Water 2020: OfWat’s regulatory approach for water and wastewater services overview

Water 2020: OfWat’s regulatory approach for water and wastewater services overview.

The water 2020 programme, driven by OfWat, industry, the Environment Agency and Natural Resources Wales explores the potential for new markets and better regulations. I discussed the Water 2020 programme with Graham Southall from V2B consulting who has previously worked at Thames Water. The programme sets out new regulations for water companies with the potential to change the market. Water companies will have separate price controls for sludge treatment, enabling them to treat additional waste for other parties and/or to use third parties to treat their sludge.  A key issue is then how the Regulatory Capital Value (RCV) of the companies is allocated between the core business and the sludge business.  The programme explores the impact of splitting sludge assets from the water assets, and how this will affect a variety of stakeholders - including customers. The benefit of such a movement in the market could result in a more resilient market, efficient services and enable the easier treatment of sewage sludge.

OfWat have been working closely with industry, DEFRA, the Environment Agency and Natural Resources Wales to develop new regulations to support new markets. The framework develops a new market for water companies, currently, the biggest barrier in the market place are environmental regulations. These make the co-digestion of sewage sludge and other organic waste in the same digester, very difficult, due restrictions of the use of final co-digested sludge cake. The wider waste and recycling sector in the UK generate a total turnover of £18.3 billion with gross added value of £5.5 billion. There is scope to develop technology in the market as in 2012, there was 200 million tonnes of waste in the UK, of which, 117 million tonnes of which was organic waste. Historically, the waste water sector sees sludge being recycled to agricultural land and in recent years has seen an increasing uptake of using anaerobic digestion or advanced anaerobic digestion in the industry.

Graham Southall says of the on the Water 2020 programme:

“Further de-regulation should bring benefits and enable water companies to choose the degree to which they want to be involved in sludge treatment (as opposed to buying in services).  Thus driving specialisation and cost efficiency through scale. However, the bigger issue still remains the environmental regulations and co-digestion.  Solving that will unlock spare capacity in food waste digesters to take sewage sludge and vice versa.”

For further information about the Water2020 programme click on this link to find out more, or read other blogs about the Water 2020 programme by Jess Allan and Matt Hindle.

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Tags: Ofwat, water 2020, emma thomas, Water, regulations, Defra, Environment Agency, natural resources wales, sludge