How water companies game the system

 

Greetings!   Here is the insanity we find ourselves in this week as water companies use the force of the law and the complicity of the regulators to suck our rivers dry at the times when they are at their most vulnerable.   Southern Water along will all similar companies, have abstraction rights enshrined in law. Essentially, they can take water from our rivers for free which, in turn, they process and sell. For most of the time, roughly eight months of the year, there is plenty of water. What they take, barring some of the most fragile headwaters, makes little or no difference to the overall ecology of the chalkstreams. I see nothing wrong with that; man cannot exist without exploiting natural resources.

 

 

However, the water companies do not have unlimited abstraction rights, their right to abstract being suspended once the daily river flow falls below a certain threshold. It seems a sensible and rational precaution in times of a drought. Why would a water company want to over exploit a natural resource? I’ll tell you why, because they have a get-out-of-jail free card which, with a mighty bound, they are able to free themselves of such pesky regulation.   They are playing that card right now, as you read this piece. The flow on the River Test has fallen below the threshold of 355 million litres per day. At this moment Southern Water should stop the pumping to rely on alternate sources, desalination plants, reservoirs and their like to maintain supplies to homes and businesses.   Oh, just a minute. There is no desalination plant – Southern Water owners Macquarie have cancelled it. Reservoirs? Heaven forbid that anyone should build a new one. It hasn’t happened in the 33 years since privatisation and the only one sure to happen for now is Havant Thicket opening (we hope) in 2029. However, it is not owned by Southern Water who will have to buy this water if they want it. Or they probably won’t.   Because what do water companies care? When the going gets tough they turn to those guardians of the chalkstreams the Environment Agency and Natural England for a waiver to the regulations. Please sir, may we carry on pumping? Of course you can boys, don’t worry about it.    You can see where the water companies are coming from in all this. If there is no incentive, no hard stop to the amount of water they can freely pillage, so why bother with expensive infrastructure? They simply lodge a Drought Permit application which allows for a seven-day formal consultation period (you can imagine how that ‘consultation’ goes ….) before the waiver is granted.   It is easy to blame the water companies, but they will only operate within the rules of the game, so what is the solution? Clearly the EA and Natural England are no use; there is zero chance that the applications coming down the line for the Test, Itchen and many other parched chalkstreams this summer will be denied despite the ecological consequences.   The fault really lies with government. They fixed the rules of this particular game, so they need to fix them back. It should not be difficult to use the power of the market to alter the behaviour of the water companies.   Simply charge them a usurious amount for these waivers. A charge levied in such a way that it can’t be passed on to the customers and a charge that makes building new infrastructure look cheap. At that point I’d happily wager we’ll rapidly see a rash of reservoir building, desalination plant construction and a host of other imaginative solutions.

 

 

A good weed story   We seem to be in perpetual weed cutting mode around this time of the summer. The worst of the cuts of June are behind us, but most weeks of July and August we are on one or other of the river catchments, be it the Avon, Itchen or Test trimming and tweaking to ensure the best natural habitat for fish and insect life whilst balancing the needs of fly fishers.   It is not always easy and often the outcome not as pretty as we’d like with rafts of surface weed left in place to preserve water levels and flows. But as one river keeper once said to me, ‘A river without weed is as worthless as a lawn without grass.’   However, we have no such difficulties on the River Wylye in Wiltshire where our Head Keeper Si Fields and his assistant Charley Portsmouth did a cracking job. 

 

 

 

A reversal of fortune   It is probably a fair assumption to make that when the Financial Times starts running articles on sewage pollution the argument has moved beyond the emotional. And in a bland line in a piece 30/June they expose what we have all suspected for years,    ‘The frequency of illegal spills might suggest water companies view penalties as simply the cost of doing business.’   The article was prompted by the announcement that Thames Water, the largest of the UK water and sewerage companies, was tapping current investors for an additional £1.5 billion of capital. This follows on the emergency injection of £1 billion for Southern Water last year. This is a considerable reversal of fortune for the water utility owners who have sucked out, rather than pumped in, cash since privatisation in 1989.

 

 

For those of us who love our rivers and coastline this is certainly some indication of a new direction of travel created by public pressure which in turn has prompted some changes in environmental oversight from government. However, that £2.5 billion is woefully short of the sort of capital investment required to solve the problems.   A report estimates that between £23 billion and £80 billion is required to clean up our water act. Passed on to customers in its entirety that is an increase in bills of between 16 and 33 per cent. The FT seems to assume this would be unacceptable to customers but that view is based on what I am not sure. As I have written before, in the totem of household bills for combined water and sewerage the annual cost is somewhere near the bottom. But let us assume it’s as bad as 33% without the water companies chipping in. That’s on average only an extra £150 per household/year.    I believe, deep down in my heart, that a brave government could make a compelling, and ultimately popular, case for such an increase especially if the utility owners are forced to share the pain.   Maybe something for the Inbox of our new Prime Minister?   You may be able to read the original FT article here though it sometimes disappears behind a firewall.

 

 

Quiz The normal random collection of questions inspired by the date, events or topics in the Newsletter.   It is just for fun with answers at the bottom of the page.   1)    Who surrendered to who on this day in 1815?   2)    The London Financial Guide founded in 1888 became which newspaper the following year?   3)    Is the Open golf trophy, the Claret Jug, that will be presented on Sunday, real or fake?

 

 

 

Have a good weekend.    Best wishes,

 

 

Simon Cooper simon@fishingbreaks.co.uk Founder & Managing Directorwww.fishingbreaks.co.uk

 

 

 

Quiz answers:   1)    Napoleon to Captain Frederick Maitland after defeat at the Battle of Waterloo 2)    Financial Times 3)    It is fake. The original trophy permanently resides on display in the R&A's Clubhouse at St Andrews, the presentation one being a replica which the winner takes home for a year.