Water 8

United Kingdom

Periodic Review

3.1 As the conclusion of the Periodic Review, the Director General of Water Services has announced his final determination of prices for water companies for the next five years. Customers will benefit from an average 12% reduction in their bills from April 2000 and there will be a £15 billion programme of spending on environmental improvements over the next five years. Ian Byatt claimed that improved efficiency by the water companies in recent years justifies the price determinations. The overall £15 billion spending programme allows for £7.4 billion on improvement programmes to ensure better quality drinking water and to clean up rivers and beaches, £6.4 billion on capital investment to maintain the industry's infrastructure to maintain customer services and £1.7 billion to ensure the supply of water meets the central demands without over-abstraction. Of the larger companies, Severn Trent prices will fall the most (on average 16% by 2005), as less money will be required to be invested in protecting the environment and raising quality standards. North West Water has been given the smallest price reductions, due to the increase in spending on quality improvements required in the area, necessary to protect the environment, raise quality standards and maintain supplies. (OFWAT News Releases Nos. 65-75, 25 November 1999)

3.2 The Drinking Water Inspectorate (DWI) welcomed the investment programme announced by OFWAT for further drinking water quality improvements. As part of the Periodic Review process, the DWI specified future drinking water quality standards and assessed water company proposals to meet those requirements. The main future areas of activity to raise drinking water standards will be to reduce further the risk of cryptosporidium, the renovation of 22,000 km of distribution mains to improve water discolouration, to meet new European Union standards by 2003 and to commence work to meet the long-term EU lead standard of 10 microgrammes per litre by 2013. (DETR News Release, 25 November 1999)

Water Company Licences

3.3 The Director General of Water Services has proposed changes to each water company licence, enabling a company to request a re-setting of its price limits during the five years beginning 1 April 2000, if specified changes affecting operating expenditure reduce its total revenue by more than 1%. Existing licences allow for water companies to request their price limits to be reset prior to the next five-yearly review, if major changes to their finances occur, however, experience has shown that this mechanism has only been used to deal with changes in capital expenditure rather than operating expenditure. This proposal to modify the conditions of appointment of water and sewerage undertakers in England and Wales has been made under the Water Industry Act 1991, Section 13(2). (OFWAT News Release, 25 November 1999)

Fisheries

3.4 The Habitat (Water Fringe) (Amendment) Regulations 1999 (SI 1999 No. 3160) came into force on 17 December 1999 implementing part of Regulation 2078/92 on agricultural methods compatible with the requirements of the protection of the environment and their maintenance of the countryside. The Habitat (Salt/Marsh) (Amendment) Regulations 1999 (SI 1999 No. 3161) also came into force on 17 December 1999, also to implement part of Regulation 2078/92. (SO, December 1999).

Water Abstraction

3.5 The November Queen's Speech set out the Government's proposals to advance the drafting of legislation to overhaul the water abstraction licensing system. Changes are to be introduced to require water companies and abstractors to conserve water within their operations and to produce drought plans. The legislation will be drafted to provide for the opportunity, if needed, to promote competition in the water industry and will provide the opportunity to consult on water quality improvements. (The Queens Speech, 17 November 1999)

Groundwater

3.6 The DETR has issued draft guidance on the Groundwater Regulations 1998, which came into force on 1 April 1999. The Regulations complete the implementation of Directive 80/68/EEC on the protection of groundwater against pollution caused by certain dangerous substances. The guidance aims to explain the provisions of the Regulations and how they will be implemented. More detailed guidance on issues of implementation affecting individual sites and specific circumstances remains the responsibility of the Environment Agency. The guidance refers to England and Wales only and is seeking comments no later than 29 February 2000. (DETR, November 1999)

Nitrates

3.7 The Government has announced that it is proposing to extend Nitrate Vulnerable Zones, with proposals to be put to consultation this year. The plans aim to reduce the levels of nitrates draining from agricultural land into surface and groundwater. Under the European Union Directive on Nitrates (91/676/EC), a Nitrate Vulnerable Zone is required to be defined for catchment areas where nitrate levels in water exceed or are likely to exceed the legal limit of 50mg/litre. Within a Nitrate Vulnerable Zone, farmers are required to adopt measures and policies to reduce nitrate pollution of surface waters and groundwater. There are currently 66 Nitrate Vulnerable Zones in England, the consultation paper to be issued will set out the exact number and location of the new Zones. It is expected that the majority of any new designations will be in central and eastern England, as with existing Zones. Farmers, water companies and other interested parties will be consulted on the proposals. (DETR, News Release, 2 December 1999)

Water Industry - Competition

3.8 The Director General of Water Services has allowed Hartlepool Water to supply water outside its current area in place of Northumbrian Water. The announcement was made at the Tenth Annual Water Industry Conference and follows previous announcements that competition within the water market will be actively encouraged. The Competition Act 1998 has strengthened the powers available to the Director General of Water Services to ensure a level playing field within the water industry and reduce barriers to entry. This is the sixth inset appointment to be granted to water companies to supply water to areas outside their main catchment. (OFWAT News Release, 29 October 1999, The Evening Standard, 29 October 1999)

3.9 Further plans have also been published to allow Hartlepool Water to supply water to Kodak in Harrow in place of the existing supplier, Three Valleys Water. (OFWAT News Release, 10 November 1999)

3.10 The Director General of Water Services has written to the Managing Directors of the water and sewerage companies and water only companies regarding the development of common carriage (reference MD154). The Competition Act 1998 is due to come into force on 1 March 2000, from which date market competition will be significantly opened up through shared networks, i.e. common carriage. Each water company should be ready by this date to respond positively and substantively to enquiries and requests to share the use of its infrastructure. It is expected to have a statement of principles that should govern this shared use and any company that is not in this position may be subject to complaints from potential competitors. In his letter to the companies, an Appendix sets out principal issues that each company should address in deciding how it will implement common carriage. (OFWAT Letter MD154, 12 November 1999)

European Union

Water Policy

3.11 The European Council's Common Position on the Framework Directive on Water Policy has been published in the OJ. The proposed Directive aims to establish a framework for the protection of inland surface water and groundwater and aims to achieve "good" quality for all European waters by 2010. (OJ C343, 30 November 1999)

Bathing Water

3.12 The European Commission has announced its decision to send a Reasoned Opinion to the UK for non-respect of Directive 76/160/EEC on the quality of bathing water. The UK has failed to introduce sufficient measures to curb pollution in order to meet the criteria set out in the Directive which establishes a set of binding and guide EU-wide standards for a range of key parameters. The UK has claimed that improvement schemes already underway to curb pollution should ensure 97% compliance with mandatory values and 60% compliance with guidance values by the early millennium. Given that it is fifteen years since the deadline for compliance expired, the Commission is pressing ahead with the Reasoned Opinion, reflecting the Commission's commitment to pollution prevention across the European Union. (European Commission News Release, 25 October 1999)

Water Use

3.13 The European Environment Agency has published a report which concludes that waste water re-use is increasing within the European Union, thereby achieving the aims of the Directive on Urban Waste Water Treatment (91/271/EEC). "Sustainable Water Use in Europe: Part I - Sectoral Use of Water" finds that surface water is the principal source of abstracted fresh water within the European Union. Agricultural irrigation and tourism are seriously increasing water stress in Southern Europe with climate change threatening desertification in some regions. Consumption is moderating, thought to be due to greater public awareness following recent droughts. The report concludes that information on water use within the European Union is of poor quality and calls for improvements including more regular monitoring. (EEA, October 1999)

International

Ocean Protection

3.14 The United Nations General Assembly has adopted a resolution to set up a radical new means of co-operation to protect the world's oceans. The resolution provides for an annual consultative meeting open to all United Nation member states, all parties to the Untied Nations Convention on the Law of the Sea (UNCLOS) and the relevant intergovernmental organisations. The first meeting is to be held in May 2000 and will look at all the problems of the oceans to identify priorities for action among the many international bodies concerned with the protection of the oceans. It was agreed that a forum was needed where experts from not only the United Nations, but national governments and other relevant international organisations could contribute, ensuring that all aspects of the oceans are considered as a whole. This new consultative process follows closely a blue-print put forward by the UK Government. (DETR News Release, 25 November 1999)