Weekend press round-up: Water bosses showered with big payouts

In our latest review of sector coverage across the national newspapers, there is criticism of executive pay in the water sector and concern about EDF’s ability to build power stations on time and budget. Meanwhile, there will be no judicial review for a project to build the UK's largest solar farm

Water bosses showered with big payouts

Multimillion pound payoffs and golden hellos at Thames Water and record pay for bosses across the water industry have been variously condemned as eyewatering, obscene and a national scandal.

Only months after the privatised water sector was vigorously lobbying against Labour’s general election pledge to bring the industry back into public ownership, this summer’s annual filings show record amounts paid to private sector bosses.

Last week it emerged that Steve Robertson, 62, the former boss of Thames Water who left the company last year, received a £2.8 million pay-off. It included a £2 million ex-gratia payment because he had not received any bonuses during his three-year tenure due to the company’s chronic failures on leaks.

That news follows revelations in The Times of the bonanza promised to his successor, the most generous package ever offered in the sector. Sarah Bentley, 48, who was poached from Severn Trent, has been hired on the promise of a £12 million three-year deal including a £3 million “golden hello” in compensation for loss of bonuses at her former employer.

Liv Garfield, 44, the chief executive of Severn Trent, was paid £2.7 million last year, a rise of 10 per cent, including £1.8 million in bonuses.

Steve Mogford, 64, chief executive of United Utilities, the north west England supplier, was paid £2.5 million, a rise of 5 per cent, of which nearly £1.6 million were bonuses Chris Loughlin, 67, the chief executive of the South West Water group Pennon, had a pay rise of 60 per cent, taking his earnings to £2.1 million, of which £1.4 million was in bonuses.

The bumper payouts coincided with a scathing report by the Commons public accounts committee, which said that the private sector’s stewardship of the nation’s water supplies and the rate of leakage — 3 billion litres a day or 20 per cent of the country’s daily usage — had left the UK within 20 years of running out of water.

Michael Gove, the Cabinet Office minister, previously said that water bosses’ high pay was helping to make the argument for nationalisation.

Rachel Fletcher, the chief executive of Ofwat, the regulator, has said that pay levels have “damaged customer trust”.

Luke Pollard, the shadow environment secretary, said last night: “When millions of litres of water are being lost in leaks every week, water company bosses should not be pocketing huge bonuses and inflated pay.

“Over lockdown, more people spent time at their homes so water bosses know people will be paying more in [metered] water bills. Bumper bonuses are a national scandal when so many households are struggling to afford rising bills.”

Mike Keil, policy head at the Consumer Council for Water, said: “Customers will find some of these eye-watering payments hard to swallow especially where executives appear to be rewarded for poor performance.”

Severn Trent argued that on a wide definition, 67 per cent of Ms Garfield’s bonus was related to customer services. United Utilities said that less than 50 per cent of Mr Mogford’s bonus was customer service-related. Pennon said that less than 10 per cent of Mr Loughlin’s bonus was based on customer service measures.

The Times

Cleve Hill Solar Park judicial review bid by Kent council fails

A council has been told it cannot challenge plans to build the UK’s largest solar farm on the north Kent coast.

The Cleve Hill Solar Park will consist of 800,000 panels built on 890 acres (360 hectares) of farmland at Graveney.

Swale Borough Council was told there is no legal basis on which they can challenge the government’s decision to approve the plan.

The council had argued for a judicial review to protect wildlife habitats.

The consent for the development was granted to Cleve Hill Solar Park Ltd by the government, on 28 May.

Kent Wildlife Trust and the Campaign to Protect Rural England have both opposed the scheme, arguing the development would threaten wildlife, including marsh harriers.

But the developers said the solar farm would have an area set aside for birds.

The council said the decision was “a great shock to local residents”.

Tim Valentine, cabinet member for environment, said: “Although the development will go ahead, there is still a lot that local people can do to influence the final proposals and reduce the negative impact as much as possible.

“I hope all interested parties will engage with the consultations on the final requirements and make the development the best it can be.”

BBC News

Doubts cast on EDF’s ability to build power stations on time and budget

France’s state auditor has questioned the ability of the company building Britain’s next nuclear power plant to construct new reactors within “acceptable” costs and timeframes.

State-owned EDF has already said that its Flamanville nuclear plant in Normandy will now cost €12.4bn due to the expense of fixing 66 faulty welds.

On top of that, the project will cost another €6.7bn, according to France’s Court of Accounts in a new report.

EDF has also said the plant’s start date will be delayed until the end of 2022. Flamanville was originally due to cost €3.3bn and start operations in 2012.

Presenting the damning 148-page report this week, Court of Accounts chief Pierre Moscovici said: “There is still uncertainty on the ability of the French nuclear industry, despite its current strong efforts, to build new nuclear reactors within a time frame and costs that remain acceptable.”

The criticism follows a £3bn surge in costs at the Hinkley Point C reactor EDF is building in Somerset.

The bill for the project will now be £22.5bn – £2.9bn more than previously forecast – with overruns paid for by EDF.

The energy giant has faced lags at its other projects, including Finland’s Olkiluoto 3 nuclear reactor, which is running more than a decade behind schedule.

In its report, the state auditor questioned the wisdom of involvement in Hinkley Point C, saying its construction was “weighing heavily” on the financial situation of EDF, whose net debt hit €41bn at the end of last year.

EDF is seeking a government green light to build six new units of a streamlined version of the European Pressurised Reactor, at an estimated cost of €46bn, to replace part of its ageing fleet.

The company does not have the cash to fund new nuclear projects on its own, said Mr Moscovici. A form of public guarantee will be needed to launch new facilities. They will also have to be cost-competitive, he said.

The French government plans to shut 12 of EDF’s 56 nuclear plants by 2035 as it expands renewable energy.

As most of EDF’s French nuclear plants will reach 60 years of age before 2045, the government will have to decide soon whether to commit to constructing new reactors, said Mr Moscovici.

In the UK, Hinkley Point C has come under scrutiny due to the involvement of the China General Nuclear Power Group (CGN), which has a 33pc equity stake.

Some experts and politicians have warned that CGN poses a security threat in the same vein as Huawei, the controversial Chinese technology company that is set to play a pivotal role in Britain’s 5G mobile networks.

Daily Telegraph

Ministers cool on Chinese nuclear reactors

A Chinese-backed plan to build small nuclear reactors in Britain has been snubbed, in the latest sign of the chill in Anglo-Sino relations.

DBD, a Cheshire-based engineering firm, was working with China’s Institute of Nuclear and New Energy Technology to build a fleet of gas-cooled small reactors, and had hoped to win government funds. However, ministers have awarded £10m each to three rival projects — including an experimental plan for a fusion reactor. A version of the DBD reactor has already been built in China. DBD declined to comment.

The snub comes as Britain prepares to sever relations with the Chinese telecoms giant Huawei. Culture secretary Oliver Dowden is expected to say this week that all Huawei’s kit must be stripped out of the 5G network by 2025, with 4G and 3G products to follow.

Britain is also under increasing pressure from the US and Sinosceptic MPs not to let China invest in nuclear power plants in the UK.

China General Nuclear hopes to defuse the row over plans to install its Hualong One reactors at Bradwell in Essex by dropping plans to invest at the Sizewell project in Suffolk.

Sunday Times

Now they’re trying to make us all get smart water meters…and, guess what, it’ll lead to higher bills

Water companies are forcing ‘smart’ water meters on to customers in a move critics fear will trigger record-high water bills.

Following in the footsteps of the much criticised ‘smart’ energy meter, these gadgets adopt wireless technology to spy on how much water you use.

The devices save utility companies a fortune because they no longer have to employ meter readers to visit your home.

And once the technology is installed it is then easy for companies to ramp up charges – perhaps hiking up rates at vulnerable times such as during a summer drought.

Water bills have doubled in the past 15 years and now average £415 a year – with companies exploiting the fact customers cannot shop around for a cheaper supplier.

Former Government energy privatisation adviser Alex Henney has long campaigned against smart energy meters. He says they are a waste of money and fears the same is true for water meters.

He says: ‘The main reason these meters are being introduced by utility companies is because they save them money. It also provides a tool that enables them to charge more in the future.

‘There is nothing smart about them. They do not save you water – they are no more than automated meter readers.’ ing the fact customers cannot shop around for a cheaper supplier.

He fears there are echoes of the discredited ‘smart’ energy meter roll-out – blighted by unreliable equipment, hacking fears and an eye-watering installation bill of £11billion to be footed by homes.

Henney adds: ‘Nobody should be fooled. These meters are not installed to help the customer. Any associated costs will only be added to our bills.’

Thames Water is among the early adopters of this new technology and has rolled out more than 450,000 of the new gadgets. It started making traditional meters obligatory for customers seven years ago and at the same time began trialling smart meters.

Eventually it hopes all 15million of its customers will have their water consumption measured using smart meters. Southern Water is also keen on them. About £200 of the average £415 annual water bill relates to the supply of fresh water. The rest goes on taking ‘grey’ water away and cleaning waste.

Large families can lose out from having a water meter installed – whether smart or not, particularly if they live in a smaller home. This is because non-metered traditional water bills are based on the rateable value of a property as calculated at least 30 years ago.

The average person uses 140 litres of water a day. The charge for providing 1,000 litres of water works out at about £2 while treating a similar amount of ‘grey’ waste flushed down the toilet or sink is £3. A shower might use 30 litres of water in four minutes while taking a bath requires 100 litres.

A washing machine uses up to 150 litres – so never half fill it. Older toilets flush 13 litres down the pan but a modern dual-flush loo can use half this amount.

On Friday, Thames Water said: ‘We all have a role to play in reducing demand for water. We are rolling out smart meters across our supply area to put customers in control to help save water and money. Metering is the fairest way to pay.’

A spokesperson for regulator Ofwat says: ‘Smart meters are one tool companies can use to help manage and reduce water consumption. We do not regulate the meters.’

Yet, if there are more bedrooms in a home than people, then a meter might work out cheaper – just as long as you are careful with water consumption. Public sector body Consumer Council for Water has a ‘water meter calculator’ on its website to help you calculate if you could save money using a meter.

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Utility Week’s weekend press round-up is a curation of articles in the national newspapers relating to the energy and water sector. The views expressed are not those of Utility Week or Faversham House.