Examination of Witnesses (Questions 500
- 519)
WEDNESDAY 28 NOVEMBER 2007
MS REGINA
FINN AND
MR JONATHAN
HODGKIN
Q500 Mr Drew:
Could we see that? Would you send us the evidence?
Ms Finn: Yes[19].
Q501 Chairman:
Can I ask for clarification? You have numbers in terms of the
type of events that you sanction investment for in terms of, for
example, sewer investment but, in terms of protecting the infrastructure
to which Mr Drew has just been referring, are there any statutory
or factual obligations in terms of what kind of weather event
water companies should be securing their assets against?
Ms Finn: The simple answer to
that is that there is not a clear standard across the board for
everything. There is a risk-based approach, particularly around
the sewerage network, to ensuring that service to customers.
Q502 Chairman:
Sewerage, yes, but I am talking about the other assets.
Mr Hodgkin: The answer would be
no. Their asset is next to a river and it is a question of the
river flood defences.
Q503 Chairman:
So are you going to be asking water companies to refine this approach
in light of the lessons learnt?
Mr Hodgkin: We are going to ask
companies to go through an analytical process which we are developing
for them which first starts with identifying critical assets.
We have spoken about the Environment Agency flood map; 57.6 per
cent of water assets appear at risk of flooding on that map but
not all are critical in the sense that if they were to flood there
would be an impact on the service. The first task is to work out
which of these assets are critical in the sense they are at risk
of flooding and that if they flood there is a significant impact
for customers. The second stage is, once such an asset has been
identified, to identify options for addressing that and those
options could crudely be building a wall around the asset or they
could be improving the resilience of the system by increasing
interconnection between water treatment plants and systems, so
that if a plant were to flood it could be supplied from another
source. The third step is then to evaluate those options to ensure
that companies select options which offer the best value for money
for customers. That is a process which we will put in place so
companies can reflect and include that in their business plans
for the next price review you referred to earlier.
Q504 Paddy Tipping:
You have already talked to us a bit about sewer flooding, and
that was helpful. In your evidence you said it would be too expensive
to bring the sewers up to date or renovate them to cope with this
summer's events. That is right, is it not?
Ms Finn: That is fairly accurate.
We are talking about an extensive legacy network nationwide; this
was a 1:150 year event and redesigning the entire sewerage network
to cope with that type of event would be enormously expensive
and may still not achieve the best results.
Q505 Paddy Tipping:
So what should we do? As you said, having the sewage in your house
is pretty appalling. What is your perspective for the future?
Mr Hodgkin: There are two ways
of answering that. The first is to recognise that the issue is
sewers are for sewage, if I can put it that way. The fact is that
they are designed for a purpose and a lot of the problems arise
when we have uncontrolled rainfall entering sewers, so one issue
is how to manage rainfall into sewers, and I think you touched
on that previously in terms of sustainable urban drainage systems
which could play a role there. More specifically, as you know
there are no set standards for the sewerage system but a standard
has evolved of 1:30. We de facto maintain that standard through
our focus on sewer flooding, so we require the companies to maintain
registers of properties that are at risk of flooding, either 1:10
years or 2:10 years, and then we fund the companies and, as we
said earlier it was £1.2 billion in this price review period,
to focus on the highest risk of flooding properties to reduce
those numbers, and those numbers have been reduced to approximately
7,300 properties at this point.
Q506 Chairman:
That is a 1:10 year event?
Mr Hodgkin: No. These are properties
that have a risk of flooding either once in ten years or twice
in ten years. So we are trying to get the companies to focus on
the pinchpoints in the sewerage system and focus on reducing sewer
flooding through those mechanisms, rather than spreading the same
amount of money thinly over the entire sewerage system which would
not offer such good value for money for customers.
Q507 Paddy Tipping:
So £1.2 billion in the present price review period. Just
speculating forward, would you expect to see that increase in
the next period? The reason I ask is that there is a view around
that we have very high water quality standards, and we are making
marginal improvements on them and it costs an awful lot. Would
we not be better putting that investment into the sewer system?
Ms Finn: The total capital programme
for this five-year period is 16 billion. Of that £1.2 billion
is specifically related to sewer flooding, another £2.2 billion
is related to the maintenance of the sewerage network, and there
are different priorities in the water and waste water sector,
including maintaining drinking water quality, including environmental
quality—and the environmental quality programme is quite
significant—and under the Water Framework Directive there
is a challenge to Defra, to Government, and to water companies
and ourselves as to what investment will be needed over the coming
three five-year periods to meet the obligations we have under
the Water Framework Directive, and at the same time over that
period we will clearly need to be planning for the future that
involves adaptation for climate change and mitigation. So there
is a balancing act to be had here. What is important for us in
the longer term framework for planning here is that we want companies
to look at the long term, at all of the demands on the services
that they provide to their customers, and to choose the most cost
beneficial ones and use economic tests that will deliver the best
benefits for customers for the least costs across the total package.
So there are a lot of challenges to balance all of those in the
future.
Q508 Paddy Tipping:
I guess I am saying that, if you put in more money, the balance
ought to change in the direction of sewers?
Mr Hodgkin: The increase on the
sewerage system in this period is 17 per cent, so a significant
amount of money is going in that direction already. One can always
spend more, I guess, but the focus on cost benefit analysis is
to try and ensure that money is spent where it delivers the value
that customers are willing to pay for.
Paddy Tipping: You told us a minute
ago that sewers are built generally to a 1:30 year standard, but
river flooding is 1:75. Why is there that disparity? Would it
make sense to equalise it a bit?
Q509 Chairman:
Who chooses which one you are going to have?
Mr Hodgkin: The sewerage flooding
standards have developed over time, and all new sewers are built
to a standard for adoption which specifies a 1:30 standard, but
it is very difficult because even if you start with a 1:30 system
once you start adding things on the capacity of the system changes
--
Q510 Chairman:
But why 1:30? Why not 1:50?
Mr Hodgkin: We did not choose
1:30; this is my point. It has grown up over time.[20]
Q511 Chairman:
Somebody must have made a decision at some stage to have done
it. How did it come about?
Ms Finn: It is a voluntary standard
agreed by the industry, and if you remember this industry has
come from being a state-owned provision of a service and evolved
into a private industry, and through industry associations and
groups this standard has been developed, and we effectively enforce
that by our flooding risk management approach. So it has been
used as a de facto standard and that is what it is built to in
future. So it has not been chosen specifically, but what is important
from our point of view is what is the level of service that is
delivered to the customer by that 1:30 planning standard. We think,
of course, that what 1:30 means may change over time, particularly
as we see the sort of events we have seen recently, so there is
a question in the future as to whether and how that has changed
for future planning purposes. But in relation to the flooding
we had in the summer, many of the assets did cope quite well with
that flooding. For example, small sewage treatment works were
allowed to flood but the effect of that was very diluted, they
recovered very quickly, particularly the smaller ones using natural
processes, and services to customers were not affected, so it
is not necessarily inappropriate in those circumstances. The particular
focus we need to think about is where the assets are critical,
and therefore we might want to protect them to a higher standard.
Q512 Chairman:
It is quite difficult, with all these different weather event
probabilities, to rationalise because from the water companies'
point of view they are not going to exactly rush to get the numbers
changed to a higher number because that means potentially more
expense and potentially lower returns to their investors. They
are going to always err on the side of caution, are they not?
Ms Finn: I do not think that is
necessarily the case. We do think all stakeholders need to work
together to get this right but there is an argument that says
water companies would be incentivised to build bigger and larger
assets because they make a return on their significant capital
base which would be a different incentive from the one you have
suggested. Because of the multi stakeholder nature of this issue
and the number of parties involved there is a need to work together,
and particularly to work with the scientific community to help
evaluate these standards and how they are changing over time.
Q513 Chairman:
How precise is the investment? We had a paper which our expert
advisers put to us that said that in terms of picking the right
size of pipes to fulfil these standards it is a bit haphazard
and that people can over-engineer because there is not a pipe
that exactly meets the 1:30 year standard so they spend more on
a bigger pipe and some people might go under on a smaller pipe.
Is it hit and miss or is it precision?
Mr Hodgkin: It is not really our
area of expertise but there is the Flood Estimation Handbook produced
by an engineering consulting company, which is widely accepted
in the industry as the guide for how you translate a one-in-whatever
standard into an engineering configuration based on modelling
and simulation, and no doubt there are errors or variances around
the results that come from that. But, to be honest, that is not
our area of expertise.
Q514 Chairman:
One thing that still concerns me in terms of development is the
seeming ability for anybody to hook up to an existing sewer system.
We do not seem to have a point at which somebody says—and
this is important against, first of all, the extra housing which
the Government, understandably, wants to build with all the implications
that has not just for infrastructure but also for run-off—"Stop,
you are overtaxing the system".
Mr Hodgkin: Currently there is
a right to connect to a public sewer and we think it is appropriate
for that right to be looked at again. At the moment, as you say,
developers do not face the full costs in terms of the loading
they are placing on the system and that influences the decisions
they make, be it SUDs or other options for dealing with drainage.
So we would encourage and welcome a review of that.
Q515 Chairman:
And that is a review to be undertaken by the Government?
Ms Finn: Yes. We suggest that
there is an opportunity to consider this along with a wide range
of measures in the context of the development of the Government's
water strategy because this is exactly the type of thing that
we think should be considered and would feed into choices, not
just by water companies but also by developers, as to the best
infrastructure and drainage system to put in place for a new development
rather than the automatic right to connect to a public sewer.
Q516 Mr Williams::
In my experience some of the problems with flooding appears to
be surface water that gets into sewerage systems. Have you any
targets for the different water authorities for solving that problem
and segregating run-off water from sewerage?
Ms Finn: We do not have targets
but I think you are right, as was mentioned earlier, one of the
significant issues this summer was the amount of run-off and water
going into the sewerage system, and it may well be that one of
the possible solutions in the future is how to divert that water
rather than just build bigger sewers. We were mentioning earlier
that we are asking companies to develop long-term plans to look
at how they propose to manage this and to use cost benefit analysis
to come up with the best option and not necessarily the obvious
one. So before the next price review period and before companies
submit their business plans to us we are going to develop an analytical
framework to help them consider these issues and prioritise and
make choices around what is the best investment, precisely around
those issues. Clearly it may well vary from area to area. We heard
earlier about the issue between sometimes the local nature of
this compared to one-size-fits-all standards, and we think companies
need to tackle this in their areas to make sure they get the better
choice for their customers.
Q517 Mr Williams:
I often advocate to Welsh Water, which is a not-for-profit company,
that instead of paying a dividend to its consumers they sort this
problem out first, because most consumers would rather have these
problems sorted out than a six monthly dividend. Is that something
that Welsh Water could address?
Mr Hodgkin: It is worth saying
that all the companies have been asked to prepare 25 year strategic
direction statements plotting out, if you like, their vision for
the company and how they will develop service for their customers,
and I would say all of them have set themselves fairly stretching
targets on things like sewer flooding, so none of the companies
is complacent on this issue. All are committed to driving it down
and some are reducing it altogether. It is very much on their
minds.
Q518 Mr Drew:
Going back to Gloucestershire, and this is borne out by the evidence
from Gloucestershire Constabulary in particular, in the immediate
aftermath of the flooding crisis when it was obvious the Mythe
was going to go, it is fair to say that Command turned to Severn
Trent and said "What's Plan B?", to which the answer
was "There isn't one". With that experience, how seriously
do you think water companies in general and Severn Trent in particular
take their obligations under the Civil Contingency Act and indeed
the Security and Emergency Measures Direction?
Ms Finn: In both of those areas
we are not the lead agency.
Q519 Mr Drew:
But you should be monitoring how they performed.
Ms Finn: The standards that the
Civil Contingencies Act and the SEMD measure, the ones that the
companies are required to comply with, are not ones that we set,
but we have funded all the companies to meet their obligations
in terms of bottled water and bowsers. Clearly, as I think you
have heard from Severn Trent, the scale of the failure in this
instance was beyond their plans under those particular provisions,
and that leads us back to the issue of the critical infrastructure,
the probability and the impact of that one piece of infrastructure
going down not being anticipated. So there are issues about protecting
the critical infrastructure in the future. The SEMD measures in
particular are designed in relation to potential terrorism impact,
and our view is that the kind of resilience and investment and
infrastructure protection issues we are talking about because
of natural disasters or weather effects do not necessarily sit
with SEMD, because the SEMD is quite closed—naturally—and
secret for obvious reasons. We think this future work in terms
of resilience, because of weather impacts, needs to happen more
transparently so it can be enforced and supervised as the companies
develop their plans to cope with it.
19 Ev 154 Back
20
Note by witness: No statutory standards are set down for the frequency
of flooding from public sewers and there is no absolute requirement
for no flooding from combined sewers and surface water drains.
Where a developer provides new sewers for adoption by the sewerage
company, the water industry guidance contained in 'Sewers for
Adoption', published by WRC, is frequently applied to ensure
new public sewers are designed to a minimum standard. This guidance
includes the requirement that the sewer should not cause flooding
at less than 1 in 30 rainfall events. This is in line with a similar
requirement in European standard BS EN 752 'Drain and sewer
systems outside buildings'. Back
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