Ofwat sets tougher leakage targets for water companies

Less than a month after Deputy Prime Minister John Prescott set quality requirements, Ian Byatt, director general of Water Services, reveals the mandatory leakage targets to be met by all water companies during 1999-2000.

The new targets, which build on the reductions that Ofwat expects companies to achieve this year, will save 275Ml/d. While recognising the challenge, the water industry is confident that it can achieve the new targets.

“On the face of it these targets look tough, but on past performance the industry has shown it’s more than equal to meeting challenges like this,” said Pamela Taylor, chief executive of Water UK. “The industry beat last year’s target, bringing savings over the last two years to 1,000 million litres a day. And companies are now on course to save a further 369Ml/d next year.”

The 1999-2000 targets have been set using two different methods. For the companies which made good assessments of their economic level of leakage as part of the information submitted to Ofwat – Welsh Water, Severn Trent, South West, Wessex, Yorkshire and Cambridge Water – Mr Byatt based their targets on their economic analyses. The remainders’s targets were set pragmatically using a method similar to the previous year.

“Though some companies produced some good work, the overall standard was not, in my view, high,” said Mr Byatt. “I expect all companies to revisit their economic levels of leakage analyses before submitting their draft Business Plan next spring.”

Mr Byatt believes rather that too many water companies are continuing to depend on national estimates in respect of crucial data and industry-standard models rather than developing their own analyses based on historic company-specific data. In addition, he believes that there is insufficient evidence of a clear link between companies’ analyses and leakage control policies on the ground.

Rather than just meeting the mandatory targets, the Environment Agency (EA) expects water companies to exceed Ofwat’s figures.

“We believe the figures published represent the very minimum that companies should be expected to achieve,” said Dr Geoff Mance, the Agency’s director of water management. “Their ambitions should – and can – extend beyond these targets. They should continue to strive to maximise the benefits for their customers of the water resources available to them.

“It would be a pity if – simply because we have had a wetter than average year – the lessons learnt from the drought of the previous two years were forgotten and momentum on water efficiency was lost, particularly given the uncertainties posed by climate change. Leakage control is vitally important if we are to manage resources in a sustainable way.

“Recent review exercises have underlined the point that the availability of water resources to some companies is becoming tighter. This in itself justifies greater leakage reduction. We are also anxious to bring the debate about target leakage levels into the open. The assessments by water companies of their economic levels of leakage should be published so that we can all examine and compare the assumptions and calculations.

Three companies failed to meet their leakage targets for 1997-98 – Mid Kent Water, Portsmouth Water and Anglian Water. In two cases, Mid Kent Water and Portsmouth Water, improvements in data quality, leading to higher estimates of leakage, were the reason for missing the targets. However, leakage still actually fell in the last year.

Although leakage had fallen marginally for Anglian Water, it is now estimates that its leakage levels are higher than currently reported. By changing the method it used to calculate leakage, Anglian found that it had underestimated leakage – mainly from its trunk mains. As a result of this Ofwat has imposed a tougher target, requiring the company to reduce its leakage by 30Ml/d, compared with the previous target reduction of 25Ml/d.

The EA intends to continue to press for rapid progress with leakage control, and promises not to issue any new abstraction licences if it is not satisfied with company performance in this area.

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