Water Companies In England Research Articles

The evolution of benchmaking the carbon efficiency drinking water companies in England and Wales

Water utilities face the challenge of transitioning to a low-carbon urban water cycle while reducing operational costs. This study evaluates the static and dynamic carbon efficiency of a sample of water companies from 2013 to 2018 operating in England and Wales. Each company was evaluated relative to itself and its peers using cross-efficiency Data Envelopment Analysis techniques. The results showed that the carbon performance of the water industry improved by 2.1% per year, mainly due to efficiency change. In contrast, the contribution of factors driving technical and scale change was almost negligible.

Assessing energy efficiency of water services and its drivers: A case study from water companies in England and Wales

Understanding how energy efficient the water services are and what drives inefficiency can greatly assist water utilities in delivering sustainable services. This study employs a neural network (NN) approach to measure the energy efficiency of water services in relation to the volume of drinking water supplied and the number of connected properties. Unlike other non-parametric approaches, NN allows capturing the complex relationships and dependencies between various factors influencing energy efficiency of water companies. An empirical application for English and Welsh water utilities embracing water only companies (WoCs) and water and sewerage companies (WaSCs) over 2008–2020 was conducted. The average energy efficiency score was found to be 0.411, indicating that water utilities could potentially save 0.54 kWh per cubic meter of drinking water supplied. Notably, WaSCs exhibited better energy performance compared to WoCs, with energy efficiency scores of 0.559 and 0.239, respectively. Nevertheless, based on the volume of water delivered, WaSCs could save 0.65 kWh/m3 whereas WoCs potential energy savings are 0.24 kWh/m3. Energy efficiency remained relatively stable across the years, with average values of 0.440, 0.388 and 0.454 for the periods 2008–2010, 2011–2015, and 2016–2020, respectively. The analysis conducted using decision tree methods highlighted the relevance of water treatment quality and the source of raw water as key variables influencing the energy efficiency of water utilities. These findings can be valuable for policymakers, enabling them to gain a deeper understanding of the driving factors behind energy efficiency in water service provision.

Google Trends indicators to inform water planning and drought management

AbstractIndicators are important tools for tracking the socio‐environmental impacts of droughts and building resilience to climate change. We begin with an overview of metrics used for water planning and drought management, with particular emphasis on the UK. We explain how considerations of cost, immediacy, access, consistency, relevance, reliability and others denote the suitability of information for developing new indicators. We then demonstrate the potential of Google Trends (GT) online search data as drought indicators for England and Ireland. We show that search terms such as ‘drought’, ‘water butt’ and ‘hosepipe ban’ correlate significantly with conventional hydroclimatic data as well as with newspaper reports of various drought impacts during the period 2011–2022. GT data also show evidence of rising interest in water saving technologies, especially for outdoor water use. Meanwhile, online searches for ‘Defra’ and ‘Environment Agency’ have declined and are more often associated with flood episodes than droughts. Interest in water companies in England is more likely around hosepipe bans than water leakage (although this varies by company). We discuss the implications of these findings for targeting information campaigns, plus prospects for monitoring drought impacts and public sentiment in near real‐time.

Water fluoride concentrations in England, 2009-2020.

Contemporary research, surveillance and monitoring of water fluoridation requires an understanding of the population coverage of this intervention. The aims of this research are to create the first publicly available record of water fluoride concentrations in England and to describe and visualise the observed variation in water fluoride concentrations and optimal fluoridation (⟩/= 0.7 mg F/L) between 2009-2020. Routine water quality sampling data were requested from water companies in England from 2009-2020 under the provisions of the Environmental Information Regulations 2004. Fluoride concentrations of Water Supply Zones (WSZs) were assigned to Lower Super Output Areas (LSOAs) using population-weighted centroids. Between 2009-2020 4247 LSOAs (12.9%) had an annual mean water fluoride concentration of ⟩/= 0.7 mg F/L in at least one year, and 3019 LSOAs (9.1%) had a grand mean fluoride concentration of ⟩/= 0.7 mg F/L. Coverage of optimal fluoridation varied over time; from 10.9% of LSOAs in 2014 to 6.3% in 2016. This study confirms previous work identifying variability in the coverage and achieved concentrations of water fluoridation programmes. The current provision for accessing, collating and utilising these data are a barrier to essential monitoring, surveillance and research. An annually maintained and publicly accessible database of water fluoride concentrations is urgently required.

Prediction of the efficiency in the water industry: An artificial neural network approach

The measurement of efficiency of water utilities has been traditionally carried out using econometric methods or linear programming techniques. Alternatively, in this study a data mining non-parametric method is used, such as an artificial neural network (ANN) approach, to predict the efficiency of several water companies in England and Wales. The further use of a regression tree model allowed us to visualize and quantify the impact of operating characteristics on efficiency. The average efficiency score for the water industry was 0.411. Average scores for water only companies and water and sewerage companies were 0.210 and 0.626, respectively. Only one water company was identified as being fully efficient. This indicates that most of the English and Welsh water companies need to make substantial improvements in their managerial practices to catch-up with the most efficient ones in the industry. Several operating characteristics such as water leakage, water taken from different sources and population density were found to influence efficiency. The percentage of water leakage was identified as the most relevant operational variable influencing the efficiency of water companies. The findings of our study aim to support benchmarking analysis in regulated industries and to get a better insight on what drives efficiency.

Comparing Operational, Environmental and Eco-Efficiency of Water Companies in England and Wales

The assessment of performance of water companies is essential for their regulation. In doing so, several variables and models can be employed. This study evaluates and compares the performance of a sample of English and Welsh water companies from the operational, environmental and eco-efficiency perspectives by applying the non-radial data envelopment analysis range adjusted measure model. This methodological approach allows integrating greenhouse gas emissions as undesirable output. The results indicated that the water industry performed well from an operational perspective. However, environmental inefficiency considerably exists which illustrates the difficulties of the water companies in reducing greenhouse gas emissions. The average eco-efficiency was 0.783 which means that while expanding water services, water companies could further reduce costs and carbon emissions by 11.7% on average. Other factors such as water treatment complexity and population density significantly affect water companies’ eco-efficiency. Several policy implications are finally discussed.

Water company productivity change: A disaggregated approach accounting for changes in inputs and outputs

The assessment of the productivity change of water utilities provides essential information to sector managers and regulators. This study uses the Luenberger-Hicks-Moorsteen Productivity Indicator (LHMPI) to evaluate productivity change as it can be further decomposed into three components namely technical change (TC), technical efficiency change (TEC), and scale efficiency change (SEC). This study evaluates the productivity of several water companies in England and Wales from 2001 to 2018. We found that productivity declined 1.2% per year due to the use of inputs that increased by 1.4% per year relative to outputs that increased by 0.2% per year.

Marginal abatement cost of carbon dioxide emissions in the provision of urban drinking water

Abstract Reducing greenhouse gas emissions is a major challenge faced by cities seeking to improve their environmental sustainability. Doing so requires a good understanding of the costs associated with lowering emissions and factors that may influence this cost. This study estimated the marginal abatement cost of reducing both direct and indirect CO2 emissions in the provision of drinking water by several water companies in England and Wales. The results indicated that during the years 2013–2018, the average cost to the English and Welsh water industry to prevent 1 kg of CO2 emissions was 0.264₤ which was equivalent to 61% of the price of the delivered drinking water The results of the Morishima elasticity of substitution between water delivered and carbon emissions revealed that on average it was costly for the water companies to reduce CO2 emissions. Furthermore, a positive correlation existed between the marginal abatement cost of CO2 and a set of company's operational factors. These included: i) water taken from boreholes and reservoirs, ii) high levels of drinking water treatment, and iii) the need for pumping to abstract, treat, and distribute drinking water. Finally, policy implications were discussed based on these findings.

Benchmarking Water Retail Cost Efficiency in England and Wales

Privatised water companies in England and Wales are subject to economic regulation by the industry regulator (Ofwat). Ofwat sets 5-year caps on the prices’ companies can charge their customers. These caps are in part based on the benchmarking of companies’ costs. Ofwat has not previously used econometrics to benchmark domestic retail costs, but it undertook such modelling in its 2019 price review analysis. This is the first journal article to present an efficiency analysis of domestic water retail costs in England and Wales. Our approach is different from Ofwat’s, as we propose two new ways of accounting for differences in the effect on cost of the number of single and dual service customers (water/sewerage-only and water and sewerage). Some companies’ cost efficiencies vary greatly between the two ways. Depending on the approach to price capping, this could possibly have non-negligible implications for companies’ caps.

A metastochastic frontier analysis for technical efficiency comparison of water companies in England and Wales.

Evaluating the performance of water companies is of great importance for both water utilities and water regulators. This paper explores comparative levels of technical efficiencies and technology gap ratios with the metafrontier concept by estimating an input distance function using stochastic frontier techniques. The metafrontier framework is employed in the water services of water and sewerage companies (WaSCs) and water-only companies (WoCs) in England and Wales. The results show that the English and Welsh water industry is an efficient industry, with WaSCs more efficient than WoCs. On average, a water company can increase its technical efficiency by operating in more densely populated areas and by investing in technology to reduce bursts in water mains. We also link the efficiency results with the regulatory cycle to assess the impact of regulation on the efficiency levels of water companies.

Estimation and evaluation of productivity change and its drivers in the English and Welsh water sector: a stochastic cost frontier approach

ABSTRACTEstimating productivity change and its determinants is of great importance when measuring the performance of a firm. A true random effect cost model was employed to measure the cost efficiency of water companies in England and Wales from 1993 to 2016. Subsequently, total factor productivity change was estimated and decomposed into cost-efficiency change, technical change, scale efficiency change, output effect and residual price effect. The results indicate that the English and Welsh water industry increased its productivity over the period examined at a rate of about 2.1%, and it was influenced primarily by technical change. The price reviews appear to have a positive impact on the productivity of water-only companies during the whole period examined. In the case of water and sewerage companies, the 1994 and 1999 price reviews had a positive impact on productivity, whereas the last two price reviews had an adverse impact.

Impact of environmental variables on the efficiency of water companies in England and Wales: a double-bootstrap approach.

An important aspect of the regulatory process is the performance comparison of regulated firms. This exists in regulated industries where tariffs are determined through a benchmarking process such as the English and Welsh water industry. A double-bootstrap data envelopment analysis (DEA) approach was applied to overcome the uncertainty in efficiency scores and to reveal the influence of environmental variables on 18 water companies in England and Wales during the 2001-2016 period. The results showed that bias and bias-corrected efficiency scores lead to changes in the water companies' rankings. This reveals the importance of using reliable methodologies to support the decision-making process. Higher levels of average pumping head, leakage, and abstraction of water from reservoirs lead to lower efficiency. In contrast, increased population density leads to larger efficiency. We also link the results from the efficiency of water companies with the regulatory cycle. Our findings can be useful to policy makers for them to better understand water utilities' performance and to aid them in reshaping their current policies and practices to improve efficiency and provide better service to customers.

The impact of cost of capital reductions on regulated water utilities in England and Wales: an analysis of isomorphism and stakeholder outcomes

This paper investigates the impacts of price cap regulation—weighted average cost of capital reductions determined by The Water Services Regulation Authority (Ofwat)—on the internal actions of regulated water companies in England and Wales through an application of the theory of institutional isomorphism. More specifically, the paper examines the potential impacts of the most recent 2014 PR14 reduction on (1) potential homogeneity of regulated firm behavior and (2) the likely impact on stakeholders, including shareholders, consumers, and employees of regulated water companies. We hypothesize that firms face isomorphic pressures in the wake of WAAC reductions that influence firm behavior regarding financing, investment decisions, profitability and returns to shareholders, service quality and consumer price, and impact on employees and employment levels. The methods utilized include a targeted analysis of available reported water industry annual reports and financial statements and semi-structured interviews with industry professionals. Interview results reveal that companies will utilize debt to fund investment in the future, with a smaller proportion of retained earnings, and that the PR14 reduction would result in downward pressure regarding water companies’ credit ratings. Interviewees stated that the WACC had minimal impact on investment decision-making, but may reduce profitability and returns to shareholders. Regarding service levels and quality, interviewees predict that service levels will remain the same, while consumer prices will decrease or remain the same. Trends towards potential employee reductions were evident through redundancies or the merging of departments.

Assessing the productivity change of water companies in England and Wales: A dynamic metafrontier approach

The assessment of productivity change and its drivers across water companies and over time is a powerful tool for both regulators and companies when setting water tariffs. Water and sewerage companies (WaSCs) and water only companies (WoCs) provide different services. Hence, their productivity change cannot directly be evaluated jointly. In this paper and for the first time, we provide a pioneering approach to assess and compare the dynamics of productivity change of WaSCs and WoCs. To achieve this, both the traditional Malmquist productivity index and the metafrontier Malmquist productivity index and its components are computed to assess the productivity change for a sample of English and Welsh water companies over the period 2001–2014. The findings from both indices indicate that productivity for both WaSCs and WoCs did not improve during this period, mainly due to the negative shift in the production frontier which offset the positive effect of efficiency change. It is also reported that the performance of the WoCs over time was slightly better than that of the WaSCs. Finally, our study provides some insights into the relationship between productivity change and the regulatory cycle. This information is essential to improve the regulation of water and sewerage services, contributing to the long-term sustainability of the urban water cycle.

Estimating the cost of improving service quality in water supply: A shadow price approach for England and wales

Service quality to customers is an aspect that cannot be ignored in the performance assessment of water companies. Nowadays water regulators introduce awards or penalties to incentivize companies to improve service quality to customers when setting prices. In this study, the directional distance function is employed to estimate the shadow prices of variables indicating the lack of service quality to customers in the water industry i.e., written complaints, unplanned interruptions and properties below the reference level. To calculate the shadow price of each undesirable output for each water company, it is needed to ascribe a reference price for the desirable output which is the volume of water delivered. An empirical application is carried out for water companies in England and Wales. Hence, the shadow price of each undesirable output is expressed both as a percentage of the price of the desirable output and in pence per cubic meter of water delivered The estimated results indicate that on average, each additional written complaint that needs to be dealt with by the water company includes a service quality cost of 0.399p/m3. As expected, when looking at the other service quality variables which involve network repair or replacement, these values are considerably higher. On average, the water company must spend an extra 0.622p/m3 to prevent one unplanned interruption and 0.702p/m3 to avoid one water pressure below the reference level. The findings of this study are of great importance for regulated companies and regulators as it has been illustrated that improvements in the service quality in terms of customer service could be challenging and therefore ongoing investments will be required to address these issues.

Accounting for service quality to customers in the efficiency of water companies: evidence from England and Wales

This paper investigates the role of service quality to customers in the efficiency assessment of water companies in England and Wales. To achieve this, data envelopment analysis techniques are employed to compute the technical efficiency of the water companies following two approaches: (i) traditional assessment based on quantity variables (without the inclusion of service quality variables) and (ii) alternative assessment considering quantity and service quality variables as undesirable outputs. The analysis covers 22 water and sewerage companies and water only companies providing drinking water services. The results indicate that the traditional efficiency assessment reveals a high level of technical efficiency, suggesting that the English and Welsh water industry is mature and that one of the challenges it faces is improving service quality. When introducing service quality variables in the evaluation, the average scores of technical efficiency slightly decrease. This suggests that, on average, water companies do not necessarily provide high quality of service, meaning that the traditional efficiency assessment favours their performance. Quality of service supplied to customers within a water sector matters and should be taken into account during the benchmarking process as it could assist regulated companies and regulators to improve performance and incentives, respectively.

Water quality standards or carbon reduction: is there a balance?

Currently there is a misalignment between the European Union Water Framework Directive (EU WFD) and the United Kingdom Climate Change Act (UK CCA). This paper explores the tensions and complexities experienced by water companies in England and Wales as they attempt to meet the contradictory legislative requirements. A simple model is used to explore the effect of increasing effluent quality on power consumption and hence carbon emissions. Further data are collected through interviews and textual analysis to dissect opinions and views on the dilemma facing the water industry. In addition to complexities within the EU WFD and UK CCA, water companies are restricted by the regulatory framework of the UK water industry and additional policies and directives. Through this research, numerous suggestions offered by key stakeholders in the industry are explored. Among the proposed solutions is process optimisation of aeration, during activated sludge treatment. This does not require additional changes to legislation and may form one of the principle solutions because it is able to reduce emissions immediately. However, recent research has shown that aeration optimisation may cause increased emissions of the greenhouse gas nitrous oxide. This must be taken into account when finding the optimal solution.

Carbon accounting in the United Kingdom water sector: a review

The UK is committed to greenhouse gas (GHG) emission reduction targets and has introduced a number of initiatives to achieve these. Until recently, these targeted energy-intensive industries and, thus, the water sector was not significantly affected. However, from 2010, UK water companies will need to report their emissions under the Carbon Reduction Commitment (CRC). Both Ofwat (the economic regulator for water companies in England and Wales) and the Northern Ireland Authority for Utility Regulation (NIAUR) now require annual reporting of GHG emissions in accordance with both Defra Guidelines and the CRC. Also, carbon impacts must now be factored into all water industry investment planning in England and Wales. Building on existing approaches, the industry has developed standardised carbon accounting methodologies to meet both of these requirements. This process has highlighted gaps in knowledge where further research is needed.

The Emergence and Performance of the Bond Funded Water Company Model in the UK: The Case of Glas Cymru

The not-for-profit, fully debt-funded and large scale outsourcing of Glas Cymru (GC) is unique in the England and Wales context, representing a fascinating case in water industry structure and regulation. This paper examines the suitability, desirability and wider feasibility of the GC model, compared with other water industries within the EU in general, and private-equity funded water companies in England in particular. Whilst GC's structure seems both suitable and desirable for its specific situation, research indicates that a particular set of circumstances surrounding GC's creation including advantages of timing and political support from the Welsh Assembly Government, may make more widespread feasibility of such a structure unrealistic within current regulatory structures for the water industry.

THE 1999 CRYPTOSPORIDIUM RISK ASSESSMENT EXERCISE IN ENGLAND AND WALES- A GROUNDWATER OVERVIEW

Regulations Introduced in 1999 obliged water companies In England and Wales to conduct risk assessments of their treatment works to establish whether there was a significant risk from Cryptosporidium oocysts in the water supplied. More than 330 treatment works were identified as being at risk, just over half of which were plants treating groundwater. This paper provides an overview of what water companies themselves identified as the most at-risk settings for their groundwater-based works in terms of aquifer and type of supply. Evaluation of results from the subsequent continuous monitoring regulatory regime that came into force on many of these supplies could validate the primarily qualitative nature of the initial assessments of at-risk settings. There would also be public health benefits from confirmation of whether currently-employed risk assessment methods are well-founded because similar procedures could then be applied with confidence to the many small private supplies In Britain.