Over a period of six months, Brefi Group facilitated a scenario planning exercise into the future of the UK water industry. Various specialist groups made up of, for example, engineers, accountants, marketeers, etc., met for a day to follow through the Mind of a Fox model.
This exercise took place 20 years ago, before climate change had become a 'hot' topic.
Their findings were bought together to create five different scenarios, which were then handed to a journalist.
In each case, he created fictitious newspaper articles that could be used to introduce the scenarios to consumer focus groups, trade bodies, government etc.
WATER CUSTOMERS in the southeast plan a campaign of non-payment across the region in protest at what they say is a deteriorating service. ‘We've had price rises year on year and all these new customers. What do they do with the money?’ said Mrs Vera Cross, the campaign’s coordinator. ‘So I won’t be paying my bill, and I’m talking to my neighbours about it as well.’ Mrs Cross has lived in the southeast all her life in the same riverside house. But in the last year alone, she’s had to put up with three weeks’ loss of water supply and two incidents of sewer flooding. Now she’s had enough and is trying to sell up—but no buyer can get a mortgage.
Wealddown Water, the local supplier, has prospered from migration into the southeast, but now appears to blame its own customers for the difficulties. ‘Ten years on we've seen double the growth expected in 2004. So we have not been able to provide the amount of water people want, we’ve had interruptions and poor quality water,’ admitted Sir Richard Fairweather, chief executive of Wealddown Water.
Despite its increasing customer revenues, Wealddown Water has few friends in the City. ‘Investors don’t need to pick the water business, and certainly not this company,’ noted Mr James Wideboy, an analyst. ‘Its reputation is in tatters. For a risk-averse sector, this one’s far too risky.’ Other lenders also want out as the company’s investment rating slides.
The company says its predicament has been made worse by recent hot, dry summers, which have led to water restrictions during the last three years, and insists it has done nothing wrong. ‘We have a water resources plan, and we've worked to it religiously, and it’s all been implemented and approved by the regulators, and yes, now there's increased flooding and everything else. It is clearly very serious because we as a company want to provide an excellent service to our customers,’ said Mr Fairweather. ‘It’s the overall planning in the country. That's what's gone wrong.’
But national agencies disagree with this assessment. The new chief regulator, Mr Rod Irons, complains: ‘I’m receiving multiple complaints in respect of this company in the southeast of England about these issues entirely to do with population growth. What I don’t understand is why this has come as a surprise.’ OFTAP has referred the matter to those responsible for setting price limits in the past. ‘They’ve explained to me that population growth is self-financing, and that the resource plan was fully funded within the price limit, so there should not be a problem at all with this rate of growth. So I'm left with little alternative other than to consider severe financial penalties which I'll have to impose in the next price limit.’
Mr Frank Fish of Environs, the national environmental agency, also blames water company mismanagement. ‘We've banged on time and time about water efficiency and demand management, and they haven't heeded our advice. All they want is new resources. If they could manage at all, they could manage the rising demand quite easily. Lanzarote can manage on four inches of rainwater a year, so why can't we manage on 23 or 24 inches a year?’ Meanwhile, the environment suffers. Another six beaches in the southeast were closed to bathers this summer, and serious pollution incidents have doubled. Environs now accuses Wealddown Water of squandering its customer income to pay its ever increasing fines rather than invest where it’s needed in maintenance of high-tech plant and staff training. ‘This is like the railways 10 years ago—excuse, excuse, excuse.’
Wealddown’s Mr Fairweather now welcomes a holistic approach that takes into account broad factors such as population shifts, climate change, planning and housing. ‘They are all factors which needed to be built in, looking back. We should have had a better case, talked more to government, the planners, and all the appropriate bodies to make sure the country got what was wanted, because it is not just a water company issue.’
Mr Fish agrees. ‘We've got all these piecemeal solutions. For example, we're seeing developers put in balancing reservoirs at individual sites. If somebody had had the foresight we'd actually have comprehensive solutions to these problems.’
While the influx of consumers to the southeast combined with several years of below-average rainfall has caused untold problems for water suppliers there, the picture further north is rosy in comparison. Here domestic customers are happy with their suppliers—unlike elsewhere in the country. They can‘t remember the last instance of sewer flooding or supply interruption. And hosepipe bans are something they only hear about in the news—from the south.
‘We have had some really good news on water resources, waste water, and water treatment work,’ admits Pennine Water chief, Mr Jack Dale. ‘We've got lots of water and excess capacity at our treatment works because the population’s drifted. But our customers are happy because we have an improved level of service. Our sewers are flooding a lot less. Our mains pressures are not so high, and so we’re not getting a lot of burst mains.’
The main disadvantage for Pennine Water has been the loss of heavy industry to overseas competitors such as China. These once provided a major source of income for the water companies as both heavy users of water and producers of trade effluent which must be specially treated. Now, revenues have been badly hit, although the losses are largely compensated by reduced operating and maintenance costs. Ironically, companies such as Pennine Water are now attracting more interest from investors fleeing from Wealddown Water.
Pennine Water wants to use its supply advantage to improve its bottom line. It now plans to lobby the regulator set a more economic level of leakage. ‘With excess water, we should be allowed to leak a lot more’, says Mr Dale.
Meet the estuary English
Ten years on, the booming Thames Gateway, or ‘Prescottopolis’, is home to two million people living in state-of-the-art modern homes and daily dread of flooding
NEWS - see page XX
Devolution on tap
With weather conditions and customer requirements so varied across the country, is regional regulation now the answer for the water industry?
BUSINESS - see page XX
Great north holiday run
Unspoiled scenery, clean air, and the natives speak English—well, sort of. Yes, Yorkshire is the new Tuscany. And second homes are going for a song.
PROPERTY - see page XX
Heavy showers; warmer
England keep Ashes