Intelligent plans for our resources

Water companies need to invest to meet the huge strains on their water and sewerage systems due to ageing infrastructure, a growing population, pollution problems, and increasingly frequent droughts and floods due to climate change.

Many catchments across England and Wales are either already experiencing over-abstraction or are at risk of it. Increasingly, solutions to these problems need to consider both the implications on water supply and subsequent wastewater treatment. Water meters can provide part of the solution to these pressures.

Using water more efficiently would help stretch current supplies further. Measures that help reduce wastage, such as meters and tariffs or reducing leakage, represent one of the most effective and fair ways to counter water stress.

Mandatory leakage targets and the economic level of leakage approach have effectively reduced leakage levels since the late 1990s. But the pressures and uncertainties on our water resources are probably more acute now than ever before.

Compulsory metering

Climate change and growth will add to these pressures in future. In seriously water-stressed areas, water companies must assess the costs and benefits of compulsory metering to help reduce demand and leakage, along with other supply-demand measures, to protect our already vulnerable and uncertain water resource base.

In England and Wales, there is already less water available per head than in many Mediterranean countries. Households use about half of public water supplied but those that are charged by volume (metered) use 10-15% less water on average.

Despite this, most UK households are still not metered: proportions of metered households in 2006-07 ranged from less than 8% to nearly 66%. The current average is 30%, growing at a rate of about 2% per year. On current trends, it will be 45% in 2015 and 64% in 2030.

To reach 90%, household metering by 2015 in water-stressed areas would require a five-fold increase in the rate of meter installation.

At the moment, installing meters in areas that are not seriously water-stressed areas is optional. Water companies may do so when a customer asks for it, when someone moves home or when they can prove a large discretionary use – such as a swimming pool.

Installing meters, and using an appropriate tariff to provide an incentive for efficient use, benefits consumers by helping them understand the true value of water as they can track how much water they use – and pay for. Metering will also help cut carbon dioxide emissions, particularly by reducing the use of heated water, which also significantly decreases energy use and bills.

Volumetric tariffs

Volumetric tariffs offer a financial incentive to customers to reduce their water use – thus curbing demand. Although the majority of customers think that metering is the fairest way to pay, they are concerned about its impact on bills.

A related concern is whether water will become less affordable to low-income customers or those with medical needs. At present, there is a scheme for vulnerable customers that allows metered customers, subsidised by other customers, to be charged the average unmetered bill if they meet certain conditions.

Few households use the scheme – about 10,000 at present. And typically those who use a lot of water, such as large families, are also reliant on other state benefits. The industry is looking to develop more mechanisms to protect those customers from pressure to use less water than they need to.

To address such concerns, we are planning a wide-scale programme to explain the need and benefits of full-scale metering.

The current piecemeal approach to metering is not as cost-effective as universal metering, and it does not save as much water.

Defra has recently taken steps to make compulsory metering easier for water companies. Regulators will need to review policies to ensure that such wide-scale metering is achieved in the most cost-effective way. This includes taking into account the indirect costs, for example, and benefits of increased supply pipe repairs resulting from a wider metering programme.

So how does the push for metering filter down to water companies?

If water companies roll out compulsory metering, based on the success of recent UK trials, most households could be metered by 2015. In areas that are seriously water-stressed, companies should use their ability to meter on compulsory basis.

We would like to see the majority of homes in seriously water-stressed areas metered by 2015. We recognise though that many meters will need to be installed, and some companies may not be able to achieve full metering until 2020. Nonetheless, water companies should do everything they can to increase water metering so it becomes the basis of charging for water in the UK. Producing accurate forecasts of the costs and implementing planned metering programmes effectively is the first step for companies to achieve this.

Companies should also introduce tariff structures that reduce demand while protecting vulnerable customers. Alternative tariffs – seasonal, peak or rising block – are likely to benefit from some form of intelligent metering to facilitate accurate and timely billing.

The effect of alternative tariffs on water demand is largely unknown. But a number of water companies are conducting trials that aim to provide more evidence on this. The effect of tariffs in changing behaviour will depend on getting information back to the customer.

This can be done retrospectively, through bills, or more immediately through a home display unit. Such units are currently being trialled for energy use, and the concept of combining utility information in one place and format is attractive.

Save water smarter

Intelligent metering could help identify leaks. If the extra costs of installing and reading intelligent meters are not excessive, the benefits would only need to be modest to make their use worthwhile.

Last year, nearly 23% of water abstracted for public water supply leaked from water companies’ networks and customers’ supply pipes. This volume of water is equivalent to the demand of nearly half the population of England and Wales.

In the face of pressures on water resources, we are clear that further increases in leakage over the next 25 years are unacceptable and unsustainable. We agree with environment secretary Hilary Benn that we should expect to see continued improvements in future leakage performance.

We all need to work together, to tell the public about how and why we need to save water and why metering rates need to increase.

Water companies should ensure consumers understand how they use water, know how to save it, and realise what is involved in maintaining reliable supplies. Intelligent metering also provides an opportunity to make customers’ bills more informative.

Companies’ planned leakage reductions are disappointing, and more needs to be done. We want to drive performance and efficiency in leakage management to reduce the amount of water lost from pipes, while managing demand by metering. This is critical to achieving the sustainable management of our water resources.

Currently, in England and Wales, water companies are preparing submissions in support of the price review, or PR09, as required by the Environment Agency. Through this process, we safeguard water resources and enhance the environment while companies deliver required standards of service to their customers.

The focus is on the cost-effectiveness of proposed supply-demand solutions (of which metering is one). And all companies must consider metering in their Water Resources Management Plans, along with other supply-demand options.

Anne Dacey is project manager, water resources, at the Environment Agency.