Reservoir Watch

[Stratos Ferric]

Oh Christ! The price of bottled water argument Have things sunk that low?

Anyway, ignoring that complete irrelevance... ...... I'd say that if I found a supply of oil in my garden I'd be looking to make money from it. If I found a supply of water I'd think about building a pond. there's a big big big difference.

Charging for oil by the amount used makes sense because there isn't an inexhaustible supply, there are NEVER times when we can afford to waste it, and conserving its will always be beneficial.

Whereas we are probably at the point now where conserving water is a redundant exercise because what we don't use now will have absolutely no impact on what's available in six months time.

I've said it before and I'll say it again...those who advocate charging for the domestic use of water by the amount used, use arguments that would be valid for charging for library services by the amount of books taken out on loan, or even the amount of time spent inside library buildings. There a logic in the argument....but not all logic makes for common sense!

You might well look to make money from oil in your garden, but I think you;d find that you'd need a licence from the Government to do so. I'm fairly sure I'm correct in saying that what lies hidden beneath the surface is sovereign, and all extraction of minerals is carried out under licence.

Now, back to your limitless supply argument. You'd better make your mind up because your opening piece, as I recall, was pointed towards supply actually NOT being limitless. The point is that at any time we do have limied capacity to supply, and that the seasonal imbalance can, occasionally, test this - as happened a couple of years ago for example. It's also the fact that there are fixed and variable costs. Your argument that it should be one cost for all is better applied to utility services like streetlighting, which burns irrespective of how much an individual drives. Whilst a case might be made for pay per mile, pragmatically, the cost of implementing and managing such a scheme would far outweigh the marginal benefits to some individuals of doing so.

Water IS a natural resource, but it still requires capture, bulk transmission, treatment, transfer and local storage before it reaches your tap. The more you use, the more the variable cost for your use increases.

In any case, and I return to the point, metering demonstrably lowers bills - the regulator would like to see all householders on meters because it would help conserve supply for critical use (watering lawns is NOT critical). Suppliers are resistant precisely because it reduces revenues without reducing the fixed overhead (pipes, reservoirs, pumps etc.)

[Timmytour]

And I've said this before (but maybe not here) - there are always going to be some people who are happy to have others subsidise their lifestyles. Doesn't mean I have to be happy paying for it.

Still, it's not like I have any choice in the matter, is it?

If charging on amount of water used makes people think before wasting it, then I consider it a good idea personally.

Getting back to an earlier side issue...that might be a little bit like saying should todays children, when they are tomorrow's taxpayers, have a say in the degree to which they want to subsidise the lifestyles of those pensioners who did not contribute to the pool of taxpayers paying for those pensions

The thing about water going to waste..... right now it's nothing to do with the issue of what people are using that's wasting water, but the fact that it is out there in copious amounts at the moment and we are not harvesting it.

When water is short, the common sense approach is to involve everyone in conserving it. But this ought not to be in a manner that penalises people for using it, but rather, as is the case now, by restricting its use. A ban on using hosepipes in the garden, applicable to all, makes sense. A system by which the wealthier end of society might be allowed to continue to use their hosepipe in the garden because, well what they hell they can bloody wll afford to, would stink to high heaven imo.

[Stratos Ferric]

...Charging for oil by the amount used makes sense because there isn't an inexhaustible supply, there are NEVER times when we can afford to waste it, and conserving its will always be beneficial.

...

Supply isn't the issue: intrinsic value is the issue. The arabs have a concept which is something like "water as gold". In the desert water genuinely IS a scarce commodity, and the price attached to it is high; oil meanwhile comes to the surface pretty much if you just jump on the nearest stretch of sand.

Having limitless potential supply (of water) is not the same as having limitless potable supply on tap.

[LadyPakal]

Here's a nice link which shows why, just because it falls out of the sky, the water that comes out of your tap isn't free for you.

http://www.dwi.gov.uk/pubs/tap/index.htm

Think for a minute about the sheer size of the infrastructure of this country. The volume of chemicals purchased to treat the water, the amount of electricity required to pump the water out of the ground or along the pipe work to your house. Now, why should someone who chooses to have sprinklers running all day pay the same as someone who doesn't?

[Coast]

To illustrate that to be a relative analogy, you'll have to point out exactly what Tesco sells us that they themselves acquire for nothing....

As is well known now, the big supermarkets pay the absolute minimum to their suppliers for products that are sold on to us, with a good margin. Now whilst a supermarket doesn't get its supplies for free, it gets them very cheap and then uses its resourses to run shops, supply chains, staff etc to sell us the products at the price they pay + mark up, to achieve profit on each item.

With domestic water supplies, the water company have to store, process, pump and maintain the system that gets it to our taps (at a cost). If demand increases they have to process more, this costs them more money and in turn they must recoup that from somewhere. If you charge everybody more money because demand by some is higher, are you not then penalising those that conserve or have a lesser requirement?

'I want another beer barman'

'£2.60 please'

'But I've been in your pub for an hour already'

'Oh, OK then I'll only charge you £2.00'

[Stratos Ferric]

...The thing about water going to waste..... right now it's nothing to do with the issue of what people are using that's wasting water, but the fact that it is out there in copious amounts at the moment and we are not harvesting it.

When water is short, the common sense approach is to involve everyone in conserving it. But this ought not to be in a manner that penalises people for using it, but rather, as is the case now, by restricting its use. A ban on using hosepipes in the garden, applicable to all, makes sense. A system by which the wealthier end of society might be allowed to continue to use their hosepipe in the garden because, well what they hell they can bloody wll afford to, would stink to high heaven imo.

Yes, but increasing capture means capital investment on land purchase and build. Reservoirs don't come cheap. Say I'm Mr United Utilities, does my bottom line improve by building more storage i.e. do more people use more water - no they don't. All it does is provide an "emergency tank" or buffer against future shortage. if that shortage never happens then I've wasted money. At the end of the day the charge is passed on to the user. For the same reason you car has a fuel tank that holds around 60 litres or so. It would be great to have a car that held 600 litres, I could bulk buy fuel, but I would then be paying for fuel that simply gets cnsumed carrying more fuel around: in otehr words I'm burning money so that I can burn more money. It's a simple economic principle referred to as the point of diminishing returns.

I think you'll find that when a hosepipe ban kicks in it does so irrespective of whether you have a meter or not. All metering does is delay the point at which such measure become necessary by serving to moderate use. The psychology is simple: unmonitored behaviour tends to be uncontrolled: introduce monitoring and a degree of self regulation always follows.

[Timmytour]

Now, back to your limitless supply argument. You'd better make your mind up because your opening piece, as I recall, was pointed towards supply actually NOT being limitless.

Supply is limitless....only not on a day in day out basis. Water is a resource that is constantly in production at a rate that is on average at least equal to its use and freely supplied to the points of storage. Moreover it is readily recyclable.

The problem is the average bit. If we were able to fully make use of the times when it was available in abundance, then managing in times when there were shortages would be a lot easier.

[Stratos Ferric]

As is well known now, the big supermarkets pay the absolute minimum to their suppliers for products that are sold on to us, with a good margin. Now whilst a supermarket doesn't get its supplies for free, it gets them very cheap and then uses its resourses to run shops, supply chains, staff etc to sell us the products at the price they pay + mark up, to achieve profit on each item.

With domestic water supplies, the water company have to store, process, pump and maintain the system that gets it to our taps (at a cost). If demand increases they have to process more, this costs them more money and in turn they must recoup that from somewhere. If you charge everybody more money because demand by some is higher, are you not then penalising those that conserve or have a lesser requirement?

'I want another beer barman'

'£2.60 please'

'But I've been in your pub for an hour already'

'Oh, OK then I'll only charge you £2.00'

Margins on food are typically no more than 5%: that, compared to the mark-up on clothing, white goods, entertainment services (meals) is very very small. Tescos make money on volume rather than margin, and by having a not insignifact non-food operation. Also, next time you're in any supermarket, look at what's in the trolleys, and then compare:

The price of a single lettuce vs a bag of lettuce leaves (often half the weight)

The price of a packet of boiled ham vs ham from the deli bar

The price of packed and prepared veg vs raw veg

The price of a garlic bread baguette vs a baguette + a portion of garlic butter.

You're quite correct that the proper approach to charging for water would be a standing charge for infrastructure + a per unit charge thereafter. Pretty much as every other utility charges. The only issue with water is that until very recently metering simply wasn't deemed practical or necessary.

[The PIT]

Supply is limitless....only not on a day in day out basis. Water is a resource that is constantly in production at a rate that is on average at least equal to its use and freely supplied to the points of storage. Moreover it is readily recyclable.

The problem is the average bit. If we were able to fully make use of the times when it was available in abundance, then managing in times when there were shortages would be a lot easier.

This conversation still going on???? You've got to remember that water can get locked away in a manner that it's too expensive to extract.

[Timmytour]

Here's a nice link which shows why, just because it falls out of the sky, the water that comes out of your tap isn't free for you.

http://www.dwi.gov.uk/pubs/tap/index.htm

Think for a minute about the sheer size of the infrastructure of this country. The volume of chemicals purchased to treat the water, the amount of electricity required to pump the water out of the ground or along the pipe work to your house. Now, why should someone who chooses to have sprinklers running all day pay the same as someone who doesn't?

Of course, the absolute ideal system would be one that charges by what it's used for, as opposed to the amount used.

I'd have no objections to our water supply being based on an unlimited use for washing, cooking, bathin, hygiene etc while additional charges are incurred for its use in washing cars, watering lawns and flowers etc etc.

That would be a logical approach to me.....but not one I think would involve any common sense.

[Stratos Ferric]

Supply is limitless....only not on a day in day out basis. Water is a resource that is constantly in production at a rate that is on average at least equal to its use and freely supplied to the points of storage. Moreover it is readily recyclable.

The problem is the average bit. If we were able to fully make use of the times when it was available in abundance, then managing in times when there were shortages would be a lot easier.

Timmy, it is NOT limitless. Supply is defined NOT as rainfall, but as raw water available, and that latter is not limitless. There is limited capacity in reservoirs and groundwater sources, and a ceiling on the quantity that can be abstracted from fluvial sources. You're making a fundamental mistake. It's like saying food it limitless: it is not, it depends on ability to process, store and distribute.

I'm not sure what you're suggesting by "make more use when it's available". The whole point of water storage is that it allows us to transfer the commodity in time. Are you suggesting people only water their lawns and wash their cars in winter? The point with water is that useage tends to peak at times when the weather is driest and stored capacity is falling. Ordinarily the UK manages fairly well, but the dry SE in particular, where storage capacity is relatively low and demand is high, can struggle particularly if we have prolonged drought. I'm not sure what you'd suggest to change this situation so that we make more use of water in seasons when there's plenty.

Of course, the absolute ideal system would be one that charges by what it's used for, as opposed to the amount used.

I'd have no objections to our water supply being based on an unlimited use for washing, cooking, bathin, hygiene etc while additional charges are incurred for its use in washing cars, watering lawns and flowers etc etc.

That would be a logical approach to me.....but not one I think would involve any common sense.

And how on earth would you monitor that?

I've said previously, if we were starting again we would have a system that pumped cheap, raw water for the purposes of bathing, flushing and ancilliary cleaning; with clean water purely for consumption. That's not going to happen though.

[Timmytour]

'I want another beer barman'

'£2.60 please'

'But I've been in your pub for an hour already'

'Oh, OK then I'll only charge you £2.00'

Let me take you back to supply and demand.

Two years ago there was a shortage of water. Today, it is abundant. If it were to be fairly charged per unit used, the price would have been fluctuating madly over these past few years.

Yet somehow I doubt that the price reductions would ever be imposed as drastically and as quickly as the prices increases would be.

And you be sure to let me know when there's a drastic reduction in the price of a pint at your local.

And how on earth would you monitor that?

Read my point about it being logical, but not common sense.

[Timmytour]

It's like saying food it limitless: it is not, it depends on ability to process, store and distribute.

But food belongs to someone. It's grown on someone's property. Somebody grows it and supplies it.

What about blackberries on common land. Should we start charging people per the amount they eat?

My main point is about our need to increase our capacity to harvest water. The sub point if you like, is that a family of six living next door to a single person should not have to pay more than that single person.

But some are arguing that cost should be assessed against use and therefore the family should pay more.

Well how about turning that argument on its head a little? The Water companies are profit making businesses. They have a monopoly on the supply in an area... so that if I'm on Thames and I want to be on Three Valleys, I can't simply change my supplier, I have to change where I live!

Now I'm not sure that the Water Companies pay for their franchises, but their shareholders certainly reap in the dividends and the Government, having signed away on all our behalfs the right for those companies to operate those franchises, will recoup some money in tax.

So...going back to the family of six living next door to the single person.... six times the benefit reaped by the government belongs to the family as does to the single person, for surely each and every individual has his or her virtual entitlement.

So, in a world where the family is penalised for using more water, what system lies in place for them recouping more of the benefits?

Or..would it be common sense through being far more practical just to limit the costs, as well as the benefits, on a per household basis?

Edited January 17, 2008 by Timmytour

[HighPressure]

Having worked in the water industry for 20yrs mainly for Thames from its Privatisation in 1989, I can answer some of the questions on here.

Water companies are not run for the benefit of the consumer but for its shareholders, this means maximising profit and reducing operating costs. The industry has no direct competition so only effectively competes against Ofwat its regulatory body for which a game of cat and mouse ensues, these companies employ top legal bods to ensure they stay one step infront of the regulator. The aim of the game is to do the absolute minimum required to conform with current statutory requirements and in many cases less if they think they can get away with it.

Its all a bit complex to go into a lot of detail here but some previous points, Thames have closed 1 water treatment works in Surbiton and sold off the land for development under the guise that its output of 120mg/d was no longer required, this done in the early 90s. Also I can confirm that total London Storage capacity is today less than it was in 1989, several of the smaller shallower reservoirs to the west of London have been decommissioned.

With the exception of a couple of natural reservoirs in NE London all Thames storage reservoirs are of above water level clay core construction and water is pumped in and gravity fed out. Only 10% of Londons Water is Ground Water 90% River. It is estimated that Thames loss @1/3rd of its daily output in leakage which equates to some 800 ml/d (million litres per day).

As SF says you would not want to pay for a completely water tight system but I think that many would agree that this level of leakage is unacceptable as one thing that has to be remembered is that this water has been pumped at least twice and the electricity used is in the order of tens of thousands of mega watts a year. In the age of environmental concern this should be considered a major factor not just if water comes out of peoples taps.

Water companies measure their own leakage and report results to Ofwat, they simple manipulate these, it is possible to get any flow reading you like from a flow meter you just adjust its milliamp setting. Water companies receive special dispensation for leakage in certain parts of their network, so it is common practice to move leakage figures from one area to another. This makes it look like targets are being met and bolsters appeals for increased customer tariffs to improve poor areas which of course are artificially made worse.

London's treatment capacity is no greater now than it was 20yrs ago, a drought can still spell trouble for London supplies even if all reservoirs are full at the end of May. Total storage capacity is 200,000 mega litres just under 100 days supply but below 60% the network suffers from reduced through put because flow depends on head and as this drops so does the output. London would not be able to cope any better with a 1976 style summer now then it could then. Water companies are run on a risk analysis basis which states that these summers are rare and therefore the expenditure is not made to combat them, they simply wait for one to come along take the slap on the wrist and pay the fine.

Sorry its a bit of a ramble

Edited January 17, 2008 by HighPressure

[Timmytour]

Thanks HP...I thought that was a really interesting read. I suppose they take their lessons from the Oil companies who never seem to do that bad when shortages drive up the price of oil !

Can you give any insight on this article I came across? I'm a little dubious as to how much the political leanings on the site have slanted the report, but even if half the stuff is true it kind of bears out what you are saying about how much we can trust the water companies......

http://www.ukwatch.net/article/uk_water_co...ddling_accounts

UK water companies fined millions after fiddling accounts

December 19th, 2007

Companies supplying water to more than half the population in England and Wales have been fined millions of pounds this year, after fiddling their accounts and cheating customers.

The industry watchdog Ofwat has fined Thames Water, the UK’s largest water company, £12.5 million (US$25 million) and Southern Water £20 million (US$40 million), accusing the companies of “ misreporting” regulatory data, which allowed them to raise prices by more than they should have done. Southern Water directors have agreed to pay up (a Serious Fraud Office investigation has been dropped), but Thames Water directors are contesting the penalty.

Ofwat chairman Philip Fletcher said, “From the evidence we have seen it is clear that Thames Water has failed to meet the Guaranteed Standards Scheme performance standards. The failures were within the company’s control, and some customers have not received the standard of service to which they are entitled. As a result customers’ interests have been damaged.”

“It is extremely disappointing that we have had to take this action against Thames Water for its customer service failures, coming on top of the company’s breach of its leakage target. This is a clear warning to Thames Water that it must be focused on delivering the services that customers have paid for,” Fletcher added.

Ofwat CEO Regina Finn said, “Southern Water deliberately misreported its customer service performance to Ofwat and systematically manipulated information to conceal the company’s true performance over an extending period of time.”

Finn added, “The magnitude of this fine reflects the magnitude of the offence—deliberately misleading the regulator, failing of the Southern Water board of directors to pick up the deception, the resulting poor service to customers and damage to the regulatory regime, in general.”

Ofwat will probably seek compensation from the UK’s second largest water company, Severn Trent Water, next year for similar offences. However, the regulator is waiting until criminal proceedings against the company are completed following a two-year long Serious Fraud Office investigation into claims that data relating to the amount of water that leaked from its pipes had been falsified. Ofwat uses leakage figures to assess a water company’s performance and to determine how much they can charge customers. Severn Trent Water has already been ordered to repay £42 million it overcharged customers after lying to Ofwat about the company’s level of income and bad debt.

Ofwat is also investigating a fifth company, Three Valleys Water, after “irregularities” were found in data relating to the billing of customers with water meters. And United Utilities has been fined £8.5 million for cheating its customers by a different method—paying high prices to its unregulated sister companies and then arguing that bills should be higher. Fletcher said that over a 10-year period, United Utilities water division would have overcharged its customers by about £80 million.

It is unlikely the latest scandal would have come to light if it had not been for Severn Trent employee, David Donnelly, blowing the whistle on the false data being given to Ofwat and in the process exposing the cosy relationship that existed between the regulator, the company and its auditors.

Donnelly had worked for Severn Trent since 1975 and became a financial analyst. He has always admitted that he falsified the figures, but said he acted under pressure from senior management and that many people were aware of what was going on. According to Donnelly, the figures allowed the company to impose an extra price rise on its customers, equivalent to £50 million in two years, or £17 per customer.

Donnelly raised his concerns in early 2004 with the directors of the parent company, Severn Trent Limited, who asked the Forensics section of its auditors PricewaterhouseCoopers (PwC) to investigate. In May 2004, Donnelly reported Severn Trent to Ofwat. However, in November 2004, the company concluded that the accounts were satisfactory and customers were not overcharged. Ofwat later revealed that two of the usual PwC auditors were on the forensics team and that it was a “ surprising omission” that some of Donnelly’s staff were not interviewed during the investigation. It also complained about the initial lack of cooperation with the parent company.

Donnelly went public in the Daily Mail in November 2004, feeling that the company and Ofwat were trying to bury a scandal that threatened to further undermine public confidence in the privatised water companies and the regulatory system. Severn Trent chairman Sir David Arculus embodied this relationship. He was also chairman of the Labour government’s Better Regulation Taskforce, where he became architect of the “Regulation—Less is More” programme and president-elect of the Confederation of British Industry.

It was only in January 2005 that Ofwat finally began its own investigation. The Labour government mounted a damage-limitation exercise by giving Ofwat the power to levy a financial penalty not exceeding 10 percent of a company’s turnover. (Bear in mind, 10 percent of Thames Water’s regulated turnover last year was £140 million, yet its operating profit was nearly £430 million).

Ofwat published its Interim report on allegations made against Severn Trent Water in March 2006. It found no basis for Donnelly’s claim that directors of Severn Trent “directed the deliberate miscalculation and that knowledge of it was widespread,” but it did conclude the company had provided regulatory data which was “either deliberately miscalculated or poorly supported,” leading to bills being higher than was necessary. Its mealy-mouthed conclusion—it could not be otherwise without implicating Ofwat itself—was that the “culture” in Severn Trent Water “led to data being submitted that was not accurate or well supported and that was influenced by a desire to present a particular position or achieve a particular outcome. We consider that Severn Trent Water’s approach fell significantly below the standard we expect.”

Throughout the period, Donnelly was vilified. He was forced on sick leave soon after he raised his concerns and then spent two years on half-pay with a disciplinary charge of gross misconduct hanging over him. The disciplinary hearing document said, “Whilst Donnelly has claimed that such disclosures are protected pursuant to whistle-blowing legislation, he did not raise such allegations as a genuine whistleblower and in good faith to seek to right what he perceived to be a wrong, but rather to further his own purposes.”

“The very fact that I am charged with manipulating the accounts is a very strange form of vindication,” Donnelly retorted. “After all, the only one to gain from twisting the regulatory submissions was Severn Trent Water—I certainly did not. What purpose could I possibly have in doing this?”

Donnelly eventually came to an early retirement agreement with Severn Trent in August 2006, but it involved a clause forbidding him speaking about the case. He said he was unlikely ever to work again adding, “Once you have blown the whistle, you are all alone. The accusation is made that you are feathering your nest and it is hard to fight.”

Most of the Severn Trent board left, too, but they have done rather better for themselves. Arculus became chairman of mobile phone operator O2, and CEO Robert Walker became chairman of the retailer WH Smith.

The overcharging affair is the latest in a string of scandals hitting the water and sewerage industry since the Thatcher Conservative government privatised it in 1989. Profits and dividends have soared. Severn Trent posted a record £150 million in the six months up to September this year, with shareholders receiving a seven percent rise in dividends and Thames Water announced a 50 percent leap in its profit. Profit margins are typically 40 percent—four times the international average. At the same time, water bills have increased by 7 percent this year—well above inflation—making the average bill £312 in England and Wales. Customer complaints rose by nearly one third from 185,466 in 2005/2006 to 240,799 in 2006/2007, an increase of nearly 30 percent with Thames Water, Severn Trent and United Utilities were responsible for more than three quarters of the complaints. In addition, there has been a public outcry about high levels of water leakage, lack of water during last year’s drought and continuing sewage pollution.

Ofwat claims the fines will be paid by shareholders, but nobody believes it. One way or another, customers and workers will end up paying them. In April 2007, within months of finally accepting limited responsibility for the overcharging scandal, Severn Trent said today it would cut 10 percent of its workforce—nearly 600 jobs—over the next five years

Edited January 17, 2008 by Timmytour

[HighPressure]

Thanks HP...I thought that was a really interesting read. I suppose they take their lessons from the Oil companies who never seem to do that bad when shortages drive up the price of oil !

Can you give any insight on this article I came across? I'm a little dubious as to how much the political leanings on the site have slanted the report, but even if half the stuff is true it kind of bears out what you are saying about how much we can trust the water companies......

http://www.ukwatch.net/article/uk_water_co...ddling_accounts

The article is basically correct, Thames have been manipulating data for their own ends, it is not new and a part of Thames Water culture. Without really giving myself away my job was to provide accurate data to the operations side of Thames Water's London region, it does not equate to the data given to Ofwat in many areas. Thames have 2 sets of books one for reporting and one for operations, one very interseting calculation is the difference between abstracted water and water supplied. One is the responsibilty of the EA and the other Ofwat, they do not talk to each other but if they did some serious questions would be raised like why something like 20,000 mega litres goes missing between river and works.

Can you work out where it goes?