and drainage networks against future pressures such as population growth and climate change. They are intended to be a robust basis for investment planning at the next price review for high profile issues including storm overflow spills, sewer flooding and pollution incidents.

Armstrong said Ofwat had “several concerns” with the first version of DWMPs and highlighted four broad areas it wants to see better developed in plans.

Defra overflow targets

She told chief executives plans on storm overflows were “lacking”; specifically that government targets were not included in English company proposals, while Welsh companies lacked supporting evidence. Government targets were published in draft form only when plans were submitted. Ofwat stated options and timelines for reducing environmental harm from spills should be set out.

Armstrong said plans failed to address all the points in Defra’s storm overflow reduction plans published in August, adding that companies “could have developed sensible scenarios that tested a range of likely targets”. Ofwat warned final plans could look significantly different to drafts, which would limit the stakeholder engagement and consultation process.

Investment needs

Secondly, Ofwat said there was insufficient evidence to support investment needs and development of costs and benefits of solutions, especially for schemes with multiple benefits. Companies were expected to present “best value, least regret solutions” for investment at PR24 as part of 25-year investment planning. Should the final plan not justify investment or convince Ofwat that proposed solutions are the right ones then companies will be asked for evidence in their PR24 plans.

Where grey solutions were prioritised over sustainable or nature-based solutions, Ofwat wanted evidence for the choices. The regulator said it wants to see an adaptive planning approach to long-term options and evidence of how short-term solutions would fit into the longer-term framework.

The letter stated: “Despite most companies having a reasonable understanding of adaptive planning, most have not yet demonstrated effective application of this approach. We expect a well-developed, adaptive plan to demonstrate that an optimised programme of investment has been prioritised.”

Ofwat also raised concerns over cost variations between companies’ plans, saying more supporting evidence will be needed for their business cases.

Nature-based solutions

Armstrong called for greater ambition in prioritising improvements from base expenditure and nature-based solutions or surface water separation options.

On this, she said companies did not always satisfactorily prioritise green and low-carbon solutions and said evidence is required for not choosing these where feasible.

“Nature-based solutions should be robustly considered, where appropriate, when determining the best long-term value, but we have not seen satisfactory evidence presented that companies have fully explored such options or provided compelling evidence for discounting them,” the letter stated.

Partnerships

Lastly, Ofwat said partnership solutions lacked “focus and maturity”. The letter expressed concern that companies have not “maximised opportunities to engage and work with other risk management authorities” that have drainage responsibilities for partnership schemes.

To remedy these points, the regulator said companies could submit their final DWMPs at the end of May 2023, rather than March.