Sharing water isn’t as simple as pumping supplies from one region to another. There are many barriers – physical, legal and financial – that must be overcome. The WRSE companies have been working hard to identify these barriers, and develop measures to overcome them. Examples are:
- Financial Putting the physical infrastructure in place to transfer water across the region is a major investment. How will it be paid for? WRSE companies also have to consider what financial value to place on surplus supplies and the effect on their finances of having to buy in water to top-up supplies.
- Practical Companies need to agree a formal framework for the quantity and quality of water that could be shared without endangering any single company’s supplies. Other practical considerations include management responsibility for shared supplies, plus a co-ordinated approach to local planning issues and environmental concerns.
- Competition New regulations by Ofwat have created a water retail market which allow some business customers to choose their water supplier. This creates competition between water companies that could get in the way of sharing supplies. How will this be overcome?
- Aversion to risk For a variety of reasons, water company management teams vary in their approach to risk. The WRSE group must come up with a formula that all companies and regulators are comfortable with.
Strong, legally sound bulk supply agreements, along with a shared ownership of new resources will be needed. So, too, will financial incentives to ensure ‘donor’ companies receive an adequate return for loss of headroom (surplus supplies). The funding issues need to be resolved via the regulatory framework and above all, there needs to be trust between the WRSE companies and the regulators. The ultimate aim is to provide certainty of supply and ensure no company’s customers benefit at the expense of another’s.
Important work to address all these issues is currently underway, and the results are being used to inform the computer modelling work we are doing to forecast likely future supplies and demand.