Ofwat’s response to business plans ‘critical’ for mitigating public health risks

Ofwat must prioritise public health when it rules on water company business plans for the next five years.

That is according to Future Water Association chief executive Paul Horton who said Ofwat’s PR24 process is “critical” for the water sector to mitigate public health risks resulting from faecal matters in recreational waters.

In particular, Horton said the water regulator has a prime opportunity to improve effluent quality from wastewater treatment works and reduce discharges from storm overflows.

He said both will be dependent on Ofwat setting a flexible regulatory regime and properly incentivising innovation.

However, Horton warned that short-termism in the 2025-30 price control could stand in the way of improvements.

He said: “Emphasising short-term cost reductions over long-term investments might discourage water companies from undertaking major infrastructure projects or adopting new technologies that require significant upfront costs but offer long-term benefits.”

He added that setting stringent standards for water quality and overflow frequency would push water companies to prioritise investments in maintenance, monitoring, and operational improvements. “Higher standards can drive the adoption of better practices and technologies,” he said.

Last month, a report by the Royal Academy of Engineering highlighted that levels of faecal matter in waterways, either from storm overflows or treated effluent downstream from wastewater treatment sites, posed health risks.

The report said public acceptability of risk and expectations of standards had shifted.

With the rise in popularity of water sports, people are using rivers and seas away from designated bathing areas and unknowingly exposing themselves to harm from bacteria or viruses.

Horton said the 15 recommendations in the report to improve waterways required Ofwat to allocate adequate funding through the price review for wastewater treatment activities. He also called for the promotion of innovation to drive improvement and for stretching performance targets to be set.

He warned that without adequate financial resources, water companies may not be able to invest in the upgrades to improve water quality. “Budget constraints could lead to prioritisation of immediate operational needs over long-term investments in infrastructure and technology.”

Horton said the current complex process to approve funding of specific projects can lead to delays for “critical interventions” and he suggested simplifying and streamlining  processes to facilitate quicker adoption and deployment.

Horton added that “overly prescriptive or rigid” determinations may limit companies’ ability to tailor interventions to the specific conditions at discharge points. Therefore, he called for better flexibility in funding use and regulatory compliance to allow for effective and “context-sensitive” solutions.

The draft determinations from Ofwat for water companies in England and Wales were due to be published this week but have been delayed until after the general election. The regulator said its initial verdicts are now due on 11 July, and the final determinations will be made in December.

The sector has proposed investing £100 billion over the asset management period (AMP8). This would require household bill rises up to 60% to meet the stringent environmental requirements set to reduce phosphorous in waterways and reduce spills from storm overflows.