ASSIGNMENT

Assignment



Assignment

Q2: a

Possible Impact on the workload of water companies

A major change in the ownership of sewers took place on 1 October 2011. It will affect the water industry as well as the customers and developers. ON THE 1 OCTOBER the Water and Sewerage Companies (WaSCs) of England and Wales collectively took ownership of 234,000 km of sewers and lateral drains (Jenkinson, 2011: 45-51). This is equivalent to over a 70% increase on the existing 324,000 km public sewer network. And add to that, the WaSCs do not know where most of these transferred sewers are or what condition they are in. And to cap that the WaSCs are also going to take on around 33,000 private sewage pumping stations between now and October 2016. And again, they do not know where they are or what condition they are in (Shaoul, 2011: 151-159). And since the transfer was still uncertain at the last price review the WaSCs were not funded for this. Private sewers are a legacy from the 1936 Public Health Act. Sewers constructed before that date but were private were transferred to sewerage undertakers in 1937. However the Act did not cover sewers laid after that date. Effectively then developers could put forward new sewers for adoption, or not, and sewerage undertakers and 60s tended to delaminate, collapse or deform over time and today many pitch fibre sewers need replacing.

Up to 10 million property owners will be relieved of the responsibility of owning and maintaining an asset they were unaware of and of the risk of the unexpected costs of repairs. There is however a price attached to that transfer of risk. Earlier estimates suggested an impact on water bills of between £3 and £14 a year. However, since there was much uncertainty over the lengths and condition of the assets being transferred these predictions can only be estimates. And if a company achieves a successful IDoK* application say in late 2013, the earliest Ofwat expects to see an application, then the company will be entitled to recover three years worth of expenditure in the final year of the current price review period(Hall, 2011: 109-151). This would be a perverse and an unpopular result for customers with a significant water bill increase in 2014/15 - coincidentally the year of the next Price Review. The regulation will necessitate additional revenue funding. Ownership of the private sewers and lateral drains transferred overnight on a date that was set by the government i.e. 1 October 2011. The regulations to control the transfer came into effect on 1 July 2011. (Buelow, 2011: 147-148)

The WaSCs had to send notices or letters to all private sewer owners two months before transfer day. Effectively this meant writing to all their customers in July. Companies made sure the messages were as clear and understandable as could be; some even tested early versions with focus groups. However the legal notice was predefined and could have caused confusion for some. Companies therefore resourced up for an unknown number ...