Supplementary memorandum from the Environment
Agency
Response to specific questions from the Environmental
Audit Committee following the Environment Agency's oral evidence
session, 2 March 2004.
How does the Agency judge whether a proposed
action will have enough impact on receiving waters to make it
worth including in the environmental programme? The Committee
is particularly interested in how the judgement is made in areas
where there are significant contributions from diffuse pollution
from other sources.
HOW THE
AGENCY DECIDES
WHETHER A
PROPOSED ACTION
IS WORTH
INCLUDING IN
THE ENVIRONMENT
PROGRAMME
1. During the price review process the Agency
identifies future environmental priorities for the water industry
by comparing the performance and impact of water company assets
(sewage treatment works discharges, storm sewage discharges, water
abstractions) against a nationally agreed set of environmental
drivers. These drivers set out legal and/or environmental requirements.
They derive from EU Directives, domestic statutory obligations,
Government policy and local environmental needs. These requirements
either apply to the environment, by setting standards that must
be achieved in the environment, or by specifying standards that
apply to the water company asset. For example, the Bathing Waters
Directive specifies microbiological standards that bathing waters
must meet to comply with the Directive, whereas the Urban Waste
Water Treatment Directive specifies standards of sewage treatment
that apply to the water company asset. The list of drivers for
the 2004 Periodic Review is included in the Agency's Memorandum
of Evidence (Annex B).
2. The Agency applies environmental quality
planning techniques to identify damage and risks, to evaluate
options to resolve them and to determine when these should be
applied. These techniques have been developed over many years
in response to increased understanding of the environment we manage,
and technologies used by those we regulate.
3. The basic steps are to identify:
— the environmental problem, eg non-compliance
with environmental standards, evidence of pollution, or damage
or risk to habitats/species caused by lack of water or pollution,
— where standards are not met, we identify
the cause of the problem through investigations, which may include
water quality modelling or detailed studies of the water flow
regime,
— actions required to control the sources
of pollution, or to restore river flow.
Identifying the environmental problem
4. The Agency has an extensive monitoring
programme for the aquatic environment; taking over 310,000 samples
every year. The results are used to assess compliance with EC
Directives and the national set of River Quality Objectives (RQOs).
We use ecological monitoring to help us identify environmental
damage from pollution and low river flow. When assessing compliance,
the statistical confidence that a true failure has been detected
is also determined. This allows us to exclude failures, which
might be caused by random chance in sampling (statistical sampling
error). It allows us to target our pollution prevention activities,
and avoid imposing unnecessary expenditure on dischargers.
5. We also receive reports of pollution
incidents or sections of river in which flow is abnormally low,
either from our own visits or from reports from members of the
public. We receive information from other organisations like English
Nature on the status of designated conservation sites, and what
might be damaging such sites.
6. We then investigate the causes of the
problem. The investigations look at all possible sources of the
environmental damage, not just water company activities. For EU
Directives, the reasons for failure are reported to the EU along
with information about the measure being taken to address non-compliance.
Investigations
7. We use a range of investigation methods
depending on the nature and complexity of environmental problem.
Water quality models allow us to simulate how different sources
of pollution, including diffuse pollution, affect the achievement
of environmental standards, and their relative contribution. Surface
water and groundwater flow models allow us to simulate how different
abstractions affect river flow.
8. We also use field investigations, which
allow us to gather more detailed information on environmental
damage from abstractions and discharges and their impact on the
environment. These range from basic visual inspection for evidence
of pollution to the most complex, which may last several years.
Some investigations are undertaken by those that we regulate,
including by water companies. These investigations help us to
determine the impact of their activities on the environment and
inform permit conditions (discharge consents and abstraction licences)
that set to rectify the problem.
9. Our investigations help us to identify
the course of action required, which may include using our statutory
powers to review permit conditions for discharges and abstractions,
promote pollution prevent campaigns, and the use of the Codes
of Good Practice.
Diffuse Pollution
10. Diffuse pollution can be characterised
as follows:
— Intermittent—often weather-related
— Pollution is generated over wide
area
— Can be difficult to monitor at source,
and quantify
— Individually sources are small—but
in combination may have a significant impact
— Requires source control (often land
management) rather than end of pipe solutions
11. This contrasts to discharges from sewage
treatment works, which operate continuously even during periods
of low river flow, when dilution of the discharge is relatively
low. The relative impact from diffuse pollution compared to pollution
from discharges varies hugely from site-to-site specific dependant
on land use, population, river flow regime and the sensitivity
of the water environment to pollution. Investigations of the type
described in paragraph 8 can be used to inform decisions about
the action to be taken to control pollution. If these investigations
show that action to a water company discharge would not produce
measurable reductions in the levels of the pollution in the environment,
we do not require action by the company. If we are uncertain then
we have recommended further investigations. At some sites the
investigations show that action is required both by water companies
and to control diffuse pollution. We await the implementation
of the Water Framework Directive and the government's diffuse
pollution initiatives, which are integral to it, to provide a
more complete set of tools to tackle land, based diffuse pollution
inputs.
Further information on the timeliness of
the completion of investigations included in AMP3 by water companies.
Does the Agency have any concerns about investigations being postponed
and results not being available to feed into the current review?
TIMING OF
AMP3 INVESTIGATIONS
12. We are concerned that the scheduling
of AMP3 investigations in particular in relation to the environmental
impact of water abstractions, in the last Periodic Review did
not take sufficient account of the timetable for the 2004 Periodic
Review. This means that many investigations have not progressed
far enough to inform decisions at this stage of 2004 Periodic
Review.
13. We monitor water companies' delivery
of the actions in the environment programme, including investigations,
and report progress to Ofwat, who would decide what action to
take in the event of late delivery. The reasons for any slippage
to agreed timetables are discussed with companies. Monitoring
has shown that some investigations are falling behind schedule.
We rely on Ofwat to take appropriate action in the event of late
delivery.
14. For the 2004 Periodic Review, we have
advised water companies and Ofwat that investigations should be
scheduled early in the programme so that the results are known
in time to influence the next price review in 2009.
You mentioned in evidence to the Committee
that the proposed cuts would have an impact on customers' bills
of around £3 at most. Could you explain how you arrived at
this figure?
IMPACT ON
CUSTOMERS' BILLS
15. In evidence to the Committee, the Agency
stated that it would be "bad news for the environment if
there was a big reduction in bills for something like a £2
to £3 reduction in bills". We explain the background
to this comment here.
16. In paragraph 25 of the Agency's Memorandum
of Evidence we pointed out that Philip Fletcher had proposed a
constrained capital programme of £15 billion in his advice
to the Secretary of State.[13]
That letter states that: "If, for example, the total capital
investment programme could be limited to £15 billion, to
a similar level to that assumed for 2000-05, it would, by my estimate,
reduce price limits by around 5% over the 5 year period against
reference plan A[14]and
by around 10% against reference plan B[15]"
17. By 2010, Ofwat have said that[16]average
household bills would be £306 based on companies' preferred
strategies. Therefore, a saving of 5% on bills in 2010 equates
to approximately £15 over the 5 years or £3 per year,
the figure that the Agency quoted in questioning.
18. The environment programme makes up around
one-quarter of the cost of reference plan A (approximately £4.8
billion out of a total of a capital expenditure of £19.5
billion). Therefore if the cuts implied by Ofwat's constrained
programme fall in similar proportions to the environment programme
and other areas of expenditure, then the contribution to savings
on bills made by cutting the environment programme would be less
than £5 over the 5 years. We set out our Memorandum of Evidence
(paragraph 25) the implications of such cuts for the environment
programme.
March 2004
13 Open letter from Philip Fletcher to the Secretary
of State, 19th December 2003. Advice to inform the Principal Guidance
on scale and timing of further Quality Enhancements. Back
14
Reference Plan A included a defined package of environmental improvements
approximating to the Secretary of States "clear and essential
drivers". Back
15
Reference Plan B includes a significantly larger package of improvements-but
not all the potential improvements. However it should be noted
that Plan B is greater than the programme put forward by the Agency
and nature conservation agencies' November advice to ministers. Back
16
Periodic Review 2004. Setting water and price limits for 2005-2010:
Overview of companies draft business plans. Ofwat, October 2003. Back
| 
