Environmental Obligations of the Water Industry - environmental and quality objectives to be achieved by the water industry

The Director General of Water Services, Ian Byatt, received guidance from the Government in September 1998 in its document "Raising the Quality" on the environmental and quality objectives to be achieved by the water industry between 2000 and 2005 as part of the third Periodic Review of prices chargeable by Water Companies. Detailed programmes have been sent to water companies by the Environment Agency and the Drinking Water Inspectorate and water companies have developed strategic business plans in the light of these programmes. Ofwat requested that the strategic business plans (also known as Asset Management Plans and often refered to as AMP 3 for the third Periodic Review) set out the Companies' strategic objectives for the five year review period (2000-2005) together with the price limits the Companies believe they need in order to finance the continued provision of services to their customers and deliver the environmental and water quality programmes requested by Ministers.

The Environment Agency has been somewhat guarded on how it has responded to the plans. Of the plans submitted by 28 water companies, 15 have been deemed "acceptable", 6 "conditionally acceptable", 6 "partially acceptable" and 1 (South East Water) "unacceptable".

The overall cost of water quality improvement programmes contained in the plans will cost approximately £8 billion over the years 2000 to 2005, but with a reduction in customers' water bills - a contentious point for the Water Companies.

The improvement programmes will mean:

• completing programmes to ensure that all significant sewage discharges receive at least secondary level treatment. In particular, secondary treatment will be the minimum requirement for all coastal discharges serving populations of 2,000 or more in England and Wales (not merely those serving populations of over 10,000, as before) to comply fully with the Urban Waste Water Treatment Directive;
• accelerating the programme to improve unsatisfactory sewer overflows which affect water quality and often deposit unhygienic and offensive debris on river banks and beaches during rainstorms. This programme means that, between 2000 and 2005, on average nearly 18 improved discharges will come on line every single week of that period. Some 4,000 intermittent discharges are currently unsatisfactory;
• making further substantial progress in meeting river quality objectives which were set in 1989;
• meeting the standards set out in the new EC Drinking Water Directive, including a start on the programme of lead pipe replacement needed to comply with the progressive tightening of the lead standard over the next 14 years;
• dealing with adverse effects of over-abstraction and/or effluent discharges have on sites covered by the Habitats and Birds Directives, other Sites of Special Scientific Interest (SSSIs) and rivers;
• achieving a significant increase in bathing water standards, including the level of compliance with guideline standards under the Bathing Waters Directive - with the aim of enabling more resorts to gain Blue Flag status. Guideline compliance could increase by 20 per cent by 2005;
• meeting higher standards for the use of sewage sludge on agricultural land including phasing out of the use of untreated sludge by the end of 2001; and
• taking steps to protect shellfish waters and address problems of eutrophication.

Ian Byatt published draft price limits on 27 July, claiming that the average customer would receive a 14% reduction in water bills next year followed by stable or slightly rising prices over the following four years, whilst enabling the water companies to reach the Government's environmental targets. His decision is based on the perceived increasing efficiency of water companies and a decrease in the cost of capital. The price limits will be finalised in November and will come into effect in April 2000. Representations from water companies and other interested parties can be made up to 30 September.

Pamela Castle