industry facts
Over twenty-three million properties, industrial/commercial and domestic, are supplied with water across the UK. The infrastructure required to enable this is made up of 1000 reservoirs, 2500 water treatment works and 7000 sewage treatment plants. Water in the UK comes from one of four sources: springs, rivers, run-off and underground supplies.
Water usage across the UK has been falling since its peak in 1996, when 20,000 megalitres were being used each day. As well as usage falling, reserves have been rising. Within London, there has not been a hosepipe ban for several years.
Currently, 16,000 megalitres are being supplied a day across the UK. 84% of this volume is used in England and Wales, 12% in Scotland and 4% in Northern Ireland.
There are ten water and sewerage companies in England and Wales, and sixteen smaller water only businesses. Due to the pressures of the price caps imposed on the industry by Ofwat, a number of companies have started providing other utilities such as gas. Since privatisation in 1989, water bills in England and Wales have risen by 36% on average to date. However, following the 1999 Periodic Review, they are set to fall by 15% by 2005.
The water companies in England and Wales are represented by a body called Water UK. Formed in 1998, Water UK works towards influencing future legislation and the development of the water industry.
the history of the UK water industry
| 1973 | The Water Act - establishes regional water authorities |
| 1985 | Government announces review on whether privatisation would be possible/beneficial |
| 1989 | The Water Act - the ten public water authorities become private limited companies |
| 1994 | The Periodic Review - Ofwat review pricing policy of private companies every five years |
| 1995 | The Companies Act - the small water only companies register and float |
| 1996 | Environmental Agency -formed to regulate environmental issues |
| 1998 | Water UK- formed as a body to represent the ten major water companies |
| 1999 | The Periodic Review - determines a one off price cut valid from April 2000 |
| 2000 | Common Carriage - private companies now have to offer infrastructure to third party access |
how water is supplied
There are several stages involved in changing the water from rivers and lakes into the water which comes through pipes into homes.
- Water is extracted from rivers, reservoirs, underground and run-off sources
- The water is sent through a water treatment plant
- The water's chemical balance is monitored to make it suitable for drinking
- The water is pumped through the company's infrastructure and into homes
- Waste water is collected and sent to a sewage treatment works
- Water is returned to an aquatic environment
regulatory bodies
The Environment Agency was created in 1996 as an ally to Ofwat, and it is independent of governmental control. Its role is to improve water and environmental quality across England and Wales and to protect the people and nature who come in contact with it.
Ofwat is the economic regulator of the water industry, with legislative power to reprimand companies who contaminate, pollute or work outside the remit of their water licences. Ofwat can now also fine companies 10% of their annual turnover if they refuse third party access to their infrastructure.
Ofwat, most importantly, also regulates the water companies via the 'RPI + K' pricing mechanism. RPI is the Retail Price Index inflation charge levied on customers' bills, and K is the factor by which prices are allowed to increase or decrease relative to the RPI.
