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Ofwat gives green light for £2.2bn investments by water firms

  • Ofwat gives green light for £2.2bn investments by water firms

About the entity

The economic regulator of the water sector in England and Wales.

Ofwat has confirmed its final decision to allow 33 infrastructure schemes, totalling £2.2 billion, with work beginning in the next two financial years, from 2023-24. This follows a public consultation on Ofwat’s original announcement on the programme in April 2023.

The projects which have been given the green light for 2023-2030 include:

  • Ten schemes worth close to £1.7 billion to tackle storm overflows. These will use innovative plans to reduce overflow spills by around 10,000 per year. This includes work to improve water quality at the bathing water site at Ilkley on the River Wharfe and significantly reduce spills into Lake Windermere.
  • Seven smart metering schemes that includes the installation of 462,000 smart meters and which will help to increase drought resilience.
  • Six water supply schemes which will provide an additional 75Ml/d of water once completed and protect a maximum of 31Ml/d of peak output.
  • Three nutrient neutrality schemes worth potentially £160 million that will protect natural ecosystems.

The water sector is facing dry summers and more frequent and intense rainfall. In addition, there is a need to significantly improve river and bathing water quality across the UK. To help tackle these issues, Ofwat agreed with Defra companies to make an early start on schemes included in existing plans, where they could demonstrate clear need and benefits to customers and the environment.

Chris Walters, Senior Director, Price Review at Ofwat said:

“The water sector needs to act now to secure future needs of customers and the environment. The schemes we are confirming today will help tackle storm overflows, install more smart meters, provide additional water supply and improve river water quality. In each case the company has demonstrated a clear need and benefits to customers and the environment”.

Ofwat’s final decisions documents can be found here.

All the schemes which were set out in our draft decisions for consultation have been approved. The changes that have been made are:

  • We have approved the acceleration of the design of the North Suffolk Winter Storage and Lowestoft reuse schemes for the Essex and Suffolk area, given the linkages of these schemes to the Suffolk Strategic Network and Storage pipelines scheme, which we had previously proposed to approve
  • The total potential costs of the accelerated project have increased from £1.6 billion to £2.2 billion. The increase is mainly driven by two United Utilities schemes to accelerate storm overflow improvements; Ofwat has updated the total costs following additional information from United Utilities
  • The total potential cost of Portsmouth Water’s accelerated universal smart metering programme has been reduced from £120m to £64m, to reflect the level of investment which will be made only from 2023 to 2030.
  • Following a request from Southern Water, the scope of its storm overflow scheme has been amended so that it removes at least 420 spills per year (down from 600 spills per year).
  • Ofwat has made some technical amendments to price control deliverables to improve the customer protections in relation to delivery

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