Climate change, extreme weather conditions, flooding and other pressures are increasingly affecting water utilities. To make sure facilities and assets are resilient and fit for purpose for today and the future, Ofwat says companies need to plan with both in mind, and make decisions based on how assets can best serve customers, the environment and society.
Ofwat conducted a six-month engagement and consultation process with the water industry before publishing the results in its Asset Management Maturity Assessment (AMMA) report (www.is.gd/yefobo). The report’s authors state that they expect companies to understand the long-term risks to customers and the environment from asset failure and to demonstrate that they are managing these effectively.
Matt Pluke, sustainability leader for Anglian Water, says: “Water actors need to be at the heart of adaptation planning, because it presents both a risk and an opportunity.
“The risk being that the climate crisis is a water crisis – 90% of natural disasters are water-related. But, when done well, delivering water resilience can bring opportunity, address long-standing problems and ultimately deliver social, environmental and economic prosperity.”
Mark Worsfold, director of asset management at South West Water, adds: “Everyone thinks climate change is a future problem, it’s really a today problem. We are already seeing increased levels of rainfall, risk of flooding and changing weather patterns, adding additional pressure to our network. On top of that, our customers’ expectations are changing too as they wish to see reductions in the number of storm overflow spills and impacts on the environment [see also pp18-19]. Then there are the challenges of things like urban creep where people are paving over their front gardens for car parking. This will increase as we see the adoption of more electric vehicles and the desire to have charging points close to the property. Who would have thought that electric vehicles would have such an effect on our sewer network?”
PLANS AND UNCERTAINTY
Ofwat says companies must develop robust responses to climate trends through long-term strategies as well as short and medium-term asset management plans. It also expects companies to develop approaches for the consideration of uncertainty in asset planning, including scenario planning and adaptive planning.
Pluke says: “In November 2020, water companies unveiled a ground-breaking plan to deliver a net zero water supply for customers by 2030 in the world’s first sector-wide commitment of its kind. This highlighted that one of the biggest challenges would be tackling the emissions associated with processing wastewater. At COP26, they called for investment to tackle these process emissions, and committed to set up a research directory to help reduce nitrous oxide and methane emissions, as well as a global research forum to expedite the reduction of greenhouse gas emissions, he reports.
However, Tony Harrington, director of environment at Welsh Water, adds that a lack of investment could mean missing industry targets. “We are trialling different anaerobic technologies to see if we can find a way to treat sewage, but at the same time have zero emissions from it,” he says.
“It is clear that, even if this works, we will not be able to change all wastewater treatment works overnight, so we also have research in place to establish how we can reduce and minimise gas emissions. What we are short of is investment, without which we will not be able to meet our targets.”
South West Water has undertaken several exercises, including ‘Our Vision 2050’, a top-down overview of future challenges, including scenarios the company needs to develop against, and what deliverables are required to achieve its plans. It then built scenarios into these plans, bottom-up in a quantitative way, to understand the costs and benefits associated to them.
Ofwat expects companies to consider the reliability and accuracy of their data and, where appropriate, undertake sensitivity analysis to determine the potential impacts of any uncertainties. As part of this, it expects companies to put processes in place to incorporate the potential impacts of climate change and other key trends into their deterioration models and other medium and long-term asset planning models. It also expects companies to use their assessment of the reliability and accuracy of their data and the materiality of the related risk to drive asset information improvement activities.
For example, Worsfold says that the sensitivity testing of some of these plans found that even if the benefits were not as high as expected or they cost more than expected in the medium to long term, they could still be implemented as long as future investigations improved the confidence in data and investment choices. Still, the outcomes remain valuable and – in the long term – these are the right things to do.
The water industry has developed new long-term planning frameworks in the form of drainage and wastewater management plans (DWMPs), which are going through the first cycle of implementation now. However, Worsfold has identified what he calls a gap with drinking water frameworks, as they only go down as far as treatment works in terms of the choices that can be taken.
“We’re developing an internal framework called water supply management plans using the principles of DWMPs to similarly identify the needs of our distribution and service reservoir assets. Again, we’re looking at lots of scenarios; we’re planning those scenarios; we’re building the data and evidence up so that we can present a credible plan to the regulator at the next price review.”
Ofwat plans to organise a follow up workshop in March 2022 to encourage companies to share updates on progress against the recommendations set out in the AMMA.