Future Water 2013 round-up

I received a very kind invitation to attend the UK annual national water policy conference, Future Water 2013. This year, proceedings were chaired by John Vidal, environment editor at The Guardian. His animated and critical approach – not to mention his rather atypical speaker introductions – made for a more entertaining and insightful event than last year’s conference, and it was good to see things improving year on year.

The day opened with wide-ranging scene-setting by John Vidal then some reflections from the morning panel (pictured above). This was framed around anticipation and speculation about the imminent Water Bill (the Draft one is here). My ears pricked up when Anne McIntosh MP stated that regulation should reward innovation, and talked a little about the potential ‘resilience duty’ for Ofwat. Ian Barker from the Environment Agency hoped the new Water Bill would give a clear policy direction to the sector, and framed his remarks with an overview of the last year’s weather extremes (which he stated were still not outside the bounds of historical weather patterns). Putting things in perspective, he indicated there were around 70 days of drought last year and 90 of floods, and that the EA had had a very busy, issuing around 6,000 flood warnings to protect 200,000 or so homes.

Tony Smith from the National Consumer Council for Water talked about the need to fix a growing ‘customer legitimacy problem’ – a misalignment and lack of engagement between customer priorities and industry activities caused by an industry that tends to do what regulators and legislators say rather than what customers want, all against a backdrop of austerity, rising water prices, and high water company returns on investment. Alan Sutherland from the Water Industry Commission for Scotland also gave a very customer-focused commentary and stated that the fact that England and Wales water companies have been allowed to make a 17% compound annual return to investors since privatisation was bound to prompt questions around legitimacy – albeit further down the line that expected, given that Ian Byatt had talked about looming legitimacy problems as long as 16 years ago, according to Alan.

Sonia Phippard from DEFRA then said very little about the forthcoming Water Bill other than to reaffirm that it clearly won’t address all of the content that was in the Water White Paper. She also talked about the high-level Open Water programme that is providing some direction on non-Water Bill aspects of the White Paper.

Then came a rather perplexing ‘in conservation’ session with John Penrose MP:

Although it had been reported on launch back in April, John Penrose’s We Deserve Better policy paper/campaign had passed me by so I was not aware of its main points. Sadly I can’t say I know a lot more about it now. It was very hard, even after quite a bit of Q&A, to discern what is new about his proposals that hasn’t already been discussed at length since the late-1980s – when many people around the world starting writing and commenting in earnest the pros and cons of regulated private utilities vis-a-vis (ostensibly) more competitive and customer-responsive free market approaches, on the eve and in the early days of the UK’s gargantuan privatisation programme. In a nutshell it seems to be a proposal to replace cheesed-off customers, ‘Big Regulator’ utility sectors with ‘Big Consumer’ one where (somehow) empowered, informed utility costumers will (supposedly) be able to redirect utility services to become more consumer-responsive. I was not impressed to say the least but until I’ve read John Penrose’s prescriptions in detail I’ll leave my comments there.

The afternoon workshop I attended, one of three, had a distinctly international flavour, and asked, ‘What would it take for the UK to lead the emerging smart water sector?’…

Kudos to Mark Lane (from UKWRIP) chairing the session for getting the three speakers to define concisely the term ‘smart water’ – which I then roughly took to mean use of real-time data capture to visualise then make data-informed decisions to control remotely, manage and optimise water networks in a holistic and integrated way (a synthesis of the thoughts of Dr Hasnul Mohamad Salleh, Tony Conway of United Utilities, and Adam Kingdon of i2O). This session highlighted the UK’s slow adoption of smart water systems and that, unless a concerted Government-SME approach is taken, the UK will remain in a ‘follower’ global position in this field – behind the leaders like Israel, Japan and others.

Much of the tone of this workshop session then carried over into the later ‘international innovations forum’ and a discussion of the UK water sector’s laggard position with respect to international best practice. Before this we were given a the ‘meteorologist’s perspective’ on the water sector’s environmental challenges, by Vicky Pope of the Met Office:

My main takeaway from this presentation was that weather forecasting science is very basic, it turns out – far more so than I’d ever previously realised. Even though the Met Office has quite recently started to use far more intensive computing power than ever before, which increases their working resolution (i.e. decrease the ‘km’ of their data grid sizes), the utility of their outputs is still very limited and restricted to very near-term predictions – apparently no more than a day or so ahead. Reliable monthly or seasonal forecasts are still far from reality, and this is all without even considering the likely impacts of both natural and human-made climate change variabilities.  

The day wrapped with a presentation from Andrew Beaver of Ofwat. In light of the looming ‘resilience duty’ issue, Andrew cautioned that ‘resilience’ is fast becoming the new ‘sustainability’ in policy circles (aside: there’s an interesting 2013 Worldwatch Institute report on this ‘sustainababble’ phenomenon) and needs to be properly defined. Demonstrating Ofwat’s understanding of the issue he showed a ‘three pillars’ model – a customer legitimacy pillar, an environmental resilience pillar, and a sustainable investment pillar, all underpinned by a ‘proportionate and evolutionary regulatory model’. Andrew was candid about the limits of the comparative competition regulatory approach that’s been in place for the past 20 years or so, and how it led to early gains as laggard companies matched the initial frontier ones’ performance and practices but then the sector’s progress slowed as the next frontier doesn’t naturally emerge from this kind of system. He also had a very stark slide to illustrate the ‘customer legitimacy’ point – that I’m going to try to get hold of – on high RPI levels since the recession started (e.g. +5% in 2010) upon which RPI-X water prices are set, and falling annual incomes (e.g. -4% in 2010).

Overall, and recapping all these different strands of presentation and discussion now reaffirms my feeling on the day, I think Future Water 2013 – interesting as it was – bit off a bit more than it could chew. Water events have a natural tendency to sprawl off into anything-and-everything coverage, given the fact that water touches all aspects of life. Even with the theme of ‘building resilience’ there were a few too many threads during the day that I could keep a coherent focus upon, and a few mild annoyances here and there that some of the same old arguments popped up again and again, typically without any evidence base to support them. But more on that in my next post…

And I almost forgot… to close this round-up, in spite of the slightly diluted focus of the day, it’s worth noting the audience’s clear and emphatic response to one theme that was prominent throughout the day, i.e. whether the new Water Bill would make the water sector more resilient, better for customers, or just better in general. When John Vidal asked for a show of hands, not a single one went up (as far as I could see at least). So, out of the people present, no one believed the Water Bill would have a positive impact; a telling response indeed!

Duncan Thomas