Examination of Witnesses (Questions 80
- 99)
WEDNESDAY 28 APRIL 2004
MR BRIAN
DUCKWORTH, DR
PETER SPILLETT
AND MR
JACOB TOMPKINS
Q80 Joan Ruddock: That is what I
expected you to say.
Dr Spillett: It is a twin track;
you need both resource development and demand management.
Q81 Joan Ruddock: I think we are
all aware of the barriers which probably exist to the building
of new reservoirs and Thames obviously has evidence of that.
Dr Spillett: Absolutely.
Q82 Joan Ruddock: In your view where
should new reservoirs be built?
Mr Duckworth: Upland areas are
the best place because you get the benefit of the water flowing
downhill to your centres of population.
Q83 Joan Ruddock: Which uplands are
we talking about? Whose uplands? Where?
Dr Spillett: In any system.
Mr Duckworth: Wales has always
been a good source of upland areas. The Victorians had a great
opportunity to build reservoirs and Liverpool has water from Wales,
Birmingham has water from Wales and the real benefit is that it
all flows downhill 70 or 80 miles under gravity and the benefits
that modern 21st century water companies are still getting from
Victorian over-engineering cannot be understated. The over-engineering
of our reservoir systems and the over-engineering of our sewerage
systems are something which we are still living on, which is great
for us in a way, but it re-emphasises yet again that we have to
do much more maintenance to those very old systems.
Q84 Joan Ruddock: I am Welsh and
I can tell you that in my youth taking water from Wales and letting
it run into England was a great political issue.
Dr Spillett: It still is.
Mr Duckworth: If you look at modern
reservoir systems and Professor Binnie mentioned earlier Carsington
in Derbyshire, which was only opened in 1992 and is the most modern
reservoir in this country, I think you can transform an area.
It is not a blight on the landscape, it does bring opportunities.
Any reservoir built anywhere would be shared by several companies
in future We are not just talking a reservoir for Severn Trent,
or a reservoir for Thames perhaps, we are talking something which
could be developed nationally. One of the things we had many years
ago was something called the Water Resources Board, which looked
at water resources in a national context. We have the opportunity,
through the Environment Agency, to do more of that national water
resource planning for the future, so it does not become a particular
local issue for Thames or Severn Trent, but has the ability to
address where best a resource might be developed for Great Britain
UK.
Q85 Joan Ruddock: Is there a map
somewhere of these planned reservoirs in the next 10 years?
Mr Duckworth: Maps have been produced
by the National Rivers Authority, which was the forerunner of
the Environment Agency and it did identify about six or seven
different opportunities, including inter-basin transfers. That
is something which unfortunately the water framework directive
does not commend. There is the opportunity and once the Environment
Agency distils all the different plans from the different companies
which have gone into the agency over the last few weeks, there
may be an opportunity to have another look at that with a national
picture in place. It will still have to address the local issues
for Thames, for example. I think Jacob has the figures.
Dr Spillett: Only a few companies
have put them; half a dozen or so.
Mr Tompkins: It is worth pointing
out that about 10 companies are going in for investigations in
this current funding round, so they are looking long term, for
the next 20 to 25 years. When we are talking about reservoirs,
we are not talking about very large reservoirs. One company has
put in for a winter storage reservoir, where they take out flood
waters or high groundwater and use it over the summer. There is
another very small one and a couple of reservoirs which are just
being increased in height. Two shared reservoirs had been put
forward by the companies. One of the companies is putting forward
a proposal to optimise the reservoirs it has by building pipelines
between them, so they can pump between the reservoirs. A lot of
the work the companies are doing is about optimising their resource
as well as building new resource and companies are looking at
a whole range of options. I do not want you to get the idea that
these are just big reservoirs; there is a mix.
Dr Spillett: Are they all in the
South and South East?
Mr Tompkins: Strangely the majority
are in the South and South East, but there is a distribution across
other parts of the country in terms of optimising current resources;
the majority are in the South East.
Q86 Joan Ruddock: That takes me to
the winter storage. If you are going to transfer water from winter
storage to areas of high demand you need infrastructure. That
has environmental impacts. How can they be minimised?
Mr Duckworth: Carsington is a
great example. It takes water out of the river Derwent in winter
time. The only time we have a licence to abstract out of the river
Derwent is when the river is at a certain height, so it is almost
at flood conditions. We take it out of the river Derwent in winter
and if we are short of water supplies anywhere in the East Midlands,
we put it back into the river Derwent and it will be transferred
back via the river system to one of three or four locations to
serve Nottingham, Derby or Leicester.
Dr Spillett: You can do it. You
take into account the treatment capacity of the available rivers,
you try to optimise these in the planning of them.
Q87 Chairman: May I just ask one
factual question? If everybody were on a water meter in England
and Wales would the water companies' revenues go up or down from
current levels?
Mr Duckworth: We would lose a
lot of money.
Q88 Chairman: You would.
Mr Duckworth: Yes. Firstly, customers
are quite conscious of what they use initially, but, secondly,
the tariffs are set such that we do not necessarily cover all
the costs and it takes a long time to recover the cost of installing
a meter, which may be up to £350.
Chairman: I was having visions, listening
earlier to Dr Spillett discussing desalination, of a little bottle
of water with "Desal" on it. A new brand could be born.
We know something about things like that.
Q89 Mr Mitchell: Just on meters,
that means presumably that you cannot really assess the value
of meters in reducing consumption, because you have offered them
as a loss leader in a sense.
Mr Duckworth: We can because we
can look at different customer groups, some of whom have had meters
installed because they have had new houses; every new house since
1979 has had a meter installed. We can look at some of those groups
who have meters and a similar sort of group who do not have meters.
The consumption tends to be quite similar, but a lower amount
of water is consumed by customers with meters.
Q90 Mr Mitchell: Is it substantial?
Mr Duckworth: No, not substantial.
Q91 Mr Mitchell: Substantial enough
to justify the huge investment in meters?
Mr Duckworth: No. We did it for
a different reason in those days. We needed to understand what
was happening to our demands, because we knew, back in the 1970s,
that we were going to have to think about the next level of resource.
What evidence do we have of customers' consumption? What opportunities
were there to encourage customers to use less? When you install
meters initially, there is a slight reduction and there is also
an opportunity to reduce peak demands. Peak demands on our system
are things which most worry us quite frankly with everyone switching
their hosepipe on at five o'clock on a warm summer afternoon.
What we have seen is that meters can be useful in suppressing
peak demands.
Q92 Mr Mitchell: I can tell you a
little story there, if it does not hold us up. In New Zealand,
with a single channel television, the best way of checking audience
reactions was the Christchurch Metropolitan Water Board. Unfortunately,
when Coronation Street was on water usage was at an absolute minimum,
apart from a few dripping taps. When my programme went on . .
. people rushed out to take baths and flush lavatories. Just to
round off the water meters thing, it is going to be difficult
to use water meters as a form of rationing or price management,
as long as there is only a proportion of usage. The universal
metering plan has faltered.
Mr Duckworth: It was never going
to be an overnight issue because the cost of universal metering
was going to be huge. We are moving to 70 or 80% meter penetration
over the next 10 to 15 years and that takes us a long way further
forward. I do not think it will overcome the problems we anticipate
as a result of climate change.
Dr Spillett: Ideally, if you had
universal metering, you would be able to do what they do abroad
with different tariffs and some seasonal pricing. The issue is
particularly relevant in London, with a lot of shared service
supplies in high-rise buildings and the average cost of £200
or £300 moves up to about £1,000 per individual property,
so when you look at those economics it is hardly worth it. Obviously
the industry would prefer everything metered so we had direct
measurement of everything. It would be sensible, but it is a long-term
thing. Also customers are not always keen and there is an incidence
shift with the disadvantaged in society. If we go away from domestic
rate based costs and you have a single parent with a lot of kids,
it goes from a low bill to a very high one, whereas people in
detached houses whose kids have maybe left are paying a high price
on the property but suddenly get very low bills on metering.
Q93 Mr Mitchell: Let me move on to
quality of water. All these visions of youths like myself wearing
straw boaters, punting down the Cam is going to be pretty well
ruled out, is it not? You paint a frightening picture of the deterioration
in the quality of water and all the causes. What is going to be
the worst problem?
Dr Spillett: The possibility of
long dry summers, meaning that there will be lower base flows
in the rivers. You saw this autumn, with an extended dry period,
companies and public and the agency all starting to get worried.
It is our fear that if we get year on year like that, the system
has never really had to face that. The quality issues are because
of dilution, or lack of it, plus the fact that we do not know
how well our treatment works will bear up under higher temperatures
and less flow. It is not meant to be a doomsday thing. The scenarios
you heard earlier from UKCIP were showing ranges over 2030, 2050,
2080 but we have just been worried as an industry about the number
of unprecedented events, the one in 200 years, which have happened
in the last 10 years. We can start to see that some of these things
are going to happen sooner than we thought and, to answer an earlier
question about why we have not been doing more about it, this
is the first price review in which the regulators and Defra have
asked us to take into account climate change in our long-term
plans. We have not had the opportunity to cope with climate change
in our investment plans before. To be perfectly honest, without
the research we have been carrying out, we have not had as much
knowledge as we need in order to plan correctly.
Q94 Patrick Hall: I must admit I
am surprised to hear what I have just heard. It is not as though
no-one had heard of the concept, nor that the concept did not
have credibility in the scientific community never mind others
until recently. In your evidence you refer in paragraph 25 to
the effects of anticipated climate change on the ecology, on the
environment and on biodiversity. You say "We will not be
able to conserve species or habitats . . . We will need to accept
that we will lose species and habitats". That is what Water
UK are saying. I think that needs to be challenged and questioned
or explained a little bit more. Obviously if there were an ice
age everywhere here, then we would expect certain things to be
different, or if there were a tropical rain forest. Do we need
to accept that or is it not too early an indication that the industry
is simply preparing to give up on nature conservation? Linked
with that of course are comments you make later in paragraph 26,
and maybe this is partly the nub of it, that it is going to be
too expensive to have good quality nature conservation projects
and regulations. Is this about the industry seeking to sidestep
its obligations towards biodiversity and environmental quality?
Mr Tompkins: No, we have statutory
duties to promote the HAP and BAP guidelines within government.
We are also one of the major landowners of SSSIs in the UK and
we do a lot to ensure that the environment is preserved and enhanced.
However, if you look for instance at the chalk streams in the
South of England, the biodiversity would then operate within a
certain temperature range; likewise salmon in the Thames is another
one. Once the water temperature gets too high, it is no longer
a suitable habitat for them. For instance is there a process to
de-list certain coastal salt marshes, if sea levels rise, inundate
those and destroy the site? We are not saying we should abandon
nature sites. We are saying that there should be some flexibility
to make sure that we are not protecting museum pieces, but that
we are adapting our protection with climate change to make sure
that we are still protecting as wide a range of species and habitats
as possible and that that is appropriate for the new temperature
and climatic conditions we are under. Also, we anticipate that
there will be a challenge if we enter into a long period of drought
and we have to apply for drought orders which may affect specific
nature sites and there is then a balance between either supply
for the public or damage to a nature site. We are trying to address
that by working with the Environment Agency and English Nature
to highlight where those sites are and to avoid those sites where
possible and to do investigations now rather than having to do
them in anger in several years' time. It is because we take our
environmental protection role very seriously that we are flagging
this up. We are concerned that we cannot carry on as we are at
the moment and if we do, that will lead to loss of habitats. What
we need to do is to make sure we have as much protection as possible.
That means an adaptation of regulation, more flexibility in regulation.
Q95 Patrick Hall: Dr Spillett said
something earlier and if I have misunderstood, please correct
me. I thought he said at one point, which is linked to this point,
that there is a need for the industry to move away from some environmental
projects and investment in environmental issues in order to put
more into re-engineering the infrastructure.
Dr Spillett: No, it is a different
point. What we are saying is that since the industry was privatised
every five years most of the focus has been on environmental and
quality investment and money on infrastructure has tended to be
deferred because it did not have any mandatory basis with OFWAT.
This time round, the fourth price review, the industry has a slightly
larger chunk of money put into infrastructure issues. Infrastructure
affects the environment as well. Jacob's point here is that most
of the companies are extremely proud of their environmental record
and we have a large number of SSSIs, sites of scientific special
interest, the conservation areas, the special protection areas,
within our custodianship. What we are saying is that what will
happen over the next 20-odd years, as the climate zones shift,
particularly if the chalk streams are not replenished and the
temperature changes—we have flagged this up with English
Nature, who know the problem—is that we will need to be
able to manage change. Do we preserve sites in perpetuity and
at increasing cost? Ecologically if they are changing anyway,
what is the best way forward? We are just raising the issue. We
in no way want to negate our environmental obligations. We would
prefer to do more in this area by conservation. The environmental
issues we were talking about on the bigger investment scene are
drinking water quality, urban waste water, framework directive,
a whole string of them.
Q96 Patrick Hall: The sentence you
use in paragraph 26 of your evidence about the need to develop
flexibility and realism and move towards a regulatory framework
which is less prescriptive could be open to misinterpretation.
It could mean that the industry is seeking to withdraw from its
responsibilities in these areas. After all, even if there are
these great changes taking place and the movement of climatic
zones etcetera, it does not necessarily mean that the degree
of biodiversity will fall; in fact it may increase in some areas.
Therefore the need to have this environmentally wholesome and
sustainable approach will apply anyway, will it not, even if certain
habitats are lost for reasons like flooding or whatever?
Dr Spillett: You are right. It
is really asking whether you can de-designate a site if ecological
conditions no longer apply. At the moment it is extremely difficult.
Q97 Patrick Hall: Perhaps then re-designate
according to a different set of circumstances.
Dr Spillett: I have no problem
with that.
Mr Duckworth: Absolutely.
Mr Tompkins: Absolutely.
Q98 Patrick Hall: I just wanted to
clarify that.
Mr Duckworth: I think it is very
important. It could be misinterpreted. You should not interpret
anything we said today as being anti-environment, because we have
to work with the environment 24 hours a day seven days a week.
We get our water from the environment and we want to make sure
that is okay and we put our waste water back into the environment.
As an industry we do have tremendous environmental credentials,
but what we have tried to get across today is about balance and
the balance of risk as we go forward.
Q99 Patrick Hall: Are you developing
this argument with regulators?
Mr Duckworth: With English Nature
and organisations like that who are very sensitive to some of
these issues themselves.
Dr Spillett: We are suggesting
that we should be developing river corridors and avenues for migration
for some species, things like invertebrates which cannot easily
change. How do we make best use of our existing ecological assets?
The point we are just making is that you cannot preserve them
in aspic if the environment is changing.
Mr Tompkins: We are actually working
with the wildlife trusts in something called Water for Wildlife,
which is looking at the ecological potential of river corridors
for wildlife. We are not just focusing on the SSSIs. One of my
concerns is that with climate change you could end up with specific
protected nature sites as islands within a desert of biodiversity
unless you also, as water companies, focus on using the rivers
as corridors and look at our wider environmental obligations to
the environment as a whole. We want flexibility which enables
us to do that as well as the protection of the designated sites.
| 
