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07 August 2017

How can shortfalls in quality threaten to land utility companies in hot water?

By Stephen McCabe

Substantial fines landed by privatised water companies in recent years have emphasised the need for public utilities providers to ‘practice what they preach’ in terms of high quality and efficiency. 

With the likes of Thames Water landing fines of almost £30m in just two separate incidents this year – a retrospective £20.3m for leaks of untreated sewage into the Thames between 2013 and 2014 and an additional £8.5m for failures to meet its target to cut water leakage from its pipes - there are many lessons to be learned from such negative events.

Ofwat, which regulates the privatised water industry in England and Wales, called the failure to improve leakage issues as “unacceptable” and said the penalty was the maximum possible.

The majority of water that we drink meets a certain minimum standard and its reliance is boosted by chemical additives. Quality is also closely checked and regulated by independent drinking water inspectorates in England and Wales, Scotland and Northern Ireland, who report each year. 

Severn Trent Water also found itself under the microscope and under the media spotlight in March 2016. The company had warned customers in Derbyshire and Leicestershire after tests found abnormal levels of chemicals in water at their Castle Donington reservoir.

The over-chlorination of water resulted in 3,700 households, which were told not to drink, prepare food or bathe in the water, being awarded £50 each to compensate. Compensation of £100 was also given to businesses which could not operate during the two day period.  A positive here is that the company responded proactively and testing and controls recognised this fault in supply before causing any harm - the system was subsequent flushed clean. 

In July 2016, Severn Trent Water was fined £426,000 by the Environment Agency for repeated raw sewage leaks - crude sewage leaked into the Shire Brook on the border of Derbyshire and Nottinghamshire on three separate occasions.

It is recognised that achieving complete asset integrity throughout the water infrastructure is nigh on impossible, but there are still a number of cases where regulatory requirements are not adhered to. There have been many more high-profile incidents involving water companies throughout the UK – who have an obligation to provide clean drinking water to the public. These standards have to meet the requirements laid out in the EU Drinking Water Directive (98/83/EC).

Water UK - a membership organisation which represents and works with the major water and wastewater service providers in England, Scotland, Wales and Northern Ireland backs this up by stating:  “UK water suppliers place the highest priority on assuring the quality of water provided to their customers. The EU Drinking Water Directive standards are based on advice from the World Health Organization (WHO) and are regularly reviewed”.

Recent research carried out by Cranfield University estimates that the UK water industry’s asset base includes “over 800,000km of sewer and water supply pipes with an estimated average age of 70 years”.  

Industry-wide initiatives such as Asset Management Period (AMP) seek to improve the infrastructure and thus reducing risks and improving resilience and network quality. We are now approaching AMP7, which will run from 2020 – 2025 - whereby water boards tender contracts to construction firms to help keep infrastructure properly maintained, and update the industry’s antiquated assets, some of which date back to Victorian times.

Global ISO standards are already in place to drive regulation and guidance for asset management in a number of industries.  The ISO 55000:2014 series consist of three main standards, these include:

  • ISO 55000 – gives an overview of the subject of asset management and the standard terms and definitions
  • ISO 55001 - requirements for an integrated, effective management system for asset management
  • ISO 55002 - delivers guidance for the implementation of such a management system.

These standards build on the requirements of PAS 55, which is the specification for the optimised management of physical assets.

This highly-regulated landscape is not exclusive to the United Kingdom - the United States also has to comply with The Office of Water’s regulations, such as Water Quality Standards (40 CFR 131) and The Clean Water Act (1972). 

The challenges within the US market are an entirely different ball game, with a myriad of water treatment plants and operators complying with the Environmental Protection Agency's National Pollutant Discharge Elimination System (NPDES) permit program controls discharges.

A 2016 study published in the Harvard Gazette found unsafe levels of polyfluoroalkyl and perfluoroalkyl substances (PFASs) — industrial chemicals linked with cancer, hormone disruption and other health problems — in the drinking water of 33 states, affecting 6 million Americans.  Incidents like this raise doubts in the public’s eye on something that most of the Western world take for granted. 

Regardless of individual views we may hold on the aspect of privatisation in the water industry, the UK’s main water and wastewater boards are highly regulated and operate to a level of superior quality. 

In spite of the regulatory and compliance hurdles in place and high-consequence events, there are a number of reasons why the glass is definitely still half full in terms of quality.

However, with such massive fines incurred for what are viewed by experts as being ‘preventable’ incidents, there is still room for improvement in terms of managing quality - before landing in hot water and facing yet further financial and reputational impacts. 

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