Anglian Water lays out £6.5bn investment in region – and what it will mean for bills
PUBLISHED: 12:25 03 September 2018 | UPDATED: 12:58 04 September 2018
Anglian Water has revealed a £6.5bn investment plan as it looks to balance increasing demand from the East of England’s growing population with reduced rainfall.
Over the next generation, the East of England is expected to grow faster than most of the country while at the same time receiving just two-thirds of the rainfall.
Balancing this increasing demand with a restricted supply has been the central challenge for Anglian Water to address in its latest five-year plan, which it has this week submitted to the industry regulator Ofwat.
The response it has come up with is one of the biggest spending programmes the region has seen: a £6.5bn investment between the years 2020 and 2025, representing a 30% increase on the previous five years.
At the centre of the plans are increasing the region’s resilience – ensuring that water supplies are able to withstand extreme weather, failures and other disruptions – by spending £650m on infrastructure which will help move water more quickly from one part of the region to another.
The plan, which was compiled following feedback from more than half a million customers, includes plans for £653m to be spent in Norfolk, £490m in Suffolk and £497m in Cambridgeshire and Peterborough.
But it will mean an increase in bills – just less than 1% over the five years of the plan, though Anglian Water said it would be stepping up its support programme for the 475,000 customers in hardship.
Anglian Water chief executive Peter Simpson said: “This is the most ambitious plan we’ve put forward yet with stretching goals that will see us push the frontier in many areas, like leakage, resilience and catchment management, and it’s the biggest investment we’ve ever proposed.
“We provide an essential public service, so it’s imperative our business responds to customer challenge. Thousands of customers have helped shape the plan – they told us what matters to them most, we’ve taken that on board and created a plan which reflects those priorities.”
Among the key points of the investment are £240m to reduce leakage by 22% across its 40,000km of pipes, improving Anglian Water’s industry-leading position using new technology, and a £630m water resources management plan which will remove the risk of water restrictions for all customers, even during periods of severe drought.
It also wants to half the average length of supply interruptions, eliminate serious pollution incidents, and spend £40m protecting drinking water quality in the environment.
The work to improve resilience will centre around a £650m programme which will cater for the 200,000 new homes to be built in the East by 2025, joining up existing parts of the network and building new pipelines to allow water to be moved across the region much faster.
Smart meters will also be rolled out, with half of customers being fitted with one by 2025, and the remainder by 2030.
As a result, the proportion of Anglian Water customers served by only one treatment works will drop from 40% to 10%, bolstering the resilience of supplies.
The other key focus of the plan is environmental sustainability, and £783m will be invested in driving up standards to mitigate the impact that increasing demand has on the natural world – more than double that spent in the past five-year period.
Mr Simpson said the priorities reflected those of customers, of whom more than 500,000 were consulted, including at week-long H2OMG festival of water held at the Forum in Norwich last summer, and a travelling double-decker bus tour.
“We’ve moved from ‘survey mode’ to getting under the skin of what our customers want,” he said.
“It’s become clear they don’t want us to kick the can down the road on resilience: they want us to do it now. We’ve also had more feedback on the environmental measures: they want us to do it now and don’t want us to kick the cost of paying for it on to the next generation.”
Some 80% of customers who responded to the consultation said they would be satisfied with a 2.5% increase in their bills to cover the investment.
“The Beast from the East and this summer’s heat wave are the kind of extreme weather challenges we’ll see more of in the future as a result of global climate change. The plan we’ve proposed, and the millions of pounds of investment within will tackle these challenges head-on to ensure that, despite the likelihood of lower levels of rainfall in the future, there are plentiful supplies of safe, quality water for our growing population,” said Mr Simpson.
What is water resilience?
When it comes to water supply, resilience is something noticed most by its absence – in short, when you turn on the tap and there’s no water.
But Anglian Water says the importance of its investment in resilience has been underlined twice this year, during two extremes of weather: the Beast from the East cold snap, and summer-long heatwave.
During both, the company was able to outperform its peers - of the 200,000 UK properties left without water for an extended period during the snow, just 163 were in Anglian Water’s region -
“The company performed incredibly well through both of those tests because of previous investments in resilience.
“We know we need to keep investing because, given the number of new houses, we have to build further resilience not just for the next five years, but for the next 50.”
The spending plans in Norfolk include:
• A share of £230m for smart meters;
• £92.7m on a new network of interconnecting pipes in Norfolk;
• £20m to replace lead pipes in Norwich;
• £6.8m to protect raw water boreholes from agricultural pollution in Hillington and Wighton;
• £11m for a new sewer connecting homes in west Norwich;
• £7m to reduce flooding risk, with around half spent on sustainable drainage schemes, using nature to slow the flow of water;
• £10m for a bio-digester at Whitlingham sewage treatment works, turning sewage into soil fertiliser;
• £7.5m to connect rural home in Morley St Botolph, Knapton, Ludham and other areas to the sewerage network for the first time.
The spending plans in Suffolk include:
• A share of £237m to reduce leakage across the county;
• £68m to create new interconnecting pipes to move water to where it’s needed;
• £4m to protect the raw water borehole at Little Saxham from agricultural pollution;
• £7m to reduce the risk of flooding in Suffolk, half of which will be spent on sustainable drainage schemes, using nature to slow the flow of water;
• £3m to connect rural homes in Little Bealings and Belstead to the sewerage network for the first time;
• £1.3m to upgrade water treatment processes and protect against lead at sites in Barnham Cross, Beck Row, Ixworth and Two Mile Bottom;
• £2.5m to work with farmers to reduce pesticide levels in the county’s raw waters;
• £600,000 to address ground water pollution from fertilisers and animal manures.
Shareholders ‘putting their money where their mouth is’
Anglian Water’s shareholders will “put their money where their mouth is” with the new investment programme, said chief executive Peter Simpson.
The company announced a raft of new transparency measures in May, as a way of bolstering public confidence in an industry that has been receiving unwelcome attention of late.
In June, it was announced Thames Water would pay £120m in penalties for failing to tackle leaks, while environment secretary Michael Gove has called for an industry crackdown on excessive pay and offshore arrangements to avoid tax.
Anglian Water has announced it will reduce dividends to 2025 so that money can be reinvested – way of showing shareholders are “putting in their two penneth” said Mr Simpson.
An unused Cayman Islands subsidiary has already been closed down, and a £1.6bn internal loan repaid so that accounts are clearer.
“The owners and board were keen to differentiate ourselves, and move ahead so we didn’t get caught up in some the accusations around what was going on,” said Mr Simpson.