Research and analysis

Water resources 2023-2024: analysis of the water industry’s annual water resources performance

Published 7 October 2024

Applies to England

Executive summary

Ensuring water reliably flows from our taps is a fundamental for a water company. This involves planning to have enough water to meet demands from customers while protecting and enhancing the environment. Water companies’ water resources management plans (WRMPs) do this, but it is important that these plans are delivered.

This report summarises and reviews progress on key water demand and supply metrics across wholesale water companies in England, for the year April 2023 to March 2024. Whilst performance is assessed against water company published WRMP19, this is set within the context of most water companies recently finalising their 2024 water resources management plans (WRMP24), which will be reported on from 2025. We explore important areas of focus for the water industry to ensure they meet the starting point of their new plans and are in a good position for effective delivery. The report sits alongside the annual review data published on data.gov.uk.

This reporting year’s wet weather has provided respite for the industry following the widespread drought conditions in 2022. Rainfall for the 12-month period was classed as either notably high or exceptionally high across all hydrological areas in England, as shown in figure 1.

Our key findings

• Leakage has reduced slightly but remains too high, with 19% of water put into supply being lost as leakage. There has been a rise in leakage within company networks in too many areas around the company. A major step change in leakage reduction is required to ensure forecasts in the updated WRMP24 plans are met. Many water companies need to take immediate action to improve their performance to reduce leakage further compared to recent years and be ready for any prolonged cold spells this winter.

• There were no operational drought-related supply issues in 2023-2024, but some water companies have still reported that they do not have enough water available in some areas to meet demands if there had been a drought. More action is needed to deliver new supply schemes alongside effective demand management.

• The amount of water put into supply by water companies in 2023-2024 was more than we would expect to be needed, given the weather conditions. This is putting unnecessary pressure on the environment.

• Some water companies are behind on their programmes to install water meters, its important they catch up to help manage water demand in future. This has a key influence on household water use and the associated per capita consumption, which is much higher than we would expect.

• Temporary losses of supply (outage) increased last year but are in line with what we would expect to be reported. We expect the industry to be proactive in managing assets.

• There have been delivery challenges of WRMP19 schemes, resulting in less surplus water available across many areas. There are many key environmental investigations due to conclude in 2025, which will improve understanding of environmental needs.

What water companies should do next

Early preparation for the next price review period beginning in 2025-2026 will help ensure successful delivery of the updated WRMP24s.

As set out in our summary of the latest WRMPs, there are more large supply options selected than ever before. Water companies should be preparing for this step change in delivery of new supply infrastructure, with some progressing through the RAPID gated process detailed on the Ofwat website.

While there are some areas where companies are making steady progress, a continued and enhanced focus on leakage reduction and effective demand management is essential during 2024-2025. This will also need to be closely monitored by the industry to ensure it remains on track.

Water companies should already be preparing for a successful smart metering rollout, ensuring data infrastructure is in place to support customers from the moment a smart meter is fitted. Reduction in demand is central to ensuring secure supplies for customers and enabling environmental protection and the implementation of required licence reductions.

1. Introduction

1.1 Background

Actions by the water industry next year and beyond to 2030 will be critical to ensuring there is plentiful and sustainable water across England over the coming decades. These actions include:

• major additional investment and focus on delivering new water supply infrastructure
• actions to reduce leakage and drive water efficiency across the country, not least through a rollout of smart water meters

These selected options are included in the water companies’ statutory WRMPs and reflected in their business plans.

For most water companies, their latest WRMPs will have been finalised and published by the end of 2024. As the industry moves from the delivery of WRMP19 to WRMP24, greater focus on effective leakage reductions and water efficiency measures will be essential to ensure security of supplies and to protect the environment.

Water companies have a statutory duty to report progress on their WRMPs each year. This publication looks at the outputs of the annual review reporting across water companies in England.

As we are on the cusp of the launch and delivery of the new WRMPs, this report sets out water resources performance this year within the context of the next round of WRMPs and progress following the 2022-2023 reporting year.

We have considered whether the industry is on track for the WRMP24 starting point. We highlight what additional action may be needed over 2024-2025 to ensure the outcomes set out in the WRMP24s can be achieved.

In the report, we present data in a national context and water company data alongside national averages.

As part of our assessment of annual review submissions, individual company data is reviewed in further detail and assessed against the company’s own WRMP forecasts. This means that although a company may be performing above the national average on a particular metric, performance issues may still be raised through our joint regulatory letters where the company is far from meeting its own forecasts. These joint regulatory letters are published on Ofwat’s website.

1.2 A year in water resources

Across the country, 2023-2024 was a wet year without drought conditions or freeze-thaw events with all parts of England experiencing exceptionally high or notably high annual rainfall. Figure 1 reflects the annual rainfall conditions across England.

The wet conditions offered welcome respite to the industry following the widespread 2022 drought conditions through suppressed demand for water.

We expect companies to continue preparing and investing in their delivery of water resources solutions, irrespective of the weather. The exceptionally high rainfall across much of the country signals the increasing weather extremes associated with a changing climate, and we must be prepared for severe drought.

Climate change is increasing the likelihood of warmer summers and the probability of combined warm and dry conditions like those experienced during 2022 and 2018.

We need to consider the data reported by water companies in the context of this exceptionally wet year. Water company supplies were not under pressure from drought and for most companies, water demand will have been lower than what we could expect under prolonged periods of hot, dry weather. This is important as we look to water company performance and preparedness for future years.

Through the annual review process, water companies also considered how demand would be uplifted under dry conditions. This has proved insightful, confirming that, nationally, demand in 2023-2024 was expected to have been above 2022-2023 levels reported if it had been dry.

The industry and the country are still grappling with some residual impacts of COVID-19, although behaviours such as the new normal of hybrid home working for a portion of the working population appear to have stabilised. Water companies have taken account of this in their WRMP24 plans.

Figure 1: Observed rainfall between April 2023 and March 2024 compared to probability bandings (by hydrological area)

Rainfall data for 2023 and 2024, extracted from Environment Agency 1km gridded rainfall dataset derived from Environment Agency intensity rain gauges. (Source: Environment Agency. Crown Copyright, 100024198, 2024.) Rainfall data prior to 2023 extracted from Met Office Hauk 1km gridded rainfall dataset derived from registered rain gauges (Source: Met Office. Crown copyright, 2024.)

 2. Analysis of 2023-2024 data

This is a national report, summarising water resources performance at a national and water company level for England. However, we do provide some water resource zone level context.

Water resource zones are geographical areas used in water resources planning, within which customers face the same risk of supply failure and the same level of service for demand restrictions.

Through the data we assess progress year on year, and against the forecast figures in the live WRMP (currently WRMP19). Given updated WRMP24 plans are being finalised, we also look to preparedness to meet the 2024-2025 forecasts in the WRMP24s.

The annual review data reported by water companies is available on data.gov.uk. There will be some differences in figures reported through the Environment Agency and Ofwat due to different reporting requirements and metrics.

2.1 Overall supply-demand balance

Given that 2023-2024 was a wet year, water companies did not experience operational issues around water availability in the year.

However, despite the wet conditions, which will have suppressed water demand compared to what can be expected during dry conditions, there were supply-demand balance deficits reported in 14 water resource zones across England.

Also, for half of all water resource zones the reported surplus available is lower than forecast in WRMP19 for 2023-2024. This is disappointing and reflects the need for timely delivery of new supply schemes alongside effective demand management.

The level of delivery of the WRMP19 demand and supply schemes has not met forecasts or our expectations and we are working across regulators to ensure this situation does not continue.

Where there are immediate risks of deficits under design drought conditions, we expect water companies to be taking urgent action to mitigate these. Where relevant, this is reflected in the joint regulator letters to companies.

2.2 Water abstracted, water losses and operational use

Water companies reported a total of 14,664 megalitres per day (Ml/d) of raw water abstracted across England during 2023-2024. This is down from the 14,773 Ml/d reported for the 2022-2023 period.

Abstraction reductions are required in many catchments. Given environmental pressures from abstraction activity, we expect to see sustained reductions in water being taken from the environment.

Prior to water being put into supply, water may be lost when it is transported as raw water to a treatment works, within the treatment works itself and where water is used operationally during the treatment process.

In 2023-2024, a total of 433 Ml/d or 3% of water abstracted was reported as losses or operational use before being put into the distribution network. Although this has reduced by 13.5% from around 500 Ml/d during 2022-2023, water companies can and should do more to save water by reducing losses prior to water being put into supply.

In Figure 2 we set out these losses and operational use as a percentage of water put into supply per company. This shows some water companies are reporting far greater losses than others.

Although there are valid reasons for differences, such as length of raw water network and type or quality of raw water abstracted, we expect all water companies to fully understand where water is being lost before distribution and take action to reduce water losses to reduce the overall volume of water taken from the environment as far as possible.

We are concerned about companies with reported losses considerably above the national average. We expect all water companies to actively monitor water quantities during the journey from source to the distribution network, and beyond.

Water companies should fully understand where water is lost and minimise this loss, alongside reducing leakage and promoting water efficiency across customers. They should ensure treatment works processes are as water efficient as possible.

Figure 2: Water losses and operational use as a percentage of distribution input (DI) per company in 2023-2024

	As % of DI
Anglian Water Services	7.9%
Bristol Water	7.4%
South Staffordshire Water	5.5%
Yorkshire Water	3.5%
Thames Water	3.5%
Northumbrian Water	3.2%
Southern Water	3.2%
National average	3.1%
Portsmouth Water	2.7%
South West Water	2.7%
Severn Trent Water	2.6%
Affinity Water	1.8%
United Utilities	1.7%
Sutton and East Surrey Water	1.4%
Essex and Suffolk Water	1.2%
Wessex Water	1.1%
Cambridge Water	0.7%
South East Water	0.3%

2.3 Outage

Nationally, water companies reported a total outage (temporary loss of supply) of 528 Ml/d for 2023-2024. This is an increase of over 8% on the 487 Ml/d reported in 2022-2023. However, the reported outage is well aligned to the 2024-2025 outage allowance in revised draft WRMP24s nationally.

We note that total outage figures reported to the Environment Agency may differ to those reported to Ofwat through its annual reporting processes, as data reported to the Environment Agency reflects the impact on water available for use.

At a water company level, performance has been far more varied. We do acknowledge that the wetter weather may have presented an opportunity for some water companies to undertake additional planned outage in 2023-2024 that was postponed during the drought conditions in 2022-2023, which can represent a positive step to improve asset health where there is no risk to customers supplies. Also, wet weather may have presented water quality challenges in some cases.

A total of 10 water companies reported a notable rise in total outage, whilst 6 water companies reported a notable drop in outage, with 2 water companies reporting outage at levels within 1% of 2022-2023 reported levels.

It is positive to see outage reductions more than 25% from the previous year by Essex and Suffolk Water, Southern Water, United Utilities and Yorkshire Water.

We understand some water companies have taken steps to be better prepared for outage including by having a good stock of replacement pumps ready to deploy as soon as an outage event occurs. The effective management of critical spares is an element of proactive asset management behaviour that we expect of the industry.

The water companies which have seen notable increases in outage should review what additional steps they can take to improve their performance in 2024-2025 and onwards, whilst ensuring assets are maintained.

2.4 Distribution input

Distribution input (DI) is the total water put into the distribution network for customer consumption. Water companies must protect the environment and reduce abstraction from sources that cause, or could cause, environmental degradation.

In the latest water resources plans (regional plans and WRMP24s), the ‘environmental destination’ describes planned environmental outcomes relating to abstraction. Achieving the environmental destination outlined in plans will require both new supplies and reduced demand. It is therefore critical that we see sustained reductions in DI across water companies.

In Figure 3 we set out the components of the DI reported by water companies through the annual review 2023-2024 for the industry. It shows that:

• household consumption accounts for 58%
• leakage comprises 19%
• non-household consumption is 20%
• the remaining 3% is water taken unbilled and distribution system operational use

Figure 3: National demand and leakage proportion of total DI in 2023-2024

	AR DI 2023-24	% of DI
Non-household	2,757	20%
Measured household	4,245	31%
Unmeasured household	3,762	27%
Other	423	3%
Total leakage	2,690	19%

Nationally, DI reduced from 2022-2023 levels, with DI of 13,877 Ml/d reported for 2023-2024. There was a further 72 Ml/d in non-potable demands, supplied using water below drinking water standards.

This DI was only around 1.4% lower than last year, despite the weather conditions during the year being considerably less challenging.

Although it is positive to see this small reduction, the DI is higher than we would expect for the wet conditions experienced and is around 90 Ml/d above the dry year forecast for 2024-2025 nationally in the revised draft WRMP24s. We are concerned that this DI would be considerably higher under dry conditions, which could pose potential risks to security of supplies.

As part of the Environment Act 2021, the Environmental Targets (Water) (England) Regulations 2022 established the ‘water demand target’. This nationally seeks a reduction in DI per person of 20% by 2037-2038 from 2019-2020 levels. Progress against this is shown in Table 1. This demonstrates that there has been a 3.6% reduction from 2019-2020 levels.

Some water companies have higher levels of DI per capita than others (Figure 4). We expect all water companies to be taking action to reduce this, however we particularly expect additional effort by those water companies with figures well above the national average, as shown in Figure 4.

Table 1: Nationally reported DI and population data and progress against the water demand target

Metric	Unit	2019-2020	2020-2021	2021-2022	2022-2023	2023-2024
DI	Million litres per day	13,732	14,175	13,927	14,075	13,877
Population	Thousands	56,895	57,636	58,405	58,883	59,617
DI per capita	Litres per person per day	241.4	245.9	238.5	239.0	232.8
DI/population reduction from 2019-20 baseline	% reduction	0.0%	-1.9%	1.2%	1.0%	3.6%

Figure 4: Reported distribution input per capita at a water company level for 2023-2024

	DI per capita 2023-24
South West Water	277.6
Northumbrian Water	250.9
United Utilities	247.2
Wessex Water	243.0
Thames Water	239.4
Affinity Water	236.7
Portsmouth Water	235.9
South East Water	235.7
National average	232.8
South Staffordshire Water	227.6
Anglian Water Services	227.4
Yorkshire Water	227.0
Essex and Suffolk Water	218.5
Cambridge Water	218.1
Bristol Water	216.6
Severn Trent Water	213.5
Sutton and East Surrey Water	213.3
Southern Water	211.2

In the latest revised draft WRMPs, water companies have forecast a total dry year DI of 13,786 Ml/d in 2024-2025. We expect the industry to achieve this and ensure they start the next asset management period (AMP) on track.

A national reduction of 91 Ml/d is required from 2023-2024 reported DI to achieve the forecast for 2024-2025, as shown in Figure 5. However, 2023-2024 was a wet year, whilst the DI forecast is for a dry year. We anticipate that water demand would be higher during a dry year, therefore even greater demand reductions are needed to meet national forecast DI levels.

Figure 5: England-wide reported distribution input 2000-2024 and WRMP forecast distribution input from 2024-2050 (based on revised draft WRMP24 plans)

2.5 Leakage

Water company actions can influence all components of water put into supply. However, they have particular control, influence and responsibility around leakage management.

We have seen a 3.7% reduction in the total leakage reported in 2023-2024. This is positive to see, following the concerning increase in leakage reported in 2022-2023.

Nationally, total leakage was 2,690 Ml/d, which is the lowest leakage level reported over 2 decades. However, leakage remains above the levels forecast in the WRMPs as shown in Figure 6.

We do not consider it acceptable for 19% of water put into supply to be leaked before it enters customer properties.

Figure 6: England-wide reported total leakage 2000-2024 and WRMP forecast total leakage from 2024-2050 (based on revised draft WRMP24 plans)

The water industry, through Water UK, committed to halve leakage by 2050 from 2017-2018 levels. The 2017-2018 levels were 2,987 Ml/d across the English water companies. Therefore, leakage has reduced by approximately 10% from 2017-2018 levels to date.

Despite the progress, leakage reduction must remain a priority across the water industry. We expect the industry to show leadership to customers by ensuring less water is being wasted on route to properties.

Through WRMP24, water companies plan to achieve the 50% reduction in leakage expected and it is vital that they deliver the leakage options selected.

Figures 7 and 8 show company leakage per person and leakage as a percentage of water put into supply.

Figure 7: Leakage per person at a water company level for 2023-2024

	Leakage per capita
Thames Water	54.0
United Utilities	53.8
South West Water	52.2
Wessex Water	50.0
Yorkshire Water	47.9
Severn Trent Water	46.7
National average	45.8
Northumbrian Water	45.0
South Staffordshire Water	44.8
South East Water	43.2
Southern Water	40.3
Affinity Water	38.9
Anglian Water Services	36.6
Portsmouth Water	36.4
Cambridge Water	32.5
Bristol Water	29.9
Sutton and East Surrey Water	27.8
Essex and Suffolk Water	24.9

Figure 8: Leakage as a percentage of distribution input at a water company level for 2023-2024

	Leakage as % of DI
Thames Water	22.7%
United Utilities	22.3%
Wessex Water	20.9%
Yorkshire Water	20.6%
South Staffordshire Water	20.0%
Severn Trent Water	19.8%
National average	19.4%
Southern Water	19.0%
South East Water	18.6%
South West Water	18.6%
Northumbrian Water	17.4%
Affinity Water	16.4%
Portsmouth Water	15.8%
Anglian Water Services	15.8%
Cambridge Water	14.6%
Bristol Water	14.0%
Sutton and East Surrey Water	12.9%
Essex and Suffolk Water	11.1%

We also note that 2023-2024 did not see temperature extremes for prolonged periods. Pipes are particularly prone to bursts during both freeze-thaw events and hot dry conditions due to ground movements.

It is critical that the industry ensures preparedness for these kinds of events, so we do not see rises in leakage in future years where conditions are harsher due to the impacts of climate change. We fully expect the industry to deliver sustained reductions of leakage.

Despite total leakage being lower, it only fell in around half of water resource zones in England and it substantially increased by over 10% in 18 resource zones. This is reflected in map in figure 9.

This level of leakage increase year on year is unacceptable and reflects the need for continued focus on reducing leakage across water resource zones, as leakage reductions and effective management can be difficult to achieve once leakage levels spike.

Figure 9: Percentage change of total leakage from 2022-2023 to 2023-2024 at a water resource zone level, using data reported through the annual review

2.6 Per capita consumption (PCC)

Water companies have an important role in promoting water efficient behaviours across their customers. Reductions in PCC are central to meeting the water demand target in the Environment Act 2021 and associated interim targets in the Department for Environment, Food and Rural Affairs’ (Defra’s) Environmental Improvement Plan.

In 2023-2024, average household PCC was reported across England as approximately 137 litres per person per day (l/p/d). This is a reduction of almost 4 l/p/d from 2022-2023 reported PCC of 141 l/p/d. A reduction was expected given the differing weather conditions.

Figure 10 shows how average household PCC saw a sharp rise during the peak of the COVID-19 pandemic in 2020-2021 with the population spending more time and working at home and has been falling since then. However, as stated in section 1.2 ‘A year in water resources’, the high rainfall across England during 2023-2024 will have significantly suppressed household water use.

Average household PCC at a water company level is shown in Figure 11, ranging from 119 l/p/d reported by Cambridge Water, up to 154 l/p/d reported by Portsmouth Water. There are many reasons why average household PCC varies across the country, with household metering rates and households being billed by their volumetric water usage through a meter being important factors.

Most water companies saw a reduction in PCC compared to 2022-2023, however this was not universal with Portsmouth Water and Yorkshire Water reporting an overall increase.

Figure 10: Average per capita consumption across households in England reported between 2005-2024 and forecast average per capita consumption from 2024-2050 (based on revised draft WRMP24 plans)

Figure 11: Average water company per capita consumption reported in 2023-2024

	Litres per person per day
Portsmouth Water	154.36
Affinity Water	154.0
Essex and Suffolk Water	153.3
Northumbrian Water	151.9
South West Water	151.9
Sutton and East Surrey Water	146.4
Bristol Water	144.7
South East Water	143.4
United Utilities	138.2
Thames Water	138.0
South Staffordshire Water	136.9
National average	136.8
Wessex Water	132.9
Anglian Water Services	127.6
Southern Water	126.7
Severn Trent Water	126.2
Yorkshire Water	125.3
Cambridge Water	119.4

At a water resource zone level, 16 zones reported an increase PCC compared to 2022-2023 despite the wetter conditions. This is reflected in the map in figure 12.

It is critical that all water companies continue to focus efforts on key activities within their control that influence customer water efficiency, including metering rollout and household water audits.

Figure 12: Map showing percentage change in reported average per capita consumption between 2022-2023 and 2023-2024 at a water resource zone level

2.7 Non-household consumption

Non-household water consumption reflects the water use of properties that are not classed as households. This includes buildings such as businesses, schools, hospitals and student accommodation.

In 2023-2024, total non-household consumption was reported as 2,757 Ml/d across England, which is marginally up from the 2,739 Ml/d reported in 2022-2023. It around 1% above forecast levels for 2024-2025 in revised draft WRMP24 plans.

Defra’s Plan for Water and Environmental Improvement Plan seek a 9% reduction in non-household consumption by 2037-2038 from 2019-2020 levels. This year’s data reflects a 1.3% reduction in the context of the target, however total non-household consumption fell substantially during the COVID-19 lockdown in 2020-2021 and has been recovering back to pre-COVID-19 levels since then.

Increased demand from household and non-household growth has led some companies in the east of England to restrict supplying water for new non-domestic purposes where this could mean there are risks to security of supply and the environment.

It is important that there is greater focus across water retailers and water companies on non-household water efficiency going forwards to ensure that businesses are empowered to be efficient with their water use. Smart water metering will be a key enabler of this and is central to the nation being able to meet these non-household targets.

2.8 Metering of households and non-households

In 2023-2024, water company reported data shows that over 61% of households in England pay for their water by metered volume (including empty or ‘void’ properties), as shown in figure 13. Void properties are properties that do not have legitimate tenant and are vacant as a result.

This is the first time the rate of metering has been more than 60% nationally, but it is notably below the 64.5% metering rate forecast for 2024-2025 in the updated WRMPs.

Rates of metering are highly variable, with some water companies reporting metering rates well over 80% and others as low as around 36%.

We note this reflects the percentage properties that are billed by meter, and that some water companies have deployed additional meters across household properties that remain on unmeasured tariffs where they have opted to do so.

Figure 13: Percentage of households being charged on a metered tariff including void properties, reported by water companies in 2023-2024

	Household meter penetration %
South East Water	88.5%
Anglian Water Services	84.8%
Southern Water	84.7%
South West Water	82.8%
Cambridge Water	73.6%
Wessex Water	72.4%
Affinity Water	66.9%
Sutton and East Surrey Water	65.2%
Bristol Water	65.1%
Essex and Suffolk Water	65.0%
National average	61.1%
Yorkshire Water	58.5%
Thames Water	56.0%
Severn Trent Water	51.1%
United Utilities	47.2%
Northumbrian Water	43.3%
South Staffordshire Water	42.2%
Portsmouth Water	36.1%

In non-households, on average a total of almost 93% of properties are metered when we exclude void properties. This varies by company, as reflected in figure 14.

Opportunities remain for many water companies and the respective retailers operating in their areas to meter the final unmeasured non-household properties. Also, although there is a high metering rate across non-households, very few of these will be smart meters.

An extensive meter replacement programme will be important over the coming years to empower non-household customers to understand their usage and be more water efficient.

Figure 14: Percentage of non-households being charged on a metered tariff excluding void properties, reported by water companies in 2023-2024

	Non-household meter penetration excluding voids %
Anglian Water Services	98.7%
Bristol Water	96.7%
South West Water Ltd	96.1%
South East Water	95.5%
Severn Trent Water Ltd	94.5%
Cambridge Water	94.5%
Essex and Suffolk Water	94.0%
Wessex Water	93.3%
Southern Water	92.6%
National average	91.3%
United Utilities	91.0%
South Staffordshire Water Plc	90.6%
Northumbrian Water	89.0%
Portsmouth Water Ltd	88.5%
Yorkshire Water	87.7%
Affinity Water	86.4%
Sutton and East Surrey Water	85.8%
Thames Water	83.5%

2.9 WRMP and water industry national environment programme (WINEP) scheme delivery

The delivery of schemes set out in the statutory WRMPs is vital for ensuring sufficient supplies now and in the future. We are concerned that in most resource zones across England, there is less surplus water available in drought conditions than had been planned in WRMP19. This reflects some delivery challenges in increasing supplies and reducing water demand and leakage.

Company specific concerns around scheme delivery this year have been raised through the joint regulatory annual review letters.

We need to see timely and effective delivery of the demand and supply schemes set out in the WRMP plans. Without this, resilience to droughts could be reduced, and both supplies and the environment will be put under additional pressure.

Water companies are progressing key investigations into the sustainability of abstractions across the country, as per the WINEP, with many due to be completed next year. We expect these to be prioritised, given timely delivery will aid understanding of the abstraction reductions required to protect and improve the environment.

2.10 New appointments and variations

New appointments and variation (NAV) companies are appointed as water suppliers for specific geographic areas, previously supplied by the wholesale water companies. The NAV companies generally operate through bulk supply agreements with the water company, purchasing water that a water company has abstracted and treated.

The NAV company market is growing rapidly. Currently there are 7 NAV companies appointed by Ofwat to supply water, supplying water to around 85,000 properties across hundreds of different NAV supply areas. By 2025, this could rise to almost 120,000 properties, supplying a total of 135 Ml/d to 296,000 people.

Albion Water, Icosa Water, Independent Water Networks Limited (IWNL) and Leep Water Networks Limited (Leep) submitted an annual review against their 2019 WRMPs.

Overall, the NAV companies have reported:

• a lower population than forecast
• lower levels of DI than forecast
• lower average household PCC than forecast

However, both Leep and IWNL reported at least one site where the volume of water they imported for use exceeded the planned bulk supply figures set out their 2019 WRMPs. Average household PCC and leakage levels above forecasts contributed to the exceedance at those sites in question.

It is important that NAVs obtain and report high accuracy data across their sites. We are raising some concerns around this through this year’s review with some NAVs.

We expect all NAV companies to continue to improve water efficiency and reduce leakage across their operational sites. Where average household PCC or leakage forecasts have not been met, NAV companies should be taking additional action to improve performance during 2024-2025.

3. Looking to 2024-2025 and beyond

3.1 Focus and expectations of the industry for 2024-2025

In 2024-2025 we expect the water industry to make significant progress on:

• improving water efficiency
• reducing leakage
• delivering supply schemes

With most water companies at the stage of concluding the update to their WRMP24s, the water industry should be taking steps to ensure successful delivery of their WRMP24 programmes. In the short term, water companies should also remain focused on completing the planned activities in their WRMP19 plans and PR19 business plans for 2024-2025.

Looking ahead to future water resources annual reviews, we request that all water companies publish their annual review reports and performance data on their websites in a timely manner. This has not been common practice in recent years, and we expect greater transparency around performance from the industry with its customers and stakeholders.

3.2 Smart water metering

As we look to the next AMP period and the latest WRMPs, 2024-2025 will be an important year for water companies to be planning and procuring for the smart water meter rollout.

We expect all water companies to be taking appropriate steps, including securing supply chains, to ensure these smart water meter rollouts are well-coordinated and appropriately resourced.

The benefits of smart water meters are directly dependent on:

• the appropriate data infrastructure
• analytical systems
• suitable customer communication channels

Water companies should be ready to alert customers to high water use and possible internal leaks as soon as the smart water meters are deployed. An effective customer transition and easy, intuitive messaging and data provision will be foundational to the success of the smart water meter rollout.

3.3 Government demand policies and Ofwat water efficiency fund

Defra is currently progressing the implementation of the mandatory water efficiency label, which is expected in 2025. This will require plumbing products and water-using white goods being sold to have a water efficiency label to enable consumers to consider water efficiency in their purchasing decisions. This is expected to have an increasing and significant benefit on water efficiency over time.

Alongside the water efficiency label, government is also set to review water efficiency standards in building regulations. Ofwat is due to launch their £100 million water efficiency fund in 2025, which is proposed to include a national water efficiency campaign alongside a water efficiency lab to fund innovative projects.

These policies and initiatives will be highly beneficial in promoting water efficiency alongside water company initiatives.

3.4 Monitoring and adaption

We expect water companies to deliver the commitments in their WRMPs. This is part of the delivery of essential services to customers, funded through customer bills set out in water company business plans. However, we also acknowledge that there are uncertainties that water companies should monitor and adapt to, if needed.

We expect water companies to have robust systems in place to ensure appropriate monitoring of uncertainties and clear communication where risks are emerging.

3.5 Regional water resources planning and strategic resource options

Water resources planning is becoming increasingly more connected between water companies and other water-using sectors. The establishment of regional water resources groups across England has been an extremely positive step, making improved connectivity and resource sharing options more possible.

This has resulted in regional water resources plans across England, which include numerous strategic resource options that have been progressed through the RAPID gated process, detailed on the Ofwat website.

Notably, the delivery of demand reductions and new supplies by one water company has the potential to affect others, particularly within the region they operate in.

Looking forward to 2024-2025 and beyond, it will be important that regional groups are tracking and monitoring delivery at a regional level and understanding any implications of this.

4. Conclusions

Our review of the water company’s water resources annual review submissions has shown some progress but highlights areas of significant under delivery which require greater focus by the industry.

In most cases, the surpluses expected in WRMP19 plans for 2023-2024 are not available, putting additional risks on customers and the environment than was planned.

We are pleased to see lower levels of leakage and per capita consumption reported in 2023-2024 than in recent years. However, we are concerned that the weather conditions have been the primary driver for these reductions. When drier conditions return, we expect water companies to be doing more to deliver sustained demand reductions.

We consider leakage reductions to be firmly within the responsibility of the water companies and expect the reduction seen in 2023-2024 to continue and for them to deliver their commitment of a 50% reduction by 2050. We expect water companies to turn around this year’s rise in leakage that was reported in 10% of water resource zones. Water companies should be capitalising on new technologies and data availability to maximise their effectiveness of their leakage management activities across their operating areas.

Beyond leakage, we also expect companies to take steps to improve their understanding and accounting of raw water losses and treatment works operational use. This again is within the control of companies, and we are not satisfied that this has had enough attention by the water industry. Inefficient abstraction practices may pose an unnecessary risk to the environment.

Although household water use per capita has fallen, we expect water companies to be rapidly increasing their resources and investment for the rollout of smart water meters. Water companies should take a positive and proactive approach to empower both household and business customers to be water efficient. This will come alongside the Ofwat water efficiency fund and government’s delivery of the mandatory water efficiency label in 2025, which will support households and businesses to make water-conscious decisions.

We expect assets to be kept in good health to ensure they are fully available during periods of dry weather and drought. This review highlights progress among some companies in substantially reducing outage, following the previous year. All water companies should take a proactive approach to asset health, investing in assets in advance of outage events occurring.

As water companies conclude the update of their WRMP24 plans, attention and resources should be focused on effective delivery of both the supply and demand schemes in these. Our summary of these plans sets out these schemes in detail. This is crucial to water resources resilience and both immediate and long-term protection of the environment.