As we approach the end of the year, we always like to pause and reflect on the events of another busy 12 months for water frameworks. It is clear that despite the progress made, the water sector still has some way to go if it is to meet the demands and targets it is increasingly facing. Companies need to update their plans to improve the service provided to customers and focus on their environmental responsibilities. Here, we bring you some of the key developments in what has been yet another busy year for water frameworks.

Ofwat price reviews

Britain’s water regulator, Ofwat, laid out its price plans for 2025-30 in December, which cover areas such as companies’ environmental commitment and measures to improve customer services. It had already announced a £100m fund to improve water efficiency for PR24, the next price framework review. In addition, there was provision for performance-related pay measures to protect customer interests in cases where companies do not meet their obligations on dividends and executive pay.

Commenting on the final methodology document, Ofwat Chief Executive Officer David Black, said, “Companies have fallen short of the expectations of customers and communities – they need to seize the opportunity to transform their performance at PR24. Turning around performance on the environment and improving resilience will require innovation, new approaches to managing water and investment.” He went on to say that “significant improvements are needed to drive down water demand, improve customer service and reduce pollution incidents”.

Older and WISER?

The Environment Agency (EA) and Natural England published a series of ‘Water Industry Strategic Environmental Requirements’ (WISER) to further help companies meet their environmental obligations given a lack of progress in the ecological status of waterbodies. The information falls into three categories, encompassing three key objectives: 1) achieving a natural thriving environment, 2) expected performance and compliance and 3) resilience for customers and the environment.

Water companies have come far over the past 30 years, particularly in improving quality despite the challenges faced by climate extremes, such as extreme rainfall and drought. Exponential population growth will add to the difficulties with rivers across the country potentially having 80% less water by 2050, which would have drastic implications on supply. A ‘Water Industry National Environment Programme’ (WINEP) has also been produced by the government to protect the environment and deliver better outcomes for customers and local communities alike.

Tidal wave of optimism

With the costs of deploying turbines falling, there is huge potential in harnessing renewable energy from tidal streams and waters. A 2022 report published by Offshore Renewable Energy Catapult predicts prices could be as much as 16% lower than nuclear energy in less than a decade. But following the success achieved by the offshore wind sector, which in 11 years has gone from generating power for 4%, to a third of UK homes, will require substantial government support.

Orbital Marine Power, a privately held company with offices in Edinburgh and Orkney, is making giant strides in the sector, having secured funding to finance the ongoing operation of the first O2, the most powerful tidal turbine, capable of generating 2MW+ of power. Operational since July 2021, it is capable of supplying energy to 1,700 homes. CEO Andrew Scott said, “Tidal stream energy has a vital role to play in delivering clean, predictable energy as a complementary part of the broader clean energy transition.”

Minimising the risk of drought

Managing the impact of droughts and water shortages came to the attention of the nation in 2022 when water companies had to impose hosepipe bans across the country. The impact of the hot and dry weather prompted a meeting of the National Drought Group (NDG) and water companies who came together to discuss long-term water security given low river and groundwater levels. A lack of water in a year of below average rain had a catastrophic effect on wildlife.

The events of 2022 serve as a reminder that we must manage water resources wisely. This must be a priority for both water companies and users in the future. Reducing leakages is an important area to improve too as highlighted by Water Minister, Steve Double, “We know essential water suppliers are safe – but more work must be done to ensure that we push forward investment to cut leaks and better prepare for prolonged dry weather for this year, next year and the coming decade.”

Forward momentum into 2023

As we’ve reported, it's been an interesting year for the water industry and water frameworks. Much has been achieved with organisations such as Ofwat, the EA and NDG at the forefront of change, all working in unison to improve environmental targets while safeguarding consumer interests. The adoption of tidal power is also very encouraging and one to watch in 2023.

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