Environment Agency warns Ofwat not to shelve water improvements

The Environment Agency has warned that a number of cost-effective and much needed improvements to rivers and the water environment risk being shelved if not funded in the final settlement for water prices being decided in December.

Examples such as the fragile chalk river habitat of the Itchen in Sussex and the very urban River Mersey, the River Tame in Birmingham and the Manchester Ship Canal, could all miss out unless Ofwat enables water companies to fund the full programme of work required to meet policy and environmental obligations defined by Ministers.

Local communities in these areas would lose out on valuable knock-on benefits to the local economy and quality of life that river improvements have been shown to trigger elsewhere, the Agency said.

Environment Agency Chief Executive Barbara Young said: “We welcome the extensive environmental and economic benefits that the environment programme will deliver. However, we were disappointed that some improvements, which are required to meet environmental obligations and policies set by Ministers, were excluded from Ofwat’s draft determinations of prices earlier this year.”

Ms Young said that, overall, she was pleased that the draft price limits showed that companies costs had been challenged, and she believed that there was scope for cost estimates to be trimmed further, such as in investment needed to deal with sewage sludge.

“The full environment programme is a small proportion (20%) of the overall industry capital investment programme. It offers excellent value for money for customers and the environment. But, we question the way Ofwat has presented the environment programme’s contribution to bills as accounting for £20 out of an average £33 bill increase. Ofwat needs now to present clearly the basis behind its estimation of bill impacts.”

Ms Young also called into question the consultation process itself: “Much of the detail of how companies and Ofwat have treated environmental improvements in arriving at draft determinations is confidential. Whilst the Environment Agency has had access to the information, other stakeholders have not, which places a question mark over the benefit of consultation.”

The complete list of environmental improvements to be achieved through the 2005-2010 investment period was published by the Environment Agency this week, as the Agency made its formal response to Ofwat’s consultation on its draft determination of price limits for the water industry.

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