Water resources market opportunities

Are you interested in working with us to deliver key elements of our water resources management plan (WRMP) by providing skills and services that will help us deliver our strategy?

Whilst we are not yet in a formal tender process, South West Water is keen to open discussions with anyone who thinks they may be able to meet our requirements as described under the heading below titled 'how we plan to deliver our stategy'.

We would like to explore commercial opportunities, links or partnerships with environmental groups, charities, and other interest groups and opportunities to work with academic institutions.

We are especially interested in providers who would be able to implement end to end solutions from concept through to delivery and benefit realisation.

If you are interested in pursuing any commercial opportunities arising from this information, it is important that you contact us about your proposal, as our network and the way we provide services to our customers is subject to a range of factors that can change how beneficial opportunities may be or how, when and where we might be able to use them.

Overview

Background

South West Water provides regulated water and wastewater services to a population of 1.7 million across Devon, Cornwall and parts of Dorset and Somerset.

In addition, Bournemouth Water merged into South West Water and we are therefore responsible for delivering services in both the original South West Water area of operation and the Bournemouth Water area of operation (see maps Water Resources Zones below).

We will be submitting our 2020– 2025 business plans to Ofwat in September 2018, Ofwat’s timetable is then as follows;

  • Early draft determinations March/April 2019
  • Other draft determinations July 2019
  • Final determinations December 2019

Our Water Resources Strategy

Our strategy is described in our WRMP (currently in draft) and which links into our Ofwat ‘Price Review 19’ business plans.

Our overall proposed WRMP strategy for maintaining the balance between supply and demand is:

Reduce leakage and the future demand for water – this is consistent with the results that show leakage reduction as a good option for managing future risks. It also aligns to the wants of our customers and Government guidelines for water resource planning.

Ensure availability of existing sources and their resilience to future droughts – this is consistent with ensuring that we can mitigate future more extreme droughts and make best use of existing supplies.

Develop our planning tools and understanding of future options – this is consistent with managing future risks and improving our forecasting tools. It will ensure we are in a good position for future plans particularly in the event that demand savings are less than expected.

Our plan can be accessed using this link - WRMP. Options for delivery of our WRMP were filtered to exclude any solutions that met the following exclusion criteria and the same exclusion criteria would be applied to any relevant proposed solutions.

  • Has low yields
  • Has high cost
  • Has high environmental impact
  • Unreliable or has promotion issues
  • Has water quality issues
  • Does not promote affordability (applicable to demand options only).

Market Information

Along with our WRMP, Ofwat now requires all water companies to publish water resources market information. This is to enable third parties to identify opportunities to both supply water resources, or provide demand management or leakage services in our area and can be accessed using this link market data.

The market information includes key water resource and economic data that underpin our water resources planning, and associated investment.

As advocates of markets, we are currently reviewing what further information would best enable third parties to help us to drive resilience, innovation and efficiency into water resources. If there is additional information that you believe would help achieve this aim, please let us know.

Water Resources Zones (WRZ)

How we plan to deliver our strategy

Leakage

Customer research and scenario analysis shows that customers’ primary preference is leakage reduction above all other options.

We will therefore we will reduce leakage by 8% to 77 Ml/d during the period 2020 to 2025, and post 2025 we will further reduce leakage by 15Ml/d (c16%) by 2045.

Customer demand

We plan is to undertake targeted improvements in water efficiency to compliment leakage reduction, these activities are a significant change in our current approach to water efficiency in terms of delivery and also in terms of cultural and behavioural change.

We will help customers reduce their water use with target ‘per capita consumption’ to 129 l/p/d by 2024/25

  • promote water efficiency community based schemes. Community based initiatives and social norms feedback are cost beneficial and help connect our customers with the service they receive
  • improve billing information to assist customers in reducing water consumption
  • work with social housing organisations to help reduce water demand. Social housing retrofit has wider benefits with regard to managing vulnerability and affordability challenges that our customers face
  • promote new water meters
  • promote water efficiency for non household tourist industry. Tourism is a key driver of demand in the summer and focused water efficiency support will help reduce the stress on the supply system during peak times

South West Water demand for water

Reduce our own water use at five large operational sites .

Improvements to resilience of systems

The challenges facing us are well described in our WRMP and we are looking for innovative solutions that will make significant benefits to the resilience of our systems and processes.

Our process

Enquiries

All contacts will be logged and tracked and evidence retained in order to provide assurance and proof of adherence to our own processes and those mandated by Ofwat.

We will ensure a level playing field for all potential suppliers of services and implement the necessary assurance process to make sure we are being open and fair.

Further details of our processes are in our Trading and Procurement Code and in our Bid Assessment Framework.

The bid assessment framework will be available soon and our trading and procurement code via this link.

Whilst our bid assessment framework is only mandated by Ofwat for use in the bidding market we will utilise the processes and principals within the code in our dealings with potential providers.

See the process flow section below of how we will manage contacts related to the Water resource market opening.

Trading Market & Trading and Procurement Code

Water trading is when a water company responsible for supplying water in an area buys it from a third party provider rather than developing its own water resources. The third party can be another water company or a private supplier.

We have no planned trades in our WRMP for either raw or treated water, but are still interested in exploring opportunities and continue a dialogue for transfers with neighbouring companies.

Trades are governed by our Trading and Procurement Code which sets out the policies, principles and requirements that will apply when appointed water companies and third parties enter into water trading arrangements with South West Water.

This code covers our three water resources zones (WRZ) in the south west peninsula and also our Bournemouth WRZ

Alternative supplies

We are interested in hearing from anyone who has a water resource such as a lake or borehole which could be commercially utilised to supplement our current sources of water.

We would also like to hear from anyone who has significant sources of reclaimed water that may be of benefit to us.

Bidding Market & Bid Assessment Framework

The bidding market provides external organisations opportunities to offer us services and solutions to our requirements.

In the run up to the start of the 2020– 2025 delivery period we will advertise specific requirements and begin reviewing potential offers in order to determine their appropriateness. We will do this by utilising our bid assessment framework and referring to our WRMP.

Our BAF is currently in draft and we welcome comments on it, your feedback can be made to marketenquiries@southwestwater.co.uk

Bi-lateral Market & Access Pricing

Bi-lateral markets are where third party providers, independent providers or other ‘out of our area’ water companies, contract directly with retailers in the business market to supply water.

The use of our distribution system and treatment if needed will require payment of an access price to us. The need for treatment depends on whether the water is sufficiently treated already. Our access pricing will reflect the cost of the use of our distribution system and will be set at water resource zone (WRZ) level.

Access pricing will become relevant when the bi-lateral market opens, which will not happen until Defra brings into force the relevant provisions of the Water Act 2014. Ofwat’s assumption is that 2022 is a likely implementation date.

Our Trading and Procurement Code sets out how we will engage with this market and can be accessed via this link.

 

Process flow map

Next steps

If you think you have a solution that might interest us and meet our needs as described in above, please contact us via marketenquiries@southwestwater.co.uk.

We look forward to hearing from you