Draft Final PR14 Water Resources Management Plan. Addendum

Transcription

1 Draft Final PR14 Water Resources Management Plan Addendum January 2014

2 Purpose of this document The Environment Agency has asked for further clarification relating to our metering strategy, climate change and regarding implementation of Review of Consent solutions for the Trinity Broads and Alde Ore. For Review of Consent solutions, it has specifically asked for clarification on the following points: Will abstraction be limited to recent actual abstraction rates (best endeavours) given no risk from these rates? Will the sustainability actions be in place before 2015? How likely is it that the full solutions will be needed, and therefore the risk to the site in the interim? The following sections of this addendum are in fulfilment of the above. For metering and climate change, additional information has been highlighted yellow. 2

3 1. Metering Current Strategy ESW Draft Final Water Resources Management Plan: Addendum In Essex and Suffolk separate metering strategies have been run since 2003/04. In Suffolk ESW have been optant only metering, as required by legislation since Although in Essex and Suffolk free meter installation had been offered to some of ESW s customers from 1997 as part of the Company s demand management strategy. Optant metering is where a customer requests a meter from the company and, assuming the meter can be installed at reasonable cost, the company is required to install a meter free of charge. The customer then pays for their water and sewage on a measured basis. They also have a choice of reverting back to an unmeasured charge during the first 13 months of the meter being installed. A meter means a customer only pays for the volume of water used, which in low occupancy, high rateable value properties usually reduces their annual water bill. All unmetered customers continue to be charged according to the rateable value of their property. All new properties, and properties that have had significant alteration or installed large water using apparatus e.g. a swimming pool, are metered. In Suffolk by the end of 2014/15 meter penetration is estimated to be 64% of domestic properties. In Essex exactly the same optant, new property and extended property strategy has been in place. However in the early 2000s it was obvious that opting for a meter was far more popular in Suffolk than it was in Essex. The exact reason for this is unknown but the greater proportion of 2 nd homes, which are only partially occupied therefore generally low annual water users, in Suffolk than Essex must be contributory. Historically there has also been a higher cost of water in Suffolk than Essex which may have made having a meter more financially attractive. Whatever the reason, the outcome was that the more water stressed area of Essex, compared to Suffolk, had a significantly lower meter penetration level. Looking at the declining trend in the annual number of optants in Essex, meter penetration was unlikely to increase sufficiently to support the Company s demand management aspirations if only optant metering was available. From 2003, initially in a pilot area, metering on change of property occupier (selective) metering was introduced. Selective metering is allowed under current legislation where, if the occupier of a property has never received an unmeasured bill for water to that property, then the company is allowed to install a water meter and charge the customer on a measured basis. In reality this means a property can be metered when it changes hands by either being purchased or having a new tenant. 3

4 This additional form of metering being added to the Essex strategy has meant that by 2014/15 55% of domestic properties will be metered. Purpose of metering properties A number of diverse reasons drive the move from an unmeasured water supply, where the occupant is charged according to the rateable value of the property, to a metered supply. In new properties they are metered as the only way of charging for water and sewage. Customer s who live in low occupancy premises with a high rateable value, opt to have a meter to lower their water and sewage bills. Other customers who opt perceive themselves to be low water users and again would financially benefit from paying by meter. Environmentally meters are seen to be beneficial by lowering the demand for water. This uses the principle that if you pay for what you use you are more likely to use less, thus leaving more water in the environment. In addition less energy, hence less carbon dioxide emissions, is used to pump and treat the water and less energy is needed to pump and treat the waste water. There is also the question of equity. As more customers become metered, although the cost of the remaining unmeasured customers increases more than the measured, profligate unmeasured users are having the cost of their water subsidised by the metered customers. Selective metering of large domestic water users All water companies in England and Wales have powers to meter domestic properties that are deemed large water users. This does not refer to occupancy of a property but is mainly associated with customers who want to use a garden sprinkler, or similar non-handheld watering device or properties where potable water is used to fill a swimming pool or pond greater than 10,000 litres capacity. There are a few other uses that could be selectively metered but these tend to be internal uses of water such as certain power showers and water softeners that ESW rarely would have knowledge of. ESW informs its customers that if they wish to use a garden sprinkler, or install a swimming pool or pond above the stated capacity they will need to have a meter installed. The majority are then classed as optants. If an unmetered property is discovered that is using a sprinkler or having a swimming pool/large pond, in the first instance, ESW advises them of the need to have a meter. Most comply and are counted as optants. The few that do not, the Company selectively meters. ESW believes the vast majority of its customers who are large users of water are, after over 20 years of the rules being in place, now metered. In the last 3 years (2010/ /13) ESW has only selectively metered 38 customers (33 in Essex and 5 in Suffolk) because of their high use of water. These were all associated with swimming pools therefore the effect of metering was to collect fair revenue from the customer rather than in controlling their water demand. Any demand savings would only come from them being more careful with their other water use and in total is negligible. Over the planning horizon we would expect even this average of 13 meters per annum may reduce. This number of meters is insignificant in terms of our 4

5 metering strategy and they are not separated out from the selective, then compulsory, meter numbers in the planning tables. Selective high water users per AMP Period AMP6 AMP7 AMP8 AMP9 AMP10 Number Meters Water saved l/p/d Customer Consultation Customer attitudes towards metering appear overall to be favourable. In a 2011 study of 80 customers 60% of respondents stated that they felt positive towards metering as a means of charging. However 65% were not keen on metering being compulsory. This favourability is supported across three programs of qualitative research conducted for PR09 and PR14. Favourability towards metering primarily seems to be concerned with three factors. On a personal level some respondents believe that the installation of a water meter would bring their water bill down. Secondly, on a societal level respondents have suggested that metering is the fairest method of charging for water consumption across customers, this is supported by recent external research conducted by the Fabian Society (2012). A third factor cited in support of metering is that metered systems make customers more aware of how much water they use, and so encourage water saving behaviour It makes people aware of how much water they use. This is supported by qualitative evidence that metered customers seem more aware of their bill amount than non metered customers. Despite this positivity towards metering there is quantitative evidence that customers are against compulsory metering. The evidence base suggests two reasons why customers are against compulsory metering; firstly because it restricts consumer choice, which is considered to be unacceptable. Secondly concerns were expressed that bills would increase following the installation of a meter. This is supported by two programs of recent NWL qualitative research (Accent, 2012) and external research (Ofwat, 2011) research which suggests better guidance is required around the impact switching to a meter can have on bill sizes. External research (Ofwat, 2011, CCWater, 2011 and ICS, 2010) suggests that unmetered customers are less likely to be advocates for metering. This is 5

6 possibly because unmetered customers tend to be less aware that meter fitting is free and that they can return to rateable value within 13 months if they are optant meter customers. Additionally these customers hold some confusion as to how metered bills are calculated. Ofwat s (2011) report offers three suggestions, from respondents, to encourage meter uptake: Clearly set-out the pros and cons of switching to help customers decision-making Offer a range of tariffs to help large families Offer smart meters Changes to Draft WRMP metering strategy for In ESW s draft WRMP the proposal was set out to move to a 20 year compulsory metering strategy for Essex and Suffolk from mid Compulsory metering powers can only be granted to a water company if they operate in a seriously water stressed area. Both Essex and Suffolk are classed by the Agency as Seriously Water Stressed. The proposal to compulsory meter must be made in a company s WRMP and it must be accepted by the Secretary of State, Defra. Once granted, the powers allow the water company to meter all properties in its supply area, including properties where the occupier has previously been billed for water on an unmeasured basis. However, for inclusion in a company s PR14 business plan, any strategy such as compulsory metering and its associated costs also needs to be accepted by the company s PR14 Customer Challenge Group. In the case of ESW the group is referred to as the Water Forum. The proposed compulsory metering strategy was presented to the Water Forum and discussed in March The CCWater member pointed to research that shows, whilst customers in general believe metering is the fairest way of paying and controlling household water use, they do not want to see compulsory metering programmes. The Forum also pointed out that with ESW s large surplus of water in the Essex WRZ, and no new water resource development in Suffolk in the WRMP, it would be difficult to credibly support compulsory metering when no water resource development costs would be deferred by the water saved. They would only support this accelerated metering proposal if there was general customer support first. In the time available between the draft WRMP and the Final WRMP it was realised that, even if eventually customer support for compulsory metering could be gained, it could not be got in the next few months. The Customer Forum were informed that for this coming AMP we would revert to optant selective metering in Essex and add selective metering, on change of occupier, to the Suffolk optant only metering. This was put forward into our Business Plan with the support of the Forum (Customer Challenge Group). The Agency s response to the proposal to compulsorily meter customers also challenged how ESW would get customer agreement for this strategy. They 6

7 believed insufficient information was given on the costs of compulsory meters for customers to agree. However, CCWater and ESW s own research shows it is a philosophical aversion to compulsory metering and the perceived adverse change to individual s water bills that sets customers against it, not the initial capital outlay to install the meters. Whilst the Company still believes that with the majority of its customers now metered, in terms of equity, let alone water savings, full metering is desirable, it is also recognised that ESW needs to achieve this in a way that takes its customers with it. ESW has therefore deferred the compulsory metering strategy for at least 5 years. During the time available between now and the next WRMP ESW will be exploring ways to get customer agreement to introduce a compulsory metering programme. In sufficient time for inclusion in the draft 2019 WRMP we will agree with CCWater what type of customer consultation / survey questions will be needed in Essex to more fully examine customer s opinions on compulsory metering. We will also be seeking advice from expert market researchers to carry out this work in a similar fashion to the customer consultation used for the PR14 Business Plan. This work will also include discussions on how we will compulsorily meter our remaining unmeasured customer base. We already anticipate simultaneously Metering 3 separate areas in Essex per annum to ensure we do not discriminate any single group of customers. The actual installation in these areas will be by external installation of metering on a street by street basis. Implementation of the meter programme The provision of free water meters to customers of unmeasured properties is a requirement of the Water Act on companies. The billing literature and our website inform customers of their right to a free meter and which customers are likely to benefit. It also informs them of their right to revert to an unmeasured supply within 1 year of the meter installation. Customers can apply for a meter online, by phone or by submitting a form. The company go out to survey the property to determine the location of the meter and if metering is going to be possible. When an application is made we aim to fit 95% within 60 days and 100% within 90 days. Selective metering of high water users is opportunistic and arises when the company attends a property, either at the request of the customer or because of operational reasons, and our personnel see a swimming pool at the property. When a pool is discovered at an unmeasured property we serve notice that we will install a meter over the next 14 days using our powers under the Water Industry Act. These unmeasured properties with pools tend to be historic installations and only 13 on average per annum are detected. 7

8 Selective metering on change of occupier starts at the point that a customer moves out of their existing property and informs our billing team. Customers always tell us their leaving date from their current property to stop being charged whereas some of those moving into a new property are a bit tardy in telling us. We therefore meter the property closely after the current occupier moves out. Surveying the property for the installation tends to rule out properties that are unlikely to be re-occupied. AMP6 ( Metering Strategy Essex In Essex the current strategy will continue of optant metering and selective metering on change of occupier of a domestic property. In addition a further 450 optant meters will be installed as part of the Company s plan for dealing with households struggling to pay their water bills. Low income eligible households will be offered the Watersure tariff if they agree to opt for a meter to be installed. The number of selective meters forecast takes account of the lower levels of house moves being seen but assumes a gradual increase in activity through the 5 year period up to The number of meters forecast to be installed in each of the 5 years is:- 2015/ / / / /20 Optants Selectives Totals 10,950 10,950 11,450 11,450 10,950 Savings in water use from metering ESW assumes an average saving from a customer having a meter installed of 5% of the unmeasured consumption for an optant and 8% for a selectively metered on change of occupier customer. These savings are based on the Company s experience in Essex. The rationale for the difference is that those who tend to opt for a meter are often lower than average users of water to begin with. This is often why they opt so as to gain a financial benefit for their careful water using behaviour. Therefore after a meter is installed they have less opportunity to make further water savings to lower their bill. The average selective / new home metered customer may not have been so careful with their water use whilst in an unmeasured property therefore their opportunity to save water is greater. The optant water savings, based on the forecast average unmeasured household consumption for 2015 /16 of litres, unmeasured occupancy of 3.26, optant occupancy 1.66, water saving of 5%, is calculated as: ( x 0.05 / 3.26) x 1.66 = 13.23l/p/d (litres/property/day) 8

9 The selective water savings, based on the forecast average unmeasured household consumption for 2015 /16 of litres, unmeasured occupancy of 3.26, selective occupancy 2.41, water saving of 8%, is calculated as: ( x 0.08 / 3.26) x 2.41 = 30.73l/p/d (litres/property/day) Installing 26,250 optant s in AMP6 = 347,288 litres water per day saved. Installing 29,500 selective s in AMP6 = 906,535 litres water per day saved. This assumes the daily consumptions and occupancies remain constant over the AMP6 period which for ease of calculation is a reasonable estimation. Therefore the total daily volume of water saved by the metering programme at the end of 2019/20 will be 1.254Ml/d. AMP6 Costs The cost of installing a meter varies according to where on the property the meter can be fitted. There are four possible locations with four different costs. ESW s intention is to always install a meter in the cheapest practical location. These locations are:- Drop in (to an empty existing meter chamber) Internal External private (new chamber installation in customers ground) External public (new chamber installation in public footpath /road) The respective costs for these are (2012/13 prices):- Drop in Internal External private External public The higher average cost of external installations in Essex, compared to Suffolk, is primarily due to a number of Local Authorities in the Essex WRZ operating permit schemes for utility companies that operate in the highways. This means for each operation in the LA s area ESW needs to buy a permit and fund the administration costs associated with applying and complying with the permit. In more rural Suffolk ESW also finds a higher proportion of supply pipes in uncovered private ground than the Company does in Essex where most urban front gardens are hard covered. The forecast location split for optant meters in AMP6, derived from location splits outturned in AMP5 and the company s meter location policy is:- Drop in 36.4% Internal 15.4% External Private 6.8% External public 41.4% 9

10 The forecast location split for selective meters in AMP6, derived from location splits out-turned in AMP5 and the company s meter location policy is:- Drop in 36.4% External Private 6.8% External public 56.8% N.B. Internal meters are not used for selective meters due to access problems to install in the period between the unmeasured occupier moving out and the, to be, metered customer moving in. ESW does not send its personnel into selective premises as a few, unknown, customers may strongly object to a meter being installed. The Company s staff are vulnerable working under a kitchen sink in these circumstances. The low proportion of private land installations compared to public land (pavement /edge of highway) is because opportunities to install a meter chamber in private land is limited due to the high cost of re-instating expensive garden paths and driveways. The 26,250 forecast optant meters for AMP6 break down to the following costs;- Drop in 9, = 0.616m Internal 4, = 0.789m Private 1, = 0.720m Public 10, = 5.093m Total cost of Essex optant metering for AMP6 = 7.218m Total water saved from Essex optant s in AMP6 = 0.347Ml/d Cost per Ml of water saved = 20.80m per Ml The 29,500 forecast selective meters for AMP6 break down to the following costs;- Drop in 10, = 0.693m Private 2, = 0.810m Public 16, = 7.853m Total cost of Essex selective metering for AMP6 = 9.356m Total water saved from selective s in AMP6 = 0.907Ml/d Cost per Ml of water saved = 10.32m per Ml Total cost of Essex metering for AMP6 = m Total water saved from metering in AMP6 = 1.254Ml/d Cost per Ml of water saved = 13.22m per Ml Suffolk In Suffolk we will continue with the current strategy of optant metering. We had intended to also introduce selective metering on change of occupier of a domestic property, but this has now been dropped. The Environment Agency 10

11 does not believe that Suffolk customers have been able to show support for this option as it had only been included in the Draft Final WRMP. As such we were unable to demonstrate that we had complied with Defra s WRMP Direction 3(b). With approximately 64% of properties being metered by 2015, the number of new optants coming forward will decline to a low level, leaving a sizeable rump of properties remaining permanently unmeasured and having on average high water consumption. In addition a further 50 optant meters will be installed as part of the Company s plan for dealing with households struggling to pay their water bills. Low income eligible households will be offered the Watersure tariff if they agree to opt for a meter to be installed. The number of meters forecast to be installed in each of the 5 years is:- 2015/ / / / /20 Optants Savings in water use from metering ESW assumes an average saving from a customer having a meter installed of 5% of the unmeasured consumption from an optant and 8% from a selectively metered on change of occupier customer. These savings are based on the Company s experience in Essex. The rationale for the difference is that those who tend to opt for a meter are often lower than average users of water to begin with. This is often why they opt so as to gain a financial benefit for their careful water using behaviour. Therefore after a meter is installed they have less opportunity to make further water savings to lower their bill. The average selective / new home metered customer may not have been so careful with their water use whilst in an unmeasured property therefore their opportunity to save water is greater. The optant water savings, based on the forecast average unmeasured household consumption for 2015 /16 of litres, unmeasured occupancy of 2.94, optant occupancy 1.79, water saving of 5%, is calculated as: ( x 0.05 / 2.94) x 1.79 = 13.44l/p/d (litres/property/day) Installing 4,000 optant s in AMP6 = 53,760 litres water per day saved. This assumes the daily consumptions and occupancies remain constant over the AMP6 period which for ease of calculation is a reasonable estimation. Therefore the total daily volume of water saved by the metering programme at the end of 2019/20 will be 0.054Ml/d. 11

12 AMP6 Costs The cost of installing a meter varies according to where on the property the meter can be fitted. There are four possible locations with four different costs. ESW s intention is to install in the cheapest practical location. These locations are: Drop in (to an empty existing meter chamber) Internal External private (new chamber installation in customers ground) External public (new chamber installation in public footpath /road) The respective costs for these are (2012/13 prices): Drop in Internal External private External public The forecast location split for optant meters in AMP6, derived from location splits outturned in AMP5 and the company s meter location policy is:- Drop in 26.1% Internal 16.1% External Private 17.3% External public 40.5% The 4,000 forecast optant meters for AMP6 break down to the following costs: Drop in 1, = 0.060m Internal = 0.123m Private = 0.222m Public = 0.692m Total cost of Suffolk optant metering for AMP6 = 1.097m Total water saved from Suffolk optant s in AMP6 = 0.054Ml/d Cost per Ml of water saved = 20.31m per Ml Overall impact of metering strategy on ESW The Company will install a total of 59,500 meters during AMP6 at a total cost of m. This will result in water demand savings of 1.308Ml/d. Over the AMP6 period meter penetration in Essex will rise from to 65.2% and in Suffolk from 64.1% to 68.6%. Total cost of Suffolk metering strategy per AMP Period AMP6 AMP7 AMP8 AMP9 AMP10 m

13 Total cost of Essex metering strategy per AMP ( m) Period AMP6 AMP7 AMP8 AMP9 AMP10 Optant Selective (COO) Compulsory Total

14 2. CLIMATE CHANGE Introduction This chapter outlines how climate change has been considered within ESW s draft Final WRMP. The effects of climate change on both baseline supply and baseline demand have been considered in line with the WRPG (EA, 2012). Carbon Emissions from Current Operations ESW reports annually on the volume of greenhouse gas for which the company is responsible and have done so since The trend in these emissions is a falling one though there is some year on year variation in this, mainly due to the impacts of weather and ESW s response to it. This fall reflects a structured approach to emissions reduction through the implementation of a carbon management plan, initiated in This Plan has the ambition to reduce emissions by 35% by 2020 against a 2008 baseline. If the emissions linked to grid electricity fall as projected by government at that time this should result in a total reduction of 50% in the Company-wide operational emissions by This is currently forecast to remain stable after 2020 until the end of the planning horizon. Any further decline will be subject to Government s decisions on electricity generation carbon reduction commitments. The Plan is based on a combination of actions to improve efficiency in the use of energy and the displacement of grid electricity by the development of renewable energy, in particular the use of biogas from sewage sludge and hydroelectric power generation. The latest estimate of GHG emissions for operational carbon as a result of providing drinking water to customers in the Essex and Suffolk operating area is 46,125tonnes CO2e. The emissions intensity of the provision of water services is 303kg CO2e/Ml. This is significantly higher than the emissions intensity of the Company s operations in the Northumbrian operating area. However, it is good in comparison with ESW s neighbours in the southern half of the country. This emissions intensity is lower than Affinity Water, Anglian Water Services, Severn Trent, Southern, South West and Wessex Water. Only Thames Water of the larger companies within the south has a lower emissions intensity, marginally down at 293kg CO2e/Ml, aided substantially by the much higher population density of its customer base. ESW has no projects for the further development of water resources in its Plan, and no consideration of options or the carbon emissions resulting from them has been necessary. Drinking Water Emissions Table Date Tonnes CO2e 59,962 46,125 29,981 29,981 14

15 3. Review of Consents Trinity Broads Will abstraction be limited to recent actual abstraction rates (best endeavours) given no risk from these rates? ESW has historically met customer demand with 60% of the raw water being sourced from the River Bure and 40% from Ormesby Broad. This equates to 4,000 Ml/annum of Broad abstraction when the licence is fully utilised. We will make best endeavours to maintain this ratio and where possible, will reduce the amount abstracted from the Broad as Broad levels are drawn down during the summer months. Will the sustainability actions be in place before 2015? ESW will be installing a new blending tank at Ormesby Treatment Works in This will enable a greater proportion of Bure water to be utilised, thus conserving Broad water whist still ensuring compliance with drinking water standards. The funding required to undertake mud pumping in the identified shallow areas will not be available until 2015/16. However, ESW will ensure that all detailed design work is completed and that landowner agreements and regulatory consents are obtained during 2014/15. This will ensure that mud pumping can start promptly once the funding has been made available. How likely is it that the full solutions will be needed, and therefore the risk to the site in the interim? Customer demand within the Ormesby zone is now lower than what it was during 1996/97 and 1997/87, the last major drought for this area. This is partly because of a reduction in residential demand due to metering and more water efficient toilets and white goods, partly because of reduced leakage and partly because of a reduction in industrial demand from pea processing. Consequently, should a similar drought occur in 2015/16, abstraction licence utilisation should be less than that experienced in 1996/97 and 1997/98. ESW believes that there is not a significant risk to the site during 2015/16 when the mud pumping will be undertaken. This is due to reduced customer demand and our intention to maximise Bure water abstraction and to minimise Broad water abstraction during the summer. Alde Ore Will abstraction be limited to recent actual abstraction rates (best endeavours) given no risk from these rates? We will make best endeavours to limit future abstraction to recent actual abstraction. 15

16 Will the sustainability actions be in place before 2015? The compensation discharge can actually be made now from an existing borehole. However, we plan to make the compensation discharge from a new borehole with a dedicated pump and new outfall into the River Blyth. Our drilling contractor will be mobilising to site w/c 13 th January 2014 and it is hoped that test pumping will be completed by the end of March How likely is it that the full solutions will be needed, and therefore the risk to the site in the interim? The need for the full solution will always be dependant on rainfall and river flow conditions. ESW conclude that there is no significant risk to the site as even if there is a drought next year that would require a compensation flow to be made, it can already be made from an existing borehole and the new borehole will be commissioned and licensed well before April 2015 after which the compensation discharge will be required. 16