Select Committee on Environmental Audit Minutes of Evidence


Memorandum from the Drinking Water Inspectorate (DWI)

BACKGROUND

1.  It would be helpful if you could briefly outline the role of the Drinking Water Inspectorate and its relationship with the DETR.

  The Drinking Water Inspectorate (DWI), although part of DETR, operates as an independent inspectorate. Statutory powers rest with the Secretary of State and the National Assembly for Wales, but both the previous Conservative government and the current government have delegated enforcement and prosecution decision to the Chief Inspector. Please see Annex 1 attached which gives a general background and describes DWI's operations.

2.  What is the DWI's view on the overall structure of environmental regulation of the privatised water companies in terms of the roles of DETR, National Assembly for Wales, DWI, the Agency and Ofwat?

  There are distinct roles for each of the above. Government establishes the policies and regulations on drinking water and the environment. DWI and the EA enforce those regulations. Ofwat, the economic regulator, determines water prices taking into account the quality requirements. All those elements are required and it is important that the quality and economic elements are separate to establish an open debate on quality and cost to avoid fudging of quality issues.

THE REVIEW PROCESS

3.  Please outline the DWI's contribution to the Periodic Review Process, in particular the interactions with regulators other than Ofwat.

  Please see Annex 2 attached which explains the DWI role in the process.

4.  At present, there is no specific legislative provision for the "quadripartite" process. Do you think that the quadripartite process should be formalised? Are the respective roles and remits of the participants sufficiently clear?

  It is necessary for there to be a clear understanding of the process and timetable at the outset. There is also a need for reviews of that process at critical times in it. The "quadripartite" process, as it has become known (albeit there are more than four players) provides that collective communication. However, the main work in the process takes place between two parties at a time. DWI works with the water companies in defining and clarifying requirements and agreeing programmes to meet statutory requirements, and with Ofwat throughout the process in communicating those requirements and programmes.

5.  What in-house expertise does the DWI have to assess the cost effectiveness of water quality improvements?

  The drinking water quality improvements cover only those necessary to meet regulations which in turn are largely determined by the requirements of EU Drinking Water Directives. There are no discretionary elements.

THE FINAL PRICE DETERMINATIONS

6.  What is the DWI's view on the final price limit profile for 2000-05?

  DWI has been advised by Ofwat that provision has been made in the final determinations for all of the programmes supported by DWI. DWI will ensure that those programmes are completed to meet the regulatory requirements.

7.  The DWI has expressed concern regarding the proposed reduction in personnel by the water companies because of a possible impact upon water quality. What are the DWI's particular concerns in this area? Is there a danger that such job cuts will result in a significant loss of technical expertise which may have implications for water quality and perhaps even hinder maintenance programmes?

  How water companies are staffed and managed is a matter for their management. The Chief Inspector's statement was made as a warning that drinking water quality aspects must not be compromised. In assessing future incidents DWI would consider whether changes in staffing levels had constituted "a lack of due diligence".

8.  What are the key drinking water quality improvements which the final price determinations will fund?

  Requirements are company-specific, but generally the key programmes related to cryptosporidium, lead and the renovation of distribution system networks.

9.  Do the final price determinations allow the kind of investment that the DWI would like to see? Are the timetable and proposed components of the quality programme in line with what the DWI would like to see achieved within the next five years? Does the quality programme go beyond the basic requirements of legislative deadlines?

  The items included in the quality-driven programmes of work cover known statutory requirements. These will become legally binding commitments. Since the announcement of the final determinations, DWI has worked with the water companies to agree the detailed programmes of quality improvements, many of which have completion dates fixed by the EU Drinking Water Directive implementation timetable.

10.  In Raising the Quality the Government advocated a more strategic approach to the maintenance of assets in the 1999 Periodic Review (paragraph 130). Is this evident in the final determinations? What is the DWI's view on the quality of existing networks and treatment plants?

  Following extensive investment since 1990 in new processes to meet drinking water quality regulations much of the treatment plant is in good condition. By the end of 2010 about £5.5 billion will have been spent on renovating approximately a third of the distribution system network to meet drinking water quality standards alone. There has been additional work dealing with leakage. The important question is what is an appropriate level of maintenance expenditure to continue to meet water quality standards and other serviceability indicators, as these "catching up" improvement programmes are completed. DWI is working with Ofwat to develop a more strategic approach to measuring asset performance. The aim is to have an effective methodology in place for AMP 4. DWI also expects water companies to develop and implement operations and maintenance management strategies to maintain water quality standards.

11.  Raising the Quality also refers to the Government's longer term aim that all water and sewerage companies should take a strategic approach to the maintenance of their assets, including infrastructure assets (paragraph 131). In the case of water supply systems the Government suggests that such an approach might build upon the Pre and Post Rehabilitation Assessment system pioneered by the DWI (paragraph 131). Could you please provide some information on this system and its purpose.

  Pre and Post Renovation Assessment (PPRA) was introduced to ensure that the improvement programmes were adequately justified and directed to the quality problems by priority, and that the effectiveness of the work could be demonstrated. A full description of PPRA is attached[1].

12.  Ofwat has adopted a policy of "no deterioration" in water and sewerage services in setting the final price limits. Is DWI generally satisfied that such a policy will ensure the serviceability of the infrastructure so that we are not storing up problems for the future?

  Please see response above to question 10. Over the next 5-10 years (depending on the water company) major programmes of rehabilitation to meet quality regulations will be completed. It is important to ensure that adequate provision is made for strategic maintenance of assets to maintain the quality of drinking water supplies to customers.



1   Not reproduced here. See Information Letter 9/2000 at http://www.dwi.detr.gov.uk/regs/infolett/current.htm Back


 
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