Pace quickens on road to metering
Whichever way you look at it, meters have a key role to play in the water supply in England and Wales. Andy Godley of WRc weighs up the pros and cons
Over the past couple of years, the debate around domestic water metering in England and Wales has moved on significantly from one of “to meter or not to meter?” to one of “how” and “when”.
There is an increasing awareness that something needs to be done about water use. Contributing factors include: the drought in 2006; projections of increased consumption due to more modern devices such as power showers and dishwashers; predictions of decreasing resources; the impacts of climate change; and a heightened sensitivity to environmental issues.
Meters have a role to play. The Environment Agency in particular has been vociferous in its support for metering of late. The position statement on their website calls for household water metering to be accelerated where it is most needed: in water-stressed areas.
It has a target for the majority of homes in such areas to be metered by 2015, though acknowledging this may not be achievable for some companies until 2020. Over the longer term, it expects metering to form the basis for charging for water across England and Wales.
Ofwat too has been making more positive statements than previously. Its consultation on the future strategy for customer charges for water and sewerage services (1) states that the regulators see increased metering as crucial to the development of volume-based charging schemes, and the development of tariffs to support demand control and competition. But they recognise there will be an associated cost.
Ofwat’s strategy will be to support more rapid progress towards high levels of meter penetration where this is shown to be appropriate in companies’ water resource plans.
In their recently published Strategic Direction Statements, many water companies indicate they will be accelerating their metering programmes from the current levels that were set in PR04. Nine companies are now planning to achieve household meter penetrations of 90% or more over timescales ranging from five years to 25 years. Five years ago, only two companies were planning such levels of metering.
Defra has been more reticent but, in Future Water, the government’s water strategy for England paper (see page 24) has announced that there will be an independent review of water charging and metering later this year. The Water Savings Group, supported by Defra, has stated it believes companies in water-stressed areas should develop and adopt further metering proposals.
The principle reasons for moving towards full metering in England and Wales are well rehearsed:
- It provides a fair and equitable way of charging with people paying for what they use
- It will reduce demand with current evidence showing that people on meters are more conscious of their water consumption and hence tend to use less
Greater detail on consumption will enable the water companies to better manage their resources and tackle leakage more efficiently.
Crucially, there is now also much wider public acceptance for water metering. In a recent study carried out by CCWater (2), the majority of customers considered that a charging system based on the amount you use was the fairest way to pay for water. As meter penetration has increased, it has moved from being something unusual to something much more commonplace – close to one-in-three households are now on meters.
There does not seem any doubt that meters reduce demand. But there is still some uncertainty in how big that reduction could be under a full metering programme. The balance of evidence seems to indicate that this will be of the order of 10%, with a spread or 5-15%. This figure was observed in the National Metering Trials in the Isle of Wight in the early 1990s, and has since been borne out by various studies on smaller groups.
Reductions in supply pipe leakage, achieved with external meters, are identified in the Ofwat June returns and appear to be in excess of 50%. From the Isle of Wight trials the reduction in leakage after metering was installed was estimated to be equivalent to 10% of the previous distribution input. So there is also evidence that leakage will be reduced.
As the arguments in favour of more metering have grown, so have expectations. For example, there are those that say the expected reduction in consumption will help Britain meet its carbon reduction commitments.
Less water demand means less treatment, reduced pumping costs and potentially significant savings in household energy use through heating less water. But there will be a carbon cost in manufacturing more meters, installing them, reading them and replacing them. And we do not really know yet how the overall carbon benefit / cost balance will work out.
Meters are also being advocated as a means of tackling water affordability. Under current meter optant policies, customers will switch to meters when there is a financial benefit, lowering their bills.
Meters are therefore seen as one mechanism by which water affordability can be addressed for those on low incomes. A recent study by WRc and the Eaga partnership for Defra on water affordability (3) looked at a range of measures designed to help such customers.
As well as switching to a metered tariff, the study also included other measures such as benefit entitlement checks and water audits and installation of water efficiency devices. The study showed a switch to a metered tariff could help some struggling with bills, particularly when coupled with the other measures. But there remained a proportion for whom affordability was a problem despite all these measures.
So, even with meters, there is still a need to find additional ways of helping the most vulnerable customers afford their water bills. At least by having a meter, it will enable water companies and other agencies who work with those customers to understand their water needs and be better able to help them.
Metering, though, comes at a cost. Meters have to be procured, installed, read and replaced. There will need to be changes in water companies’ billing and support systems; it is known, for example, that customer enquiry rates are four times higher for metered than unmetered customers.
These costs are largely calculable from what is known already. But there is greater uncertainty on the benefits side, and many are hard to quantify – what value to put on a “fair charging system”? The cost benefit balance therefore is still far from clear and it will be a challenge for the industry to maximise the benefits from metering at an acceptable cost.
Many of those in the industry think that to fully realise the benefits, some form of intelligent metering will be required. Meters and reading mechanisms need to be used that allow more than just a single cumulative total to be collected from a visual read of the register once a year.
Intelligent metering will enable the introduction of sophisticated tariffs that can be used to manage demand, and will allow readings to be captured at a frequency to make a big difference to leakage control. But how much extra will this cost, and how big will the gains be?
It is to help try and answer some the questions surrounding metering and to ensure that metering can be deployed and used in such a way as to maximise the benefits that the Intelligent Metering Initiative has been formed. The body has been set up by WRc, SBWWI and I&P Services with the support of the Environment Agency and Waterwise among others. Many water companies have also joined the initiative.
One key task for the group early on will be to set up and manage a knowledge base for metering. There is a wealth of knowledge and experience being generated from research and trials in the UK and overseas.
The knowledge base will help bring all this information together, enabling the industry to make full use of the research, see where there are currently gaps in our understanding and avoid duplication of effort. Other work is envisaged that builds on the Metering Roadmap developed for UKWIR, such as developing the cost benefit model for metering and defining the data requirements to enable the full benefits of metering to be realised, thus giving guidance to the manufacturers.
There is an excellent opportunity now for metering to be carried forward in the next AMP period. A widened metering programme will not by itself solve all the problems of water scarcity, affordability and carbon commitments. It will, inevitably, bring its own unforeseen problems. But it will be a valuable tool and could bring significant benefits in helping address these issues.
References: Ofwat’s future strategy for customer charges for water and sewerage services: a consultation; Corr Willbourn Research and Development, Deliberative research into consumer views on fair charging for the Consumer Council for Water. 2007; Waylen C, Glennie, E, Mobbs P. South West Pilot Scheme on Water Affordability – Final Report. WRc November 2007