Water commissioner warns on "continued use of legacy IT systems"
£30 billion in spending planned. CIOs could really take leadership roles here as pressure mounts to do more with technology and data
Utilities
Headline-hogging Thames Water, saddled with ~£19 billion of junk-rated debt and the gargantuan task ahead of finding 1) a rescuer and 2) an estimated £20 billion over the next five years to invest in its decrepit infrastructure, is the tip of a deeply troubled water utility sector in the UK.
That’s not helped by a failure of regulators to invest in the kind of technology that could help them spot problems before they escalate, a report from the independent water commissioner found – as government wrangling with potential rescuers for Thames Water continues. (A multi-billion-pound haircut for senior creditors is now on the cards.)
Sir Jon Cunliffe, the independent water commissioner, is reviewing the water sector regulatory system in England and Wales. His 100+ page interim report [pdf] was published on June 3 after a consultation that attracted an extraordinary 50,000+ responses. It deserves a close read.
Major technology gaps?
In it, he notes that the ability of regulators to enforce compliance – across a sector that has widely abused lax oversight – has been “compromised by capacity, capability and cultural challenges.” That includes real tech gaps.
“Regarding capability, a key issue raised in relation to the EA [Environmental Agency] is its continued use of legacy IT systems and inability to take advantage of advances in technology,” the report noted.
“The Commission understands this is limiting the organisation’s ability to take advantage of new data streams coming online, for example, from real-time monitors at storm overflows and wastewater treatment works. These data streams can be utilised to drive intelligence led inspections and audits of water industry assets,”
The EA is working to tackle that, it says.
It says new flow monitors are being installed on more than 2,000 wastewater treatment works: “We will be stepping up our inspection rate fourfold next year of the water industry so we’ll have more boots on the ground,” said EA Director of Water Helen Wakeham earlier this year.
“We’ll also be using the data we get from the industry, rainfall data, environmental data, to produce all kinds of visuals which actually show where there’s a mismatch between what we expect and what we see.”
Mounting regulatory pressure has seen utilities ramp up spending, with Anglian Water, for example, going to market in March for a partner to supply 60,000 sensors to monitor sewer levels as part of a £140 million overhaul.
(As The Stack noted at the time, it wants battery powered devices that can ship data to the cloud using the MQTT protocol, or HTTPS as a back up, via 4G or LTE CAT-1 BIS (a network standard for IoT); the sensors will need to have Bluetooth capability for “local use” and a roaming SIM to allow connections across different network providers.)
Notably, as Wakeham pointed out, much “criticism is driven by monitoring.”
“ The monitoring of storm overflows in England, the Environment Agency mandated those. That’s an unprecedented level of transparency, so it lifts the lid on how our networks are performing. No other country has that level of monitoring and that’s driven interest from the public, as has the publication of the performance of the water industry,” she commented.
The water commissioner sounds sympathetic to the plight of many utilities – even as public outrage at how saddled with debt private equity owners have left them mounts. He wrote last week: “Between 2020/21 to 2023/24 Southern and Thames received ODI penalties of £204m and £226m respectively. Southern Water also received a £126m penalty from Ofwat in 2019 and a £90m fine from the EA in 2021. Thames received a £123m penalty from Ofwat this year.”
“Whilst the penalties and fines were for underperformance relative to regulator expectations as well as wrongdoing, there remains the question of how constructive they are in turning around poor performance at a time when the industry needs to attract significant investment…”
There is £50 billion of investment in 30 major projects in the water sector
planned over the next 15 years says regulator Ofwat. Earlier this year it wrote to water company CEOs saying the sector can "support growth by unlocking opportunities [including to] support water intensive new industries such as hydrogen and data centres."
But on technology it wants much more joined-up thinking.
"We are also committed to exploring and implementing measures to maximise the opportunities from digitalisation and, in time, AI, working alongside other regulators and thesector to ensure we do so in a streamlined and efficient way. It would be helpful if the sector and its regulators can align on the best platforms and/or technologies and/or structures required so that our investments are interoperable," Ofwat lamented in its submission to this month's water commissioner report. Yet despite some innovative efforts, joined up thinking hasn't been the industry's forte. Amid mounting pressure, that may have to change and the industry's CIOs can expect themselves to find themselves, if they wish, taking meaningfully central roles here.