Trading theory
for practice
A report on opportunities
for water resource sharing
in East Anglia
Water trading is a potential answer to one of the
biggest challenges facing the future viability of our
industry – water resource management.
Ofwat’s paper Valuing Water addresses the nature
of this challenge and in doing so has stimulated a
very important and far-reaching debate.
Here, we contribute to that debate by presenting
an evidence-based report, supported by detailed
technical analysis. The conclusions are based on
a case study, undertaken in close collaboration
between our three water and wastewater
companies that together serve over 6 million
customers in eastern England.
Valuing Water sets out a number of ideas for encouraging a greater level of water trading between companies. Its high level analysis suggests that companies may have been incentivised to invest in unnecessary capital spending, when water trading
CNTKDÞHAUEÞOQNUIDEDÞAÞLNQEÞCNRSEáECSIUEÞRNKTSINMÞ
Market reform
We see this in the context of the wider debate about market reform in the water industry. The proposed reform of upstream water resources, including abstraction, raw water distribution, treatment and treated water distribution, is likely to increase the role of trading in water resource planning, and so adds a further dimension to the debate. Groundbreaking
With this in mind, Anglian Water, Essex
AMDÞ3TáNKJÞ7ASEQÞOAQSÞNFÞ.NQSHTLBQIAMÞ
Water) and the Cambridge Water Company collaborated on a groundbreaking project on water resource sharing in the eastern part of East Anglia to see if this can really work.
Managing risk
4HIRÞIRÞNFÞQEAKÞRIGMIâCAMCEÞGIUEMÞ%ARSÞ!MGKIAÞIRÞ IDEMSIâEDÞARÞNMEÞNFÞSHEÞHIGHERSÞQIRJÞAQEARÞIMÞSHEÞ5+Þ^Þ
being particularly vulnerable to the impacts of climate change as well as being the fastest growing region. Given this we believe we can contribute
a very helpful perspective.
/TQÞRSAQSIMGÞONIMSÞIRÞSHASÞSHEQEÞIRÞMNÞRIGMIâCAMSÞ
surplus of water in this region, so major investment is required to help balance future supply and demand. This is being achieved over a 25 year planning horizon. We set ourselves two primary goals:
1. Establish whether sharing or trading of
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to customers and the environment; and 2. Determine whether the current industry
structure and/or regulatory framework acts to constrain opportunities or an appetite for resource sharing.
We share the ambition of Ofwat to achieve more
ãEWIBKEÞAMDÞEäCIEMSÞVAXRÞNFÞLEESIMGÞFTSTQEÞCHAKKEMGERÞ
and we are pleased to share the results of our collaborative project to contribute towards this goal.
Peter Simpson Managing Director Anglian Water Heidi Mottram #HIEFÞ%WECTSIUEÞ/äCEQ .NQSHTLBQIAMÞ7ASEQ 3SEOHEMÞ+AX Managing Director
Cambridge Water Company
Looking to the future
At stake is the security of safe, constant supplies of water and
wastewater services to every customer in our region. They will be
looking to us for innovative and ideas-driven solutions, based on
solid evidence and practical experience. And getting it right means
more sustainable planning and operations too, with consequent
Executive summary
Ofwat is currently working on a programme of market reform,
including looking at options to increase the role of trading in the
allocation of water resources. Through such measures, Ofwat is
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Anglian Water, Cambridge Water Company and
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Water into Norwich in 2025-30; and
2. !ÛSQAMRFEQÛFQNLÛ#ALBQIDGEÛ7ASEQÛ#NLOAMXÛ IMSNÛ"TQXÛ3SÛ%DLTMDRÛAKRNÛIMÛ 4HEÞCNLBIMEDÞCAOACISXÞNFÞSHEREÞRCHELERÞIRÞ Þ-KDÞSHIRÞCNLOAQERÞSNÞÞ-KDÞNFÞVASEQÞ AUAIKABKEÞFNQÞTREÞIMÞSHEÞRSTDXÞAQEAÞIMÞ (NVEUEQÞRTCCERRFTKÞDEKIUEQXÞNFÞSHEÞSQAMRFEQRÞIRÞ RTBȱECSÞSNÞSHEÞNTSCNLEÞNFÞSHEÞÞ#!-3ÞTODASEÞ FTSTQEÞRTRSAIMABIKISXÞQEDTCSINMRÞCKILASEÞCHAMGEÞ AMDÞFNQÞSHEÞ%RREWÞAMDÞ3TáNKJÞNOSINMÞSHEÞFEARIBIKISXÞ NFÞDEUEKNOIMGÞAÞCNRSEáECSIUEÞGQNTMDVASEQÞ RNTQCEÞIMÞSHEÞ,NVERSNæÞAQEAÞ 4HEREÞAQEÞAKKÞRIGMIâCAMSÞTMCEQSAIMSIERÞAMDÞTMSIKÞQERNKUEDÞ SHEÞEWIRSIMGÞOKAMRÞLTRSÞBEÞCNMRIDEQEDÞNOSILAK 4HEÞFAIKTQEÞSNÞIDEMSIFXÞNSHEQÞECNMNLICÞNOSINMRÞQEãECSR AÞKACJÞNFÞRTQOKTRÞQERNTQCEÞIMÞSHEÞRSTDXÞAQEAÞAMDÞSHE CNRSÞNFÞSQAMRFEQQIMGÞSHEÞRLAKKÞALNTMSRÞSHASÞAQE AUAIKABKEÞNUEQÞKNMGÞDIRSAMCERÞ4HEÞONSEMSIAKÞFNQ RSQAMDIMGÞARRESRÞAMDÞREMRISIUISXÞSNÞBTKJÞRTOOKXÞ CHAQGERÞAQEÞAKRNÞIDEMSIâEDÞARÞIRRTERÞ
Challenges and long-term opportunities
4HEÞCHAKKEMGEÞNFÞCKILASEÞCHAMGEÞVIKKÞLEAMÞVEÞMEEDÞ SNÞâMDÞLNQEÞIMMNUASIUEÞVAXRÞSNÞEMRTQEÞRECTQEÞVASEQÞ QERNTQCERÞIMÞSHEÞFTSTQEÞ)MSEQCNLOAMXÞSQAMRFEQRÞ VHIKEÞBEMEâCIAKÞRHNTKDÞMNSÞBEÞREEMÞARÞAÞTMIUEQRAKÞ RNKTSINMÞARÞSQAMRFEQQIMGÞVASEQÞKNMGÞDIRSAMCERÞIRÞ EWOEMRIUEÞAMDÞSECHMICAKKXÞCNLOKEWÞVISHÞHIGHÞCAQBNMÞ AMDÞEMUIQNMLEMSAKÞILOACSRÞ)MUERSLEMSÞIMÞVIMSEQÞ RSNQAGEÞIMÞILONTMDIMGÞRSQTCSTQERÞNQÞBEKNVÞGQNTMDÞ ARÞOAQSÞNFÞAPTIFEQÞQECHAQGEÞRCHELERÞVIKKÞAKRNÞBEÞ ERREMSIAKÞSNÞLISIGASEÞAGAIMRSÞSHEÞILOACSRÞNFÞCKILASEÞ CHAMGEÞ4HEÞMEEDÞFNQÞEACHÞCNLOAMXÞIMÞSHEÞRSTDXÞAQEAÞ SNÞIMUERSÞIMÞRSQASEGICÞRSNQAGEÞAMDÞSQAMRFEQÞCAOACISXÞ BEXNMDÞÞLEAMRÞSHASÞSHEQEÞVIKKÞBEÞKNMGSEQLÞ NOONQSTMISIERÞSNÞIMCQEAREÞSHEÞUNKTLEÞNFÞVASEQÞSHASÞIRÞ RHAQEDÞNQÞSQADEDÞ4NÞFTKKXÞTSIKIREÞSHEREÞNOONQSTMISIERÞ SHEÞFNKKNVIMGÞILOQNUELEMSRÞAQEÞMEEDEDÞIMÞSHEÞVAXÞ SHASÞVASEQÞCNLOAMXÞACSIUISIERÞAQEÞQEGTKASED
dÛ
4HEÛOQNCERRÛFNQÛLAJIMGÛRTRSAIMABIKISXÛ QEDTCSINMRÛMEEDRÛSNÛBEÛAKIGMEDÛVISHÛSHEÛwater resource planning process;
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)MEáCIEMCIERÛAMDÛCNLOKEWISXÛIMÛSHEÛcurrent process for approving resource sharing need to removed, particularly
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/OEWÛEáCIEMCXÛARRERRLEMSRÛMEEDÛto take into account the adverse
EÞECSÛNFÛBTKJÛSQAMRFEQÛCHAQGER 4HEÞKNMGÞKEADÞSILEÞFNQÞDEKIUEQXÞNFÞRSQASEGICÞARRESRÞ LEAMRÞSHASÞVNQJÞNMÞOKAMMIMGÞAMDÞDEUEKNOLEMSÞ MEEDRÞSNÞRSAQSÞMNVÞ/OSILIRIMGÞAQQAMGELEMSRÞ FNQÞSQADIMGÞSHEÞQERNTQCEÞSHASÞVIKKÞBEÞCQEASEDÞ MEEDRÞSNÞBEÞAÞJEXÞEKELEMSÞNFÞSHIRÞVNQJ
4HEÞOQNȱECSÞCNMRIDEQRÞSHEÞBEMEâSRÞAMDÞ
barriers to companies trading water across traditional water company boundaries.
This is something that Ofwat has considered in its
OAOEQÞb!ÞRSTDXÞNMÞONSEMSIAKÞBEMEâSRÞNFÞTORSQEALÞ
markets in the water sector of England and Wales”
-AQCHÞ Þ)MÞSHIRÞ/FVASÞERSILASERÞSHASÞSHEÞ BEMEâSRÞNFÞGQEASEQÞSQADIMGÞCNTKDÞBEÞAOOQNWILASEKXÞ
£1,000m more than those delivered by capital investment projects proposed in water companies’
$QAæÞ7ASEQÞ2ERNTQCERÞ-AMAGELEMSÞ0KAMRÞ72-0R Þ
We share the ambition of Ofwat to achieve
LNQEÞãEWIBKEÞAMDÞEäCIEMSÞVAXRÞNFÞLEESIMGÞ
future challenges. This project has enabled us to explore these concepts in a real context to trade theory for practice. It is particularly valuable in contributing to the current debate because it:
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Targets a high risk area – the project is focused in East Anglia, an area highlighted in the Ofwat report as likely to have theLNRSÛRIGMIßCAMSÛRAUIMGRÛFQNLÛVASEQÛSQADIMG
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Uses latest data – several key changesVEQEÛLADEÛSNÛCNLOAMXÛ$QAãÛ72-0RÛTREDÛ
by Ofwat in their analysis; our research
TRERÛSHEÛßMAKÛOKAMRÛFNQÛSHEÛFNTQÛCNLOAMIERÛ
in scope to give the latest position; and
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Provides evidence to assess the scaleNFÛKIJEKXÛBEMEßSRÛCNLOAQEDÛSNÛCNRSRÛSNÛ IDEMSIFXÛSHEÛLNRSÛEÞECSIUEÛRNKTSINMR
It was designed to:
dÛ
Explore the practicalities and opportunities for water resource trading in East Anglia;dÛ
!RRERRÛSHEÛRCAKEÛNFÛKIJEKXÛBEMEßSRÛCNLOAQEDÛ SNÛCNRSRÛSNÛIDEMSIFXÛLNRSÛEÞECSIUEÛRNKTSINMRdÛ
Explore whether, in light of theßMDIMGRÛCHAMGERÛSNÛ72-0RÛ
should be recommended; and
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Identify potential barriers to increased levels of sharing or trading andhow they could be overcome.
Setting the context
Objective
This report outlines the results of a
collaborative project between Anglian
Water, Cambridge Water Company and
%RREWÛAMDÛ3TÞNKJÛ7ASEQÛSNÛKNNJÛASÛ
water resource sharing opportunities.
The purpose of the project is to
determine if resource trading can
deliver enhanced customer and
EMUIQNMLEMSAKÛBEMEßSRÛ
The project focuses on ource whether reso trading can nced deliver enha d customer an tal environment MÛ BEMEßSRÛSNÛAM area that is o vulnerable to nge, climate chan growth and ty sustainabilit reductions.2
1
This region is an ideal case study to test if trading
IRÞLNQEÞCNRSEáECSIUEÞSHAMÞRCHELERÞIMÞ&IMAKÞ 72-0RÞARÞISÞIRÞUEQXÞUTKMEQABKEÞSNÞSHEÞEáECSRÞNFÞ
climate change and growth. There are only limited surpluses available and investment in measures to maintain the supply-demand balance is needed. Pressures on water resources include:
dÛ
Impact of climate change on water resource availability;dÛ
Low rainfall;dÛ
Limited surpluses available;dÛ
&NQECARSRÛNFÛRIGMIßCAMSÛONOTKASINMÛgrowth – up to a million new homes could be built in the next 25 years; and
dÛ
High probability that the EA will reduce available resources further because of the need to maintain sustainable levels of abstraction.Methodology
The study is based on the baseline forecasts and
âMAKÞOKAMMIMGÞRNKTSINMRÞIMÞSHEÞÞ7ASEQÞ2ERNTQCERÞ -AMAGELEMSÞ0KAMRÞb&IMAKcÞ72-0R Þ4HEREÞHAUEÞ
been published for water companies in the study area and provide a realistic strategic plan for the east of our region that balances the needs of public water supply and the environment. The Water Resource
:NMERÞ72:R ÞIMÞSHEÞRSTDXÞAQEAÞAQEÞGIUEMÞBEKNV
Scope
The project approach is an appraisal
of trading opportunities in the eastern
parts of East Anglia.
Anglian Water Cambridge Water %RREWÛAMDÛ3TÞNKJ Water (Essex) 6ENKIAÛ7ASEQ East %RREWÛAMDÛ3TÞNKJ Û7ASEQÛ3TÞNKJ study area Figure 1
Study area
Figure 2The water companies
3
Table 1
Water Resource Zones in study area
#/-0!.9 7!4%2Û2%3/52#%Û:/.% Anglian Water %ARSÛ3TÞNKJÛAMDÛ%RREWÛ
#ALBQIDGERHIQEÛAMDÛ7ERSÛ3TÞNKJÛ .NQFNKJÛ2TQAK .NQVICHÛAMDÛSHEÛ"QNADR .NQSHÛ.NQFNKJÛ#NARS &EMKAMD Essex and 3TÞNKJÛ7ASEQ Essex .NQSHEQMÛAMDÛ#EMSQAKÛ.NQSHEQM#EMSQAK Hartismere "KXSH
Veolia Water East 6ENKIAÛ7ASEQÛ%ARSÛRIMGKEÛYNME
Cambridge Water Company #ALBQIDGEÛRIMGKEÛYNME
4HEÞRSTDXÞAQEAÞIRÞRHNVMÞIMÞ&IGTQEÞÞ)SÞIMCKTDERÞ
AQEARÞRTOOKIEDÞBXÞ!MGKIAMÞ7ASEQÞ!7 Þ%RREWÞAMDÞ
3TáNKJÞ7ASEQÞ%37 Þ#ALBQIDGEÞ7ASEQÞ#NLOAMXÞ
#7# ÞAMDÞ6ENKIAÞ7ASEQÞ%ARSÞ67% Þ^Þ&IGTQEÞ
In the study, unconstrained and feasible scheme
NOSINMRÞIMÞSHEÞ&IMAKÞ72-0RÞVEQEÞEWSEMDEDÞSNÞIMCKTDEÞ AÞREQIERÞNFÞMEVÞIMSEQCNLOAMXÞSQAMRFEQRÞ!æEQÞ
screening the unconstrained options, the feasible options were evaluated using an Average Incremental
#NRSÞ!)# ÞARRERRLEMSÞ4HIRÞAOOQNACHÞIRÞBAREDÞNMÞ SHEÞ!MGKIAMÞ7ASEQÞ&IMAKÞ72-0ÞAMDÞÞOQICEÞ QEUIEVÞ&IMAKÞ"TRIMERRÞ0KAMÞRTBLIRRINMÞNMÞRTOOKX
demand and is summarised in the box below right.
#NRSBEMEßS
4HEÞCNRSBEMEâSÞARRERRLEMSÞSAJERÞIMSNÞACCNTMSÞ BEMEâSRÞFNQÞBNSHÞCTRSNLEQRÞAMDÞSHEÞEMUIQNMLEMSÞ
dÛ
#TRSNLEQÛBEMEßSR from reduced capital expenditure (capex) and operational expenditure (opex); anddÛ
%MUIQNMLEMSAKÛBEMEßSR through a reduction in the volume of licensed resource needed to maintain the supply-demand balance and carbon reductions.In completing the project, we have assumed that investment plans for AMP5 have been committed
AMDÞVIKKÞDEKIUEQÞSHEÞARRTLEDÞBEMEâSRÞAMDÞSHASÞSHEÞ
current trading arrangements between Anglian
7ASEQÞAMDÞ6ENKIAÞ7ASEQÞ%ARSÞVIKKÞBEÞEWSEMDEDÞ
where appropriate. Similarly, we have excluded the
5+#0ÞNTSOTSRÞFTSTQEÞRTRSAIMABIKISXÞQEDTCSINMRÞ
and bulk transfer charges. Additional details about exclusions from the scope are given in Appendix 1.
AIC methodology
4HEÞâMAKÞOKAMMIMGÞRNKTSINMÞIRÞREKECSEDÞTRIMGÞSHEÞ KNVERSÞAUEQAGEÞIMCQELEMSAKÞCNRSÞ!)# ÞFNQÞSHEÞ
option or options that are needed to maintain the supply-demand balance. To compare AICs using the AW models, each option is assessed using
SHEÞbVASEQÞNFÞBEMEâScÞSHIRÞIRÞEPTIUAKEMSÞSNÞSHEÞ
water generated by the scheme that is used and is
DIáEQEMSÞFQNLÞSHEÞSNSAKÞRTOOKXÞCAOACISXÞNFÞSHEÞMEVÞ
scheme. AICs are calculated from the following: Average Incremental Cost (£/Ml)= NPV (capex + opex)
NPV of water consumed As part of the economic modelling, capex and opex
ERSILASERÞFNQÞREKECSEDÞRCHELERÞIMÞSHEÞ&IMAKÞ72-0RÞ
were also updated, allowing for direct comparison of the existing resource development schemes and the new transfers. In all cases, the capex and opex estimates were generated using AW cost models with a price time base of 2007-08 and engineering scope sheets that were prepared for AW.
Step 1 ^ÞOKEAREÞREEÞRECSINMÞ 5MDEQRSAMDÛNQIGIMAKÛIMUERSLEMSÛ MEEDÛAMDÛRNKTSINMR ÛRTOOKXDELAMDÛDEßCISÛ FNQECARSÛIMÛ7ASEQÛ2ERNTQCERÛ Management Plan 7ASEQÛ2ERNTQCERRÛ-AMAGELEMSÛ0KAMÛ QERNTQCEÛDEUEKNOLEMSÛRCHELER Step 2 ^ÞOKEAREÞREEÞRECSINMÞ %UAKTASEÛTMCNMRSQAIMEDÛNOSINMR
Explore all possible inter- company transfers to assess
VHICHÛAQEÛSECHMICAKKXÛAMDÛ
economically feasible
Step 3 ^ÞOKEAREÞREEÞRECSINMÞ
Assessment of feasible inter-company transfers Explore the feasible transfer options
Step 4 ^ÞOKEAREÞREEÞRECSINMÞ
Economic appraisal of feasible inter-company transfers Assess which inter-company
SQAMRFEQRÛAQEÛLNQEÛCNRSEÞECSIUEÛ SHAMÛNQIGIMAKÛ7ASEQÛ2ERNTQCERÛ
Management Plan schemes
Step 5 ^ÞOKEAREÞREEÞRECSINMÞ )MSEQOQESASINMÛAMDÛVIDEQÛ DIRCTRRINM %WOKNQEÛSHEÛVIDEQÛILOKICASINMRÛ NFÛQERTKSRÛBEMEßSRÛBAQQIEQRÛ AMDÛFTSTQEÛNOONQSTMISIER Non feasible inter- company transfers
Details of supply-demand balance are summarised below and in Appendix 2:
Cambridge Water Company and Veolia Water East
4HEÞ#ALBQIDGEÞ7ASEQÞ#NLOAMXÞAMDÞ6ENKIAÞ7ASEQÞ
East WRZs are in surplus through the forecast period and as a consequence, no supply-side schemes are required by either company. Anglian Water
To maintain the supply-demand balance, post AMP5 investment in resource development or transfers will be needed in all of the WRZs in the east of the AW region.
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#TQQEMSÞDEâCISRÞIMÞSHEÞ%37Þ%RREWÞ72:ÞVIKKÞBEÞ
restored by the AMP5 Abberton scheme. This will deliver 64 Ml/d of additional water available
FNQÞTREÞ7!&5 ÞAMDÞVIKKÞQERTKSÞIMÞSHEÞYNMEÞ
being in surplus from 2014-15 to 2034-35. Of the remaining ESW WRZs, there is a surplus
SHQNTGHNTSÞSHEÞFNQECARSÞOEQINDÞIMÞSHEÞ3TáNKJÞ "KXSHÞ72:ÞAMDÞLIMNQÞDEâCISRÞIMÞSHEÞ3TáNKJÞ
Hartismere WRZ will be avoided using demand
LAMAGELEMSÞLEARTQERÞ!ÞÞ-KDÞDEâCISÞIMÞSHEÞ 3TáNKJÞ.NQSHEQM#EMSQAKÞ72:ÞVIKKÞBEÞAUNIDEDÞ
using a combination of demand management
AMDÞSHEÞÞ-KDÞ,NVERSNæÞ'QNTMDVASEQÞRCHELEÞ &NKKNVIMGÞDEKIUEQXÞNFÞSHEREÞSHEQEÞIRÞFNQECARSÞSNÞBEÞAÞ
nominal 2.5 Ml/d surplus in the WRZ in 2034-35.
Investment need
The 2034-35 baseline supply-demand
BAKAMCERÛFNQÛ72:RÛIMÛSHEÛRSTDXÛAQEAÛ
are given in Figure 3, together with
an equivalent map – Figure 4 – that
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RCHELERÛVHICHÛAQEÛIDEMSIßEDÛIMÛSHEÛ
7ASEQÛ2ERNTQCERÛ-AMAGELEMSÛ0KAMRÛ
4
AW North Norfolk Coast
WRZ AW Norwich & The Broads WRZ AW Norfolk Rural WRZ AW Fenland WRZ AW Cambridgeshire Û7ERSÛ3TÞNKJ WRZ ESW Essex WRZ AW %ARSÛ3TÞNKJ & Essex WRZ ESW 3TÞNKJ Hartismere WRZ 3TÞNKJÛ"KXSHESW WRZ ESW Northern/ Central WRZ CWC VWE AW North Norfolk Coast
WRZ AW Norwich & The Broads WRZ AW Norfolk Rural WRZ AW Fenland WRZ AW Cambridgeshire Û7ERSÛ3TÞNKJ WRZ ESW Essex WRZ AW %ARSÛ3TÞNKJ & Essex WRZ ESW 3TÞNKJ Hartismere WRZ 3TÞNKJÛ"KXSHESW WRZ ESW Northern/ Central WRZ CWC VWE Figure 3
Supply-demand balance 2034/5
+L¿FKSBPQJBKQ¿QL¿OBPQLOB¿ABç@FQP Figure 4Supply-demand balance 2034/5
WRMP schemes delivered > 10 Ml/d in Surplus 5 < 10 Ml/d in Surplus 0 < 5 Ml/d in Surplus Þ ÞÞÞ -KDÞIMÞ$EâCIS ÞÞÞÞ -KDÞIMÞ$EâCIS Þ ÞÞ -KDÞIMÞ$EâCIS.NÞIMSEQCNLOAMXÞSQAMRFEQÞNOSINMRÞHAUEÞBEEMÞIDEMSIâEDÞ FNQÞDEâCISRÞIMÞSHEÞ!7Þ&EMKAMDÞAMDÞ.NQFNKJÞ2TQAKÞ
72:RÞ4HIRÞQEãECSRÞAÞCNLBIMASINMÞNFÞSHEÞFNKKNVIMG 1. Û&EMKAMDÛ72:ÛAÛKACJÛNFÛRTQOKTRÛ
resource in the adjacent company area (Cambridge Water Company) once other possible trades have been taken into account; and
2. .NQFNKJÛ2TQAKÛ72:ÛSHEÛAUAIKABIKISXÛNFÛ
options to transfer resources over relatively short distances within the AW network. )SÞHARÞAKRNÞBEEMÞARRTLEDÞSHASÞAMXÞ67%ÞRTQOKTRERÞ VIKKÞBEÞSQADEDÞVISHÞ!7ÞEISHEQÞSNÞAUNIDÞDEâCISRÞIMÞ SHEÞ#NKCHERSEQÞ0KAMMIMGÞ:NMEÞ0: ÞNQÞSNÞRTOONQSÞ
the supply-demand balance in PZs adjacent to
Colchester. Details of the unconstrained options
AQEÞIKKTRSQASEDÞNMÞSHEÞOAGEÞNOONRISEÞ&IGTQEÞ
Three of the unconstrained options fell out of the analysis at this stage as they entailed excessive cost or are likely to be environmentally unacceptable. These were:
/OSINMÛÛ
ESW transfer to !7Û.NQSHÛ.NQFNKJÛ#NARSÛ72:
IMÞ!-0ÞBAREDÞTONMÞAMÞEWSEMRINMÞNFÞSHEÞ.NQSHÞ ,NVERSNæÞ'QNTMDVASEQÞRCHELEÞ4HIRÞNOSINMÞVNTKDÞ
involve a pipeline transfer from ESW Lound WTW
ACQNRRÞSHEÞEMUIQNMLEMSAKKXÞREMRISIUEÞ.NQFNKJÞ "QNADRÞSNÞMNQSHEARSÞ.NQFNKJÞ4HEQEÞAQEÞRIGMIâCAMSÞ DIäCTKSIERÞNFÞQNTSIMGÞAÞOIOEKIMEÞSHQNTGHÞSHEÞ"QNADRÞ
making this environmentally unacceptable and
Evaluation of unconstrained options
5MCNMRSQAIMEDÛNOSINMRÛFNQÛMEVÛIMSEQCNLOAMXÛSQAMRFEQRÛHAUEÛBEEMÛDEUEKNOEDÛ
from the analysis and from discussion between AW, ESW and CWC about the
infrastructure needed to deliver each option. Table 2, at the base of the page,
sets out the unconstrained options.
5
Table 2Unconstrained options
).4%2ҰÛ #/-0!.9Û 42!.3&%2Û /04)/.Û 2%&%2%.#% 7!4%2 2%3/52#%Û:/.%Û WITH NEED EXISTING 72-0Û3500,9Ұ 3)$%Û3#(%-%Û Ү!-0ү .%7Û).4%2Ұ #/-0!.9Û 42!.3&%2Û /04)/.3 /54,).%Û DETAILS 1 !7Û.NQSHÛ .NQFNKJÛ#NARS 3ECNMDAQXÛ 'QNTMDVASEQ 5REÛ!-0 Transfer from %37Û3TÞNKJÛ .NQSHEQM #EMSQAKÛ72: %WSEMRINMÛNFÛ-KDÛ%37Û.NQSHÛ,NVERSNãÛ'QNTMDVASEQÛRCHELEÛ!-0 Û AMDÛSQAMRFEQÛFQNLÛ%37Û,NTMDÛ747ÛSNÛREQUICEÛQEREQUNIQÛIMÛSHEÛUICIMISXÛ NFÛ3SAKHALÛJL 2 !7Û.NQVICHÛ AMDÛSHEÛ"QNADR .NQVICHÛ%âTEMSÛ 2ETREÛ!-0 Transfer from %37Û3TÞNKJÛ .NQSHEQM #EMSQAKÛ72: %WSEMRINMÛNFÛÛ-KDÛ%37Û.NQSHÛ,NVERSNãÛ'QNTMDVASEQÛRCHELEÛ !-0 ÛAMDÛSQAMRFEQÛFQNLÛ%37Û,NTMDÛ747ÛSNÛ!7Û,AJEMHALÛ3EQUICEÛ 2EREQUNIQÛNMÛSHEÛNTSRJIQSRÛNFÛ.NQVICHÛJL 3.1 %37Û3TÞNKJÛ Northern AMDÛ#EMSQAK .NQSHÛ,NVERSNãÛ 'QNTMDVASEQÛ !-0 Transfer from !7Û.NQVICHÛAMDÛ SHEÛ"QNADRÛ72: $EKIUEQXÛNFÛ.NQVICHÛ%âTEMSÛ2ETREÛ!-0 ÛAMDÛSQAMRFEQÛFQNL !7Û,AJEMHALÛ3EQUICEÛ2EREQUNIQÛSNÛ%37Û,NTMDÛ747ÛJL 3.2 Transfer from !7Û.NQSHÛ.NQFNKJÛ #NARSÛ72: %WSEMRINMÛNFÛ3ECNMDAQXÛ'QNTMDVASEQÛ5REÛRCHELEÛ!-0 ÛNQÛAÛMEVÛ DERAKIMASINMÛOKAMSÛRIYEDÛSNÛLEESÛBNSHÛ!7ÛAMDÛ%37ÛMEEDRÛAMDÛSQAMRFEQÛ FQNLÛ!7ÛREQUICEÛQEREQUNIQÛIMÛSHEÛUICIMISXÛNFÛ3SAKHALÛNQÛ"ACSNMÛSNÛSHEÛ %37Û,NTMDÛ747ÛJLÛJLÛFNQÛ"ACSNM 4 !7Û #ALBQIDGERHIQEÛ AMDÛ7ERSÛ 3TÞNKJ 'QNTMDVASEQÛ Development !-0 Transfer from #7#Û72: 3TOOKXÛFQNLÛ#7#Û4HESFNQDÛVEKKßEKDÛ4QAMRFEQÛUIAÛCNMMECSINMÛSN #7#Û4HESFNQD#ALBQIDGEÛLAIM 5.1 5.2 5.3 !7Û%ARSÛ3TÞNKJÛ AMDÛ%RREW #KIÞÛ1TAX %âTEMSÛ2ETREÛ !-0 Transfer from %37Û%RREWÛ72: Û5RIMGÛRTQOKTRÛFQNLÛÛ-KDÛ!BBEQSNMÛRCHELEÛ!-0 dÛÛ!BBEQSNMÛ) ÛSQEASEDÛVASEQÛSQAMRFEQÛFQNLÛ#NKCHERSEQÛSNÛ)ORVICH BAREDÛNMÛEWSEMRINMÛNFÛ!QDKEIGHÛ747 dÛÛ!BBEQSNMÛ)) ÛQAVÛVASEQÛSQAMRFEQÛFQNLÛ#NKCHERSEQÛSNÛ)ORVICHÛBARED NMÛEWSEMRINMÛNFÛ!KSNMÛ747Û dÛÛ!BBEQSNMÛ))) ÛSQEASEDÛVASEQÛSQAMRFEQÛFQNLÛ#NKCHERSEQÛSNÛ)ORVICH BAREDÛNMÛBTKJÛRTOOKXÛFQNLÛ%37Û,AXEQÛDEÛKAÛ(AXEÛ747 6 !7Û%ARSÛ3TÞNKJÛ AMDÛ%RREW – – !ÛUAQIASINMÛNFÛSHEÛ!QDKEIGHÛQEREQUNIQÛRTOOKXÛAGQEELEMSFigure 5
Unconstrained options
SECHMICAKKXÞCNLOKEWÞ4HEQEÞIRÞAKRNÞAÞSILIMGÞIRRTEÞ RIMCEÞSHIRÞNOSINMÞIMÞ!-0ÞQEKIERÞNMÞAMÞEWSEMRINMÞ NFÞSHEÞ.NQSHÞ,NVERSNæÞ'QNTMDVASEQÞRCHELEÞ VHICHÞIRÞCTQQEMSKXÞOQNONREDÞIMÞ!-0Þ&NQÞSHEREÞ QEARNMRÞSHIRÞNOSINMÞHARÞBEEMÞDIRCNTMSED Option 3.1: AW transfer to %37Û3TÞNKJÛ.NQSHEQM#EMSQAKÛ72: IMÞ!-0ÞBAREDÞNMÞEWSEMRINMÞNFÞ.NQVICHÞ2ETREÞRCHELEÞ 4HIRÞNOSINMÞIMUNKUERÞAÞSQAMRFEQÞFQNLÞ.NQVICHÞSN SHEÞ%37ÞVASEQÞSQEASLEMSÞVNQJRÞ747 ÞASÞ,NTMD 3IMCEÞSHEÞCAOEWÞQEPTIQELEMSÞFNQÞSHIRÞAOOQNWILASEKXÞ yL ÞIRÞSVICEÞSHEÞ%37ÞCAOEWÞERSILASEÞFNQÞSHE .NQSHÞ,NVERSNæÞ'QNTMDVASEQÞRCHELEÞAOOQNWILASEKXÞ yL ÞSHEÞRCHELEÞIRÞMNSÞECNMNLICAKKXÞFEARIBKE Option 3.2: AW transfer to %37Û3TÞNKJÛ.NQSHEQM#EMSQAKÛ72: IMÞ!-0ÞBAREDÞNMÞEWSEMRINMÞNFÞSHEÞ3ECNMDAQXÞ 'QNTMDVASEQÞ5REÞNQÞSHEÞ"ACSNM ÞDERAKIMASINMÞRCHELERÞ 4HIRÞNOSINMÞVNTKDÞIMUNKUEÞAÞOIOEKIMEÞSQAMRFEQÞFQNLÞ MNQSHEARSÞ.NQFNKJÞACQNRRÞSHEÞ.NQFNKJÞ"QNADRÞSNÞ SHEÞ%37Þ,NTMDÞ747Þ'IUEMÞCAOEWÞQEPTIQELEMSRÞ RILIKAQÞSNÞSHNREÞNFÞSHEÞSQAMRFEQÞFQNLÞ.NQVICHÞSHEÞ DIäCTKSIERÞNFÞQNTSIMGÞAÞOIOEKIMEÞSHQNTGHÞSHEÞ"QNADRÞ AMDÞSHEÞGAOÞBESVEEMÞDEKIUEQXÞNFÞSHEÞ3ECNMDAQXÞ 'QNTMDVASEQÞ5REÞRCHELEÞ!-0 ÞAMDÞSHEÞMEEDÞIMÞ SHEÞ%37Þ3TáNKJÞ.NQSHEQM#EMSQAKÞ72:Þ!-0 Þ SHIRÞNOSINMÞIRÞMNSÞCNMRIDEQEDÞSNÞBEÞECNMNLICAKKXÞ FEARIBKEÞNQÞEMUIQNMLEMSAKKXÞACCEOSABKE AW North Norfolk Coast WRZ AW Norwich & The Broads WRZ AW Cambridgeshire Û7ERSÛ3TÞNKJÛ72: ESW Essex WRZ AW %ARSÛ3TÞNKJ & Essex WRZ ESW Northern/ Central WRZ CWC VWE OPTIONS 2 and 3.1 4QAMRFEQÛFQNLÛ%37Û3TÞNKJ Northern/Central WRZ to AW Norwich & The Broads (with Reverse Transfer Option) OPTIONS 1 and 3.24QAMRFEQÛFQNLÛ%37Û3TÞNKJ Northern/Central WRZ to AW North Norfolk Coast (with Reverse Transfer Option)
OPTION 4 Transfer from CWC WRZ to AW Cambridgeshire & 7ERSÛ3TÞNKJÛ72:
OPTION 6 Extension of Existing Trading Arrangements from VWE to AW %ARSÛ3TÞNKJÛÛ%RREWÛ72:
OPTIONS 5.1-5.3 Transfer from ESW Essex WRZ to !7Û%ARSÛ3TÞNKJÛÛ%RREWÛ72:
Feasible options
Having assessed the unconstrained options to rule out those which were excessively
EWOEMRIUEÛNQÛKIJEKXÛSNÛBEÛEMUIQNMLEMSAKKXÛTMACCEOSABKEÛßUEÛNOSINMRÛVHICHÛVEQE
feasible remained. Figure 6 summarises these transfer options. We discuss these
below exploring economic modelling completed for each and detailed schematics
of the transfer scheme options.
6
Figure 6Feasible options
AW Norwich & The Broads WRZ AW Cambridgeshire Û7ERSÛ3TÞNKJÛ72: ESW Essex WRZ AW %ARSÛ3TÞNKJ & Essex WRZ ESW Northern/ Central WRZ CWC 4QAMRFEQÛFQNLÛ%37Û3TÞNKJ Northern/Central WRZ to AW Norwich & The Broads Transfer from CWC WRZ toAW Cambridgeshire & 7ERSÛ3TÞNKJÛ72:
Transfer from ESW Essex WRZ to !7Û%ARSÛ3TÞNKJÛÛ%RREWÛ72:
Graph 1
Surplus from Abberton Scheme available to transfer to AW
BALANCE /&Û3500,9 -KD 20.0 10.0 0.0 -10.0 -20.0 -30.0 -40.0 -50.0 20 1 0 /1 1 20 1 1 /1 2 20 1 2 /1 3 2 0 13/ 1 4 20 1 4 /1 5 20 1 5 /1 6 20 1 6 /1 7 20 1 7 /1 8 2 0 18 /1 9 20 1 9 /2 0 20 20 /2 1 20 2 1 /2 2 20 22 /2 3 20 23 /2 4 20 24 /2 5 20 25 /2 6 2 0 26/ 2 7 20 2 7 /2 8 20 28 /2 9 20 2 9 /30 20 30 /3 1 20 3 1 /3 2 20 3 2 /3 3 20 3 3 /3 4 20 3 4 /3 5
Options 5.1, 5.2 and 5.3: ESW Essex WRZ to
!7Û%ARSÛ3TÞNKJÛAMDÛ%RREWÛ72:Û4QAMRFEQR
The three Abberton options are based on the
RTQOKTRÞFQNLÞSHEÞ%37Þ!-0 Þ!BBEQSNMÞRCHELEÞ 4HIRÞIRÞLNRSÞQECEMSKXÞDEâMEDÞIMÞSHEÞb!DDISINMAKÞ )MFNQLASINMÞ3TOONQSIMGÞSHEÞ&TKKÞ!BBEQSNMÞ3CHELEcÞ &IMAKÞ2EONQSÞSHASÞVARÞRTBLISSEDÞBXÞ%37ÞSNÞ$EFQAÞ /FVASÞAMDÞSHEÞ%!Þ&QNLÞSHIRÞSHEÞRTQOKTRÞIRÞUAQIABKEÞ AMDÞDECKIMERÞQEãECSIMGÞGQNVSHÞIMÞDELAMDÞIMÞSHEÞ
WRZ and a series of target headroom adjustments that have been agreed between ESW and the EA. The maximum amount available to transfer to AW is marginally in excess of 10 Ml/d; however, for
LTCHÞNFÞSHEÞFNQECARSÞOEQINDÞAMÞALNTMSÞRIGMIâCAMSKXÞ KERRÞSHAMÞSHIRÞIRÞAUAIKABKEÞREEÞ'QAOHÞÞBEKNV
Outline details of the engineering required for the three Abberton options are set out overleaf
IMÞ&IGTQEÞÞ4HEÞARRNCIASEDÞCAOEWÞAMDÞNOEWÞ
requirements are given in Table 3 opposite. In each case, the water generated by the scheme is required to support the supply-demand balances in the AW Ipswich and Colchester PZs.
Table 3
Scheme Cost Data (ESW transfers
QL¾4¾">PQ¾0RÕLIH¾>KA¾"PPBU¾4/7¾
35"Ұ/04)/. #!0%8Û2%15)2%-%.4Û Үy-ү /0%8Û2%15)2%-%.4Û Үy-!ү Abberton I Abberton II Abberton III)MÞSHEÞECNMNLICÞLNDEKKIMGÞSHEÞ!BBEQSNMÞ) ÞAMDÞ)) Þ
options were compared to updated costs for a 20
-KDÞ#KIáÞ1TAXÞ%åTEMSÞ2ETREÞRCHELEÞ4HEÞCAOEWÞ
and opex requirements for this are £54.786m and
yLAÞQEROECSIUEKXÞ4HEÞ!BBEQSNMÞ)) ÞNOSINMÞ CNLBIMERÞLNRSÞNFÞSHEÞEKELEMSRÞNFÞSHEÞ#KIáÞ1TAXÞ
scheme and the Alton-Horkesley transfer scheme that is referred to in the WRMP and so this option was compared against the combined costs of the
two AW schemes. The capex and opex requirements
FNQÞSHIRÞAQEÞyLÞAMDÞyLAÞQEROECSIUEKX
The £1.806m/a opex requirement for the Abberton III option assumes costs for supplying Ipswich
VISHÞVASEQÞFQNLÞ!QDKEIGHÞ747ÞyLA ÞAMDÞ
a contribution to a 10 Ml/d extension of the ESW Layer de la Haye WTW. Supplies from this works into Colchester allow for an equivalent amount to be pumped from Ardleigh WTW to Ipswich.
Ipswich Planning Zone River Stour ESW Abberton Reservoir AW/VE Ardleigh Reservoir Ardleigh Break Tank 10 Ml/d Ardleigh WTW Extension New 7 Ml/d treated water main New pumping station Alton WTW New pumping station New assets Wherstead Service Reservoir Colchester Planning Zone Figure 7
??BOQLK¿LMQFLKP¿CLO¿"04¿QO>KPCBOP¿QL¿4¿">PQ¿0RÖLIH¿>KA¿"PPBU¿4/7
Option 1 Ipswich Planning Zone River Stour ESW Abberton Reservoir AW Alton Reservoir Ardleigh Break Tank New 7 Ml/d treated water main (Alton-Horkesley) New 10 Ml/d raw water main New pumping station New pumping station New pumping station New assets Wherstead Service Reservoir Colchester Planning Zone 10 Ml/d Alton WTW Extension Option 2New assets Ipswich Planning Zone River Stour ESW Abberton Reservoir AW/VE Ardleigh Reservoir Ardleigh Break Tank New 7 Ml/d treated water main New pumping station Alton WTW Wherstead Service Reservoir Colchester Planning Zone New ESW Layer Option 3 3VAMÛAMDÛCXGMESRÛFEED
Option 2: ESW Transfer to AW Norwich and the Broads WRZ
4NÞLEESÞ!-0ÞMEEDRÞIMÞSHEÞ!7Þ.NQVICHÞAMDÞSHEÞ "QNADRÞ72:ÞSHEÞCAOACISXÞNFÞSHEÞ%37Þ.NQSHÞ,NVERSNæÞ
Groundwater scheme would have to be increased to 7.5 Ml/d, with 5 Ml/d of this available to transfer to
.NQVICHÞ4HEÞCAOEWÞAMDÞNOEWÞQEPTIQELEMSRÞFNQÞSHEÞ EMGIMEEQIMGÞQEPTIQEDÞAQEÞERSILASEDÞSNÞyLÞAMDÞ
£0.205m/a respectively. Outline details are given below.
In the economic modelling, the ESW transfer option was compared to updated costs for a nominal 10
-KDÞ.NQVICHÞ2ETREÞRCHELEÞ4HEÞCAOEWÞAMDÞNOEWÞ
requirements for this are £47.246m and £0.650m/a respectively; 10 Ml/d is comparable in size to the combined output of the other post-AMP5 schemes
FNQÞ.NQVICHÞAMDÞRNÞAKKNVRÞFNQÞCNLOAQIRNMÞNFÞSHEREÞ
with both the reuse scheme and the ESW transfer.
AW Heigham WTW 5 Ml/d treated water
transfer %37Û,NVERSNãgroundwater scheme (including 5 Ml/d extension for AW need) Norwich Planning Zone River Wensum Lakenham Service Reservoir New assets Costessey Pits Figure 8
"04¿1O>KPCBO¿QL¿4¿+LOTF@E¿>KA¿QEB¿OL>AP¿4/7
!KSNMÛ7ASEQÛQEREQUNIQÛMEAQÛ)ORVICHÛ3TÞNKJOption 4: CWC Transfer to AW
#ALBQIDGERHIQEÛAMDÛ7ERSÛ3TÞNKJÛ72:
To meet AMP8 needs in the AW Cambridgeshire and
7ERSÞ3TáNKJÞ72:ÞSHEÞSQAMRFEQÞFQNLÞSHEÞ#7#Þ4HESFNQDÞ
to Cambridge main would have to be approximately 1.3 Ml/d. This is equivalent to the surplus in the Cambridge WRZ at the end of the forecast period. The capex and opex for a cross-connection between the AW and CWC systems are £0.481m
and £0.027m/a respectively. Outline details of the engineering required are given below.
In the economic modelling, the CWC transfer option was compared to updated costs for a 1.3 Ml/d groundwater development in the vicinity of Stanton WTW. This allowed for direct comparison of the two options. The capex and opex for the Stanton
NOSINMÞAQEÞyLÞAMÞyLAÞQEROECSIUEKX Bury St Edmunds Planning Zone Cambridge CWC Thetford VEKKßEKD AW Barnham Cross WTW AMP5 Barnham Cross Transfer (Thetford PZ to Bury St Edmunds PZ) CWC 600m diameter treated water main 1.3 Ml/d cross connection AW Stanton WTW New assets Figure 9
4 ¿1O>KPCBO¿QL¿4¿ >J?OFADBPEFOB¿>KA¿4BPQ¿0RÖLIH¿4/7
Accepted alternatives
/MKXÞSVNÞNFÞSHEÞâUEÞMEVÞIMSEQCNLOAMXÞSQAMRFEQÞ NOSINMRÞAQEÞLNQEÞCNRSEáECSIUEÞSHAMÞRCHELERÞIMÞSHEÞ &IMAKÞ72-0RÞ4HEREÞAQEÞRHNVMÞIMÞ&IGTQEÞÞAMDÞAQE
dÛ
ESW to AW Norwich and the BroadsSQAMRFEQÛVHICHÛIRÛLNQEÛCNRSEÞECSIUEÛ SHAMÛSHEÛOQNONREDÛ!7Û!-0 Û
Norwich reuse scheme; and
dÛ
CWC to AW Cambridgeshire and West3TÞNKJÛSQAMRFEQÛVHICHÛIRÛLNQEÛCNRS EÞECSIUEÛSHAMÛSHEÛOQNONREDÛ!7Û!-0 Û
GOGS South Groundwater Development.
However, delivery of these schemes depends on existing groundwater resources being available in AMP8 and in the case of the ESW transfer, the
ABIKISXÞSNÞDEUEKNOÞGQNTMDVASEQÞIMÞSHEÞ,NVERSNæÞ AQEAÞCNRSEáECSIUEKXÞ4HEÞ#!-3ÞTODASEÞOKAMMEDÞ
for 2012, outcomes from the EA “Restoring
3TRSAIMABKEÞ!BRSQACSINMcÞ23! ÞOQNGQALLEÞAMDÞ HXDQNGENKNGICAKÞCNMDISINMRÞMEAQÞ,NVERSNæÞLAXÞ
not be consistent with these assumptions.
Rejected alternatives
.NMEÞNFÞSHEÞ%37ÞSNÞ!7Þ%ARSÞ3TáNKJÞAMDÞ%RREWÞ SQAMRFEQRÞVEQEÞCNRSEáECSIUEÞQEKASIUEÞSNÞSHEÞ!7Þ !-0 Þ#KIáÞ1TAXÞQETREÞRCHELEÞNQÞFNQÞ!BBEQSNMÞ)) Þ
a combination of this and the Alton-Horkesley link.
4HEÞHIGHÞ!)#RÞFNQÞSHEÞ!BBEQSNMÞNOSINMRÞQEãECSÞ
a combination of the variable and declining
RTQOKTRÞFQNLÞSHEÞ%37Þ!-0 Þ!BBEQSNMÞ
scheme as well as high capex and opex requirements for each of three sub-options.
4HEÞEáECSÞNFÞSHEÞUAQIABKEÞAMDÞDECKIMIMGÞRTQOKTRÞ
is to reduce the scheme capacity, meaning that the comparatively large investments deliver
QEKASIUEKXÞKISSKEÞBEMEâSÞ4HIRÞDIáEQRÞFQNLÞSHEÞ #KIáÞ1TAXÞRCHELEÞVHICHÞAKSHNTGHÞLNQEÞ
expensive, generates a far higher yield.
It is also noteworthy that, at the end of the forecast period some of the assets created by these schemes would be stranded, since there will no longer be a surplus to trade with AW. These include:
dÛ
!BBEQSNMÛ) ÛÛ-KDÛ!QDKEIGHÛWTW extension;
dÛ
!BBEQSNMÛ)) ÛÛ-KDÛQAVÛVASEQÛtransfer main between Ardleigh
2EREQUNIQÛAMDÛ!KSNMÛ7ASEQÛAMD
dÛ
!BBEQSNMÛ))) ÛÛ-KDÛSQEASEDÛVASEQÛtransfer main from Layer de la Haye WTW into Colchester and pumping station on the Ardleigh-Alton treated water transfer main.
7
Results of economic appraisal
Economic appraisal of the feasible options was conducted to assess which were more
CNRSEÞECSIUEÛSHAMÛRCHELERÛIMÛ&IMAKÛ72-0RÛ4HEÛQERTKSRÛNFÛSHIRÛLNDEKKIMGÛAQEÛRTLLAQIREDÛ
IMÛ4ABKEÛÛNOONRISEÛ"AREDÛNMÛSHIRÛAMAKXRIRÛSVNÛNOSINMRÛVEQEÛIDEMSIßEDÛARÛACCEOSABKEÛ
alternatives, these are discussed below and illustrated on Figure 10. All three Abberton
Table 4
Results of economic modelling
OPTION AIC (£/Ml) SELECTED EXISTING WRMP OPTION
Abberton I %37ÛSQAMRFEQÛSNÛ!7Û%ARSÛ3TÞNKJÛAMDÛ%RREW 3,306 No #KIÞÛ1TAXÛ%âTEMSÛ2ETRE Abberton II %37ÛSQAMRFEQÛSNÛ!7Û%ARSÛ3TÞNKJÛAMDÛ%RREW 3,234 No #KIÞÛ1TAXÛ%âTEMSÛ2ETREÛAMDÛ!KSNM(NQJERKEXÛ,IMJ Abberton III %37ÛSQAMRFEQÛSNÛ!7Û%ARSÛ3TÞNKJÛAMDÛ%RREW 3,506 No #KIÞÛ1TAXÛ%âTEMSÛ2ETRE
ESW Transfer to AW Norwich
AMDÛSHEÛ"QNADR 649 9ER .NQVICHÛ%âTEMSÛ2ETRE #7#Û4QAMRFEQÛSNÛ!7Û#ALBQIDGERHIQEÛAMD 7ERSÛ3TÞNKJ 101 9ER '/'3Û3NTSHÛ'QNTMDVASEQÛ$EUEKNOLEMS Figure 10
LPQBÖB@QFSB¿LMQFLKP
4QAMRFEQÛFQNLÛ%37Û3TÞNKJ Northern/Central WRZ to AW Norwich & The BroadsAW Norwich & The Broads WRZ AW Cambridgeshire Û7ERSÛ3TÞNKJÛ72: ESW Northern/ Central WRZ CWC Transfer from CWC WRZ to AW Cambridgeshire & 7ERSÛ3TÞNKJÛ72:
#TRSNLEQÛAMDÛEMUIQNMLEMSAKÛBEMEßSR
As well as some small water resource savings,
SHEÞSVNÞCNRSEáECSIUEÞNOSINMRÞNáEQEDÞVIDEQÞ CTRSNLEQÞAMDÞEMUIQNMLEMSAKÞBEMEâSRÞ7EÞAMSICIOASEÞ SHEXÞVIKKÞNáEQÞCAOEWÞRAUIMGRÞCAQBNMÞRAUIMGRÞAMDÞ QEDTCEDÞILOACSÞNMÞRISERÞNFÞCNMREQUASINMÞIMSEQERS /UEQAKKÞSHEÞCAOACISXÞNFÞSHEÞSVNÞMEVÞSQAMRFEQRÞIRÞ Þ-KDÞ4HIRÞCNLOAQERÞSNÞAÞSNSAKÞ7!&5Þ7ASEQÞ !UAIKABKEÞ&NQÞ5RE ÞIMÞSHEÞRSTDXÞAQEAÞIMÞÞ NFÞAOOQNWILASEKXÞÞ-KD !RRTLIMGÞDEKIUEQXÞNFÞSHEÞSVNÞSQAMRFEQRÞIRÞONRRIBKEÞ VEÞAMSICIOASEÞSHEÞFNKKNVIMGÞCTRSNLEQÞAMDÞ EMUIQNMLEMSAKÞBEMEâSR
dÛ
#TRSNLEQÛBEMEßSRÛ3AUIMGRÛFQNLÛQEOKACELEMSÛ NFÛSHEÛ!7Û.NQVICHÛ2ETREÛAMDÛ3SAMSNMÛ 'QNTMDVASEQÛRCHELERÛVIKKÛBE ^ÛCAOEWÛyL ^ÛNOEWÛyJA 4HIRÛARRERRLEMSÛEWCKTDERÛSHEÛEÞECSÛ NFÛBTKJÛSQAMRFEQÛCHAQGERÛVHICHÛUAQXÛ FQNLÛTMDEQKXIMGÛECNMNLICÛCNRSRdÛ
%MUIQNMLEMSAKÛBEMEßSRÛ4HEREÛCNLOQIRE SHEÛFNKKNVIMG ^ÛÛ3TBRSISTSINMÛNFÛÛ-KDÛABRSQACSINMÛFQNLÛAÛ ONSEMSIAKKXÛRCAQCEÛGQNTMDVASEQÛQERNTQCEÛIMÛ SHEÛUICIMISXÛNFÛ3SAMSNMÛVISHÛAMÛIMCQEAREÛIMÛ NTSOTSÛFQNLÛSHEÛEWIRSIMGÛ4HESFNQDÛVEKKßEKD ^ÛÛ#AQBNMÛBEMEßSRÛEPTIUAKEMSÛSNÛAOOQNWILASEKXÛ SÛ#/EÛELBNDIEDÛCAQBNMÛAMDÛS #/EÛNOEQASINMAKÛCAQBNMÛOEQÛXEAQÛ4HEREÛ RAUIMGRÛAQIREÛOQIMCIOAKKXÛFQNLÛQEOKACELEMSÛ NFÛSHEÛ!7Û.NQVICHÛ2ETREÛRCHELEdÛ
,NCAKÛILOQNUELEMSRÛIMÛRTOOKXRXRSELÛ QERIKIEMCEÛFNQÛCTRSNLEQRÛIMÛSHEÛ4HESFNQDÛ 3SAMSNMÛ"TQXÛ3SÛ%DLTMDRÛAMDÛ.NQVICHÛ0:R 4HEQEÞAQEÞTMKIJEKXÞSNÞBEÞRIGMIâCAMSÞEMUIQNMLEMSAKÞ BEMEâSRÞFQNLÞQEOKACELEMSÞNFÞSHEÞ.NQVICHÞ QETREÞRCHELEÞRIMCEÞSHIRÞQEKIERÞNMÞSHEÞCAOSTQEÞ AMDÞTREÞNFÞREVAGEÞSQEASLEMSÞVNQJRÞDIRCHAQGEÞ SNÞSIDAKÞVASEQRÞIMÞSHEÞ2IUEQÞ7EMRTL )SÞIRÞILONQSAMSÞSNÞMNSEÞSHASÞSHEÞSVNÞSQAMRFEQRÞAQEÞMNSÞ QEPTIQEDÞTMSIKÞ!-0Þ ÞAMDÞSHEÞFEARIBIKISXÞNFÞ DEKIUEQIMGÞSHELÞIRÞRTBȱECSÞSNÞRIGMIâCAMSÞTMCEQSAIMSXÞ 4HIRÞIMCKTDERÞVHESHEQÞNQÞMNSÞRTRSAIMABIKISXÞ QEDTCSINMRÞNMÞSHEÞ7EMRTLÞNQÞIMÞSHEÞ4HESFNQDÞ VEKKâEKDÞVIKKÞQERTKSÞIMÞSHEÞMEEDÞFNQÞADDISINMAKÞ QERNTQCEÞDEUEKNOLEMSÞNQÞRSQASEGICÞSQAMRFEQR Scheme costs /TQÞVNQJÞHARÞEMABKEDÞTRÞSNÞCNLOAQEÞCNRSRÞNFÞVASEQÞ SQAMRFEQRÞBAREDÞNMÞQNBTRSÞEMGIMEEQIMGÞARRERRLEMSRÞ VISHÞâGTQERÞARRTLEDÞIMÞOQEUINTRÞOTBKIRHEDÞHIGH KEUEKÞAMAKXRERÞOEQFNQLEDÞBXÞBNSHÞ/FVASÞAMDÞ 3EUEQMÞ4QEMSÞ7ASEQÞ7EÞCAKCTKASEÞTMISÞCNRSRÞNFÞ SQAMRONQSIMGÞVASEQÞSHASÞVEQEÞRTBRSAMSIAKKXÞHIGHEQÞ IMÞRNLEÞCARERÞBXÞSVNÞNQÞSHQEEÞSILERÞSHAMÞSHEÞTMISÞ CNRSRÞSHASÞ/FVASaRÞLNDEKKIMGÞAOOEAQRÞSNÞARRTLEÞFNQÞ RCHELERÞNFÞAÞRILIKAQÞRCAKEÞ/TQÞTMISÞCNRSRÞAQEÞAKRNÞ RTBRSAMSIAKKXÞHIGHEQÞBXÞREUEQAKÞSILERÞSHAMÞSHEÞO -KÞTMISÞCNRSÞPTNSEDÞBXÞ3EUEQMÞ4QEMSÞ7ASEQÞ(NVEUEQÞ SHEÞDEQIUASINMÞNFÞSHIRÞâGTQEÞIRÞMNSÞCKEAQÞOAQSICTKAQKXÞ VHASÞRCAKEÞNFÞSQAMRFEQÞHARÞBEEMÞARRTLED /TQÞVNQJÞSHEQEFNQEÞCARSRÞRNLEÞDNTBSÞNMÞSHEÞCNRSÞBEMEâSÞ AMAKXRERÞAMDÞRTGGERSRÞSHEÞILONQSAMCEÞNFÞDEUEKNOIMGÞ AÞLNQEÞQNBTRSÞEUIDEMCEÞBAREÞIMÞQEKASINMÞSNÞCNRSRDiscussion
/TQÛAMAKXRIRÛNFÛSHEREÛQERTKSRÛHARÛCNMRIDEQEDÛAÛMTLBEQÛNFÛDILEMRINMRÛ
IMCKTDIMGÛCTRSNLEQÛAMDÛEMUIQNMLEMSAKÛBEMEßSRÛREMRISIUISXÛSNÛRCHELEÛ
CNRSRÛAMDÛBTKJÛSQAMRFEQÛCHAQGERÛBAQQIEQRÛSNÛRHAQIMGÛNQÛSQADIMGÛQERNTQCERÛ
AMDÛFTSTQEÛNOONQSTMISIERÛFNQÛSQADIMGÛNQÛRHAQIMGÛQERNTQCER
The projectsj will deliiver carbon ssavings as well aas customeer and commerrcial BEMEßSRTable 5
Results of sensitivity analysis
3#(%-% !33%33%$Û3%.3)4)6)49 EFFECT INVESTIGATED 2%35,4
ESW – AW Norwich and
SHEÛ"QNADRÛ72:ÛSQAMRFEQ
!RRTLOSINMÛSHASÛCAOEWÛAMD
opex for transfer is split in
OQNONQSINMÛSNÛSHEÛ%37ÛAMD !7ÛMEEDÛÛ-KDÛAMDÛÛ-KDÛ QEROECSIUEKX
7HESHEQÛTREÛNFÛCAOEWÛAMD
opex estimates for the full
Û-KDÛNOSINMÛQERTKSÛIM
the inter-company transfer
BEIMGÛDEREKECSED
No change in scheme selection
Assumption that Norwich Reuse
RCHELEÛVIKKÛDEKIUEQÛÛ-KD
7HESHEQÛTREÛNFÛMNLIMAK CAOEWÛAMDÛNOEWÛERSILASERÛFNQ AÛÛ-KDÛ.NQVICHÛQETREÛNOSINMÛ
result in the inter-company
SQAMRFEQÛBEIMGÛDEREKECSED
3CHELEÛREKECSINMÛCHAMGED
"TKJÛSQAMRFEQÛCHAQGE ADDISINMAKÛRCHELEÛNOEW
"TKJÛSQAMRFEQÛCHAQGEÛAS
which inter-company transfer
IRÛDEREKECSEDÛIMÛFAUNTQÛNF EWIRSIMGÛ72-0ÛRCHELE !OOQNWILASEKXÛOL3 CWC – AW Cambridgeshire and 7ERSÛ3TÞNKJÛ72:ÛSQAMRFEQ "TKJÛSQAMRFEQÛCHAQGE ADDISINMAKÛRCHELEÛNOEW "TKJÛSQAMRFEQÛCHAQGEÛAS
which inter-company transfer
IRÛDEREKECSEDÛIMÛFAUNTQÛNF EWIRSIMGÛ72-0ÛRCHELE
"ESVEEMÛOL3ÛAMDÛOL3
Sensitivity to scheme costs and bulk transfer charges
7EÞCNMDTCSEDÞAÞREQIERÞNFÞREMRISIUISXÞAMAKXRERÞSNÞCNMâQLÞ
that the results of the economic modelling were robust. These are summarised in Table 5 and show:
1. The CWC – AW Cambridgeshire and West
3TÞNKJÛNOSINMÛDIROKAXRÛRNLEÛREMRISIUISXÛ
to bulk transfer charges; and
2. Selection of the ESW – AW Norwich and
SHEÛ"QNADRÛ72:ÛSQAMRFEQÛIRÛQEKASIUEKXÛ
insensitive to bulk transfer charges but potentially sensitive to assumptions about
SHEÛLIMILTLÛRIYEÛNFÛAMÛEâTEMSÛQETREÛRCHELEÛ
that could be developed in Norwich.
The sensitivity to bulk transfer charges is something that will be important to consider further if
trading opportunities are to be realised.
All else equal, trading should result in bulk transfer charges at which both trading parties would be willing to trade. These will fall somewhere between the cost of the transfer scheme to the exporter and the next cheapest alternative for the importer. Any factor, regulatory or otherwise, which causes the bulk charge to be set at level outside this range is likely to result in a sub-optimal decision. How bulk transfer charges are set is therefore important. In our case study, switching of the CWC transfer
AMDÞ3SAMSNMÞ'QNTMDVASEQÞNOSINMRÞNCCTQRÞASÞAÞSAQIáÞ
of between 20p/m3 and 30p/m3. As the current
BTKJÞRTOOKXÞSAQIáÞFNQÞ#7#ÞIRÞOL3, charges for the
SQAMRFEQÞAQEÞKIJEKXÞSNÞBEÞAÞFACSNQÞAáECSIMGÞSHEÞFEARIBIKISXÞ
of this option.
Barriers to sharing or trading resources
7ISHIMÞSHEÞRSTDXÞAQEAÞRIGMIâCAMSÞUNKTLERÞNFÞQERNTQCEÞ
are already either shared or traded. These are shown in Table 6 on page 17 and include up to 573 Ml/d of raw water and up to 68 Ml/d of treated water. Collaborative planning has also been used in delivery of assets such as the CWC Thetford
APTEDTCSÞSNÞLAWILIREÞBEMEâSRÞFNQÞCTRSNLEQRÞ RTOOKIEDÞBXÞDIáEQEMSÞVASEQÞCNLOAMIER
These transfers have been achieved with few barriers to sharing or trading between water companies. In completing the project, however, it has become apparent that future opportunities for sharing or trading water in the study area are likely to be limited by:
1. A lack of surplus resource and the economics of transferring the small volumes that are available over long distances; and 2. 5MCEQSAIMSXÛABNTSÛSHEÛILOACSÛNFÛSHEÛ
%!ÛÛ#!-3ÛTODASEÛAMDÛ2ERSNQIMGÛ 3TRSAIMABKEÛ!BRSQACSINMÛ23! ÛOQNGQALLEÛ NMÛDEOKNXABKEÛNTSOTSÛ4HEÛEÞECSÛNFÛSHIRÛIRÛ
to leave companies not knowing whether they have surplus resources that could be shared or will need new resources, which could be developed cooperatively.
$IäCTKSIERÞVISHÞSHEÞ23!ÞOQNGQALLEÞAQIREÞFQNLÞREUEQAKÞ AQEARÞIMCKTDIMGÞCKARRIâCASINMÞNFÞAÞKAQGEÞUNKTLEÞNFÞ
sustainability reductions in our region as “potential”,
ÞSHEÞKEMGSHÞNFÞSILEÞISÞSAJERÞSNÞCNMâQLÞVHESHEQÞNQÞMNSÞ
these are needed, and the lack of alignment between the RSA programme and the WRMP process.
These uncertainties mean that companies are not able to identify the optimal solutions for managing the change that is needed. This problem is exacerbated by disagreement between Ofwat and the EA
ABNTSÞSHEÞSQEASLEMSÞNFÞCKILASEÞCHAMGEÞEáECSR
Discussions between AW, ESW and CWC also
IDEMSIâEDÞNSHEQÞONSEMSIAKÞQEGTKASNQXÞBAQQIEQRÞSNÞ
the sharing or trading resources. These include:
dÛ
The EA process for approving thedevelopment and use of shared resources. This is cumbersome and time-consuming and additional complexity arises where the transfer involves movement of resources from one EA region to another, for example between the Thames/Southern
2EGINMÛAMDÛSHEÛ%ARSEQMÛ2EGINMÛAMD
dÛ
The impact of bulk transfer chargesNMÛSHEÛNOEWÛEáCIEMCXÛARRERRLEMSÛFNQÛ
the company receiving the transfer.
Future opportunities for trading or sharing resources
The WRMPs for AW, ESW and CWC all show the need to develop new resources at the end of the forecast period. Current plans suggest there are no surplus resources in the study area for direct abstraction
TMDEQÞKNVÞãNVRÞISÞIRÞKIJEKXÞSHEÞRTOOKXDELAMDÞBAKAMCEÞ
will be maintained using demand management in combination with wastewater reuse, winter storage, groundwater storage and transfers. In this scenario, most of the recycled wastewater will be pumped into rivers to support or increase reservoir yields. The development of integrated storage and transfer
RXRSELRÞIMÞSHEÞRSTDXÞAQEAÞNáEQRÞLAMXÞNOONQSTMISIERÞ
for the sharing or trading of resources and for designing market-type arrangements that promote
ãEWIBKEÞAMDÞEäCIEMSÞVAXRÞSNÞLISIGASEÞSHEÞQIRJÞ
from climate change, growth and sustainability reductions. Several options are available, including:
dÛ
A winter storage reservoir in central%ARSÛ!MGKIAÛSHASÛIRÛßKKEDÛTRIMGÛSHEÛ RTQOKTRÛQERNTQCERÛNFÛSHEÛ2IUEQÛ4QEMSÛ
This scheme would transfer water from the north and west of our region to resource-limited demand centres in the south and east. Through trading of the resource stored in the reservoir, water companies, farmers and the environment
CNTKDÛAKKÛBEMEßSÛFQNLÛSHEÛDEUEKNOLEMS
dÛ
Wastewater recycling, such as that used toRTOONQSÛSHEÛ%37Û(AMMIMGßEKDÛQEREQUNIQÛNQÛ SHASÛOQNONREDÛIMÛSHEÛ!7Û72-0ÛFNQÛ)ORVICHÛ
and Norwich. Schemes of this type would see the development of resources in proximity to the major demand centres in the south and east, with potential carbon and opex
BEMEßSRÛ3SNQAGEÛNFÛSHEÛQECXCKEDÛVASEQÛIMÛ
the reservoirs in the study area (Langham,
(AMMIMGßEKDÛ!BBEQSNMÛ!QDKEIGHÛAMDÛ!KSNM
and the development of inter-connecting assets could be used to drive an increase in resource trading; and
dÛ
!PTIFEQÛ3SNQAGEÛAMDÛ2ECNUEQXÛ4HEÛdevelopment of underground storage could generate resources that are available at a local scale for trading or sharing. These could be used to mitigate the
EÞECSRÛNFÛCKILASEÛCHAMGEÛAMDÛGQNVSH
Since delivery of large infrastructure projects, such as a winter storage reservoir, may take up to 20 years, detailed evaluation of the options for maintaining the long-term supply-demand balance is a priority. Given the current debate, this work needs to encompass arrangements for the sharing or trading of the resources that become available, including with the agricultural and environmental sectors. Table 6
"U>JMIBP¾TEBOB¾@LJM>KFBP¾L?Q>FK¾
T>QBO¾COLJ¾`LRQLC¾>OB>f¾PLRO@BP
-KD CWC supplies to Cambridge from the Thetford
VEKKßEKDÛVHICHÛIRÛKNCASEDÛIMÛSHEÛ!7ÛRTOOKXÛAQEA
25
CWC supplies to the AW Cambridgeshire and
7ERSÛ3TÞNKJÛ72:ÛTRIMGÛSHEÛ#7#Û4HESFNQDÛ APTEDTCSÛASÛ3VAÞHALÛ0QINQ
3
%37ÛRTOOKIERÛSNÛSHEÛ%37Û%RREWÛ72:ÛFQNLÛSHEÛ !BBEQSNMÛ2EREQUNIQÛVHICHÛIRÛRTOONQSEDÛBXÛSHE
Ely-Ouse to Essex Transfer Scheme (EOETS) and the Great Ouse Groundwater Scheme (GOGS), both of which are operated by the EA using resources available in the AW supply area
455
67%ÛRTOOKIERÛSNÛSHEÛ!7Û%ARSÛ3TÞNKJÛAMD %RREWÛ72:ÛVHICHÛAQEÛNBSAIMEDÛFQNLÛSHE ȮNIMSKXÛLAMAGEDÛ!QDKEIGHÛ2EREQUNIQ
25
Bulk supplies that are traded between ESW and
!7ÛIMÛSHEÛ4IOSQEEÛ0:
2
4HALERÛ7ASEQÛRTOOKIERÛSNÛSHEÛ%37Û%RREWÛ72:Û
using an interconnection at Chigwell
!7ÛRTOOKIERÛFQNLÛSHEÛ'QEASÛ"AQDßEKDÛRNTQCE
which is located in the ESW supply area
1
4HEÛLNRSÛRIGMIßCAMSÛCNMRSQAIMSRÛSNÛRHAQIMGÛ VASEQÛQERNTQCERÛIMÛ%ARSÛ!MGKIAÛAQEÛOHXRICAKÛAMDÛCNRSÛ QEKASEDÛQASHEQÛSHAMÛDTEÛSNÛAMXÛAQSIßCIAKÛQEGTKASNQXÛ NQÛKEGIRKASIUEÛBAQQIEQRÛ/TQÛVNQJÛRTGGERSRÛSHASÛSHEÛcosts of water transfers may be substantially higher
SHAMÛARRTLEDÛIMÛOQEUINTRÛHIGHKEUEKÛAMAKXRIRÛAMDÛ RTGGERSRÛSHEÛMEEDÛFNQÛAÛLNQEÛQNBTRSÛEUIDEMCEÛBARE
2
The relatively small volumes of surplusVASEQÛAUAIKABKEÛAMDÛSHEÛCNRSÛNFÛSQAMRFEQQIMGÛSHEREÛ KNMGÛDIRSAMCERÛVNTKDÛMNSÛNÞEQÛAÛCNRSEÞECSIUEÛ
or environmentally sustainable solution, even
VHEMÛSAJIMGÛIMSNÛACCNTMSÛDIROKACELEMS
3
7HESHEQÛNQÛMNSÛNOSILAKÛVASEQÛSQAMRFEQRÛVIKKÛ SAJEÛOKACEÛDEOEMDRÛNMÛSHEÛOQICERÛCHAQGEDÛFNQÛSHEÛBTKJÛ VASEQÛSQAMRFEQQEDÛ)FÛBTKJÛOQICERÛAQEÛQERSQICSEDÛFQNLÛ LNUIMGÛSNÛSHEÛOQICEÛSHASÛVNTKDÛBEÛRSQTCJÛBESVEEMÛ VIKKIMGÛSQADIMGÛOAQSMEQRÛFNQÛQEGTKASNQXÛNQÛAMXÛNSHEQÛ QEARNMRÛSHEMÛRTBNOSILAKÛNTSCNLERÛAQEÛKIJEKX4
&TQSHEQÛNBRSACKERÛSNÛSQADIMGÛAMDÛHIMDQAMCERÛ SNÛKNMGSEQLÛOKAMMIMGÛAQEÛCATREDÛBXÛTMCEQSAIMSXÛ ARÛSNÛSHEÛVASEQÛAUAIKABKEÛ-NQEÛOQECIREKXÛSHIRÛIRÛIMÛ QEKASINMÛSNÛSHEÛOQNCERRÛFNQÛDESEQLIMIMGÛDEßMISIUEÛ RTRSAIMABIKISXÛQEDTCSINMRÛTMDEQÛSHEÛ%!aRÛNMGNIMGÛ 2ERSNQIMGÛ3TRSAIMABKEÛ!BRSQACSINMÛOQNGQALLEÛThis results in companies being unsure of their
FTSTQEÛDEOKNXABKEÛNTSOTSÛAMDÛSHEQEBXÛMNSÛJMNVIMGÛ VHESHEQÛSHEXÛHAUEÛRTQOKTRÛQERNTQCERÛVHICHÛCNTKDÛ BEÛRHAQED ÛNQÛVIKKÛMEEDÛSNÛDEUEKNOÛMEVÛQERNTQCERÛ VHICHÛCNTKDÛBEÛDEUEKNOEDÛCNNOEQASIUEKX
5
Our analysis supports the view thatCTQQEMSÛ7ASEQÛ2ERNTQCERÛ-AMAGELEMSÛ0KAMRÛAQEÛ QNBTRSÛAMDÛOQNUIDEÛAÛRNTMDÛBARIRÛFNQÛOKAMMIMG
6
Nevertheless, we believe that there may beLNQEÛNOONQSTMISIERÛFNQÛVASEQÛSQADIMGÛIMÛSHEÛKNMGEQÛ SEQLÛ$TQIMGÛSHIRÛCAREÛRSTDXÛVEÛHAUEÛIDEMSIßEDÛ FEVEQÛSHAMÛEWOECSEDÛRCHELERÛVHEQEÛRHAQIMGÛNQÛ SQADIMGÛNOSINMRÛLIGHSÛNÞEQÛAÛBEMEßSÛQEKASIUEÛSNÛ CTQQEMSÛCNLOAMXÛOKAMRÛ4HEREÛQEKASEÛSNÛKNMGSEQLÛ OKAMRÛ^ÛRCHELERÛRCHEDTKEDÛFNQÛSHEÛOEQINDÛ Û^ÛQASHEQÛSHAMÛAMXSHIMGÛLNQEÛILLIMEMS
7
"XÛKNNJIMGÛASÛAÛUEQXÛQEAKÛAMDÛOQACSICAKÛIRRTEÛ IMÛ%ARSÛ!MGKIAÛVEÛHAUEÛDIRCNUEQEDÛSHASÛSHEÛRCNOEÛ FNQÛECNMNLICÛSQADIMGÛIMÛSHEÛRHNQSSEQLÛLAXÛBEÛ KERRÛSHAMÛHADÛOQEUINTRKXÛBEEMÛARRTLEDÛ(NVEUEQÛ SHEQEÛLAXÛBEÛKNMGSEQLÛNOONQSTMISIERÛAMDÛISaRÛ ABRNKTSEKXÛERREMSIAKÛSHASÛAMXÛFTQSHEQÛCNMRIDEQASINMÛ NFÛVASEQÛSQADIMGÛIRÛQNNSEDÛIMÛQEAKÛAMDÛOQACSICAKÛCAREÛ RSTDIERÛAMDÛDIRIMCEMSIUERÛSNÛSQADEÛAQEÛAUNIDED8
7HEMÛVEÛKNNJÛFTQSHEQÛAHEADÛAMDÛCNMRIDEQÛ SHEÛEWSEMDEDÛOKAMMIMGÛHNQIYNMÛ^ÛBEXNMDÛÛ^ÛAÛ QAãÛNFÛRNKTSINMRÛVIKKÛMEEDÛSNÛBEÛDEUEKNOEDÛSNÛLEESÛ FTSTQEÛMEEDRÛ)SÛIRÛONRRIBKEÛSHASÛVEÛVIKKÛMEEDÛSNÛ KNNJÛASÛBQIMGIMGÛVASEQÛFQNLÛFTQSHEQÛAßEKDÛAMDÛ SHEQEÛVIKKÛSHEMÛBEÛNOONQSTMISIERÛSNÛDEUEKNOÛRHAQIMGÛ NQÛSQADIMGÛNOSINMRÛ4HEREÛAQEÛKIJEKXÛSNÛIMUNKUEÛSHEÛ DEKIUEQXÛNFÛRSQASEGICÛRSNQAGEÛQEREQUNIQÛRSNQAGEÛAMDÛ GQNTMDVASEQÛRSNQAGE ÛAMDÛRSQASEGICÛIMFQARSQTCSTQEÛ AMDÛSHEÛTREÛNFÛSHIRÛSNÛLISIGASEÛGQNVSHÛCKILASEÛ CHAMGEÛAMDÛRTRSAIMABIKISXÛQEDTCSINMÛQIRJRÛ#NMSIMTIMGÛ CQNRRCNLOAMXÛCNKKABNQASINMÛAMDÛȮNIMSÛVNQJIMGÛ VISHÛSHEÛ%!ÛREELRÛSHEÛBERSÛQNTSEÛSNÛOKAMÛFNQÛSHIRConclusions
In collaborating on this groundbreaking project, we have explored
the practical implications of water trading as a potential answer to
one of the biggest challenges facing the future of water resource
management. Key conclusions are made below.
1
7EÛVNTKDÛEMCNTQAGEÛFTQSHEQÛCNKKABNQASIUEÛ VNQJÛIMÛNSHEQÛQEGINMRÛSNÛCNMRIDEQÛSHEÛKNMGSEQLÛ QERNTQCEÛONRISINMÛEWSEMDIMGÛBEXNMDÛSHEÛHNQIYNMÛNFÛ 72-0RÛAMDÛSHEÛONSEMSIAKÛOQNROECSRÛFNQÛSQADIMGÛ &TQSHEQÛDESAIKEDÛELOIQICAKÛVNQJÛIRÛQEPTIQEDÛSNÛ SERSÛARRTLOSINMRÛAMDÛCHAKKEMGEÛSHENQIER2
7EÛAQEÛOKEAREDÛSHASÛ/FVASÛHARÛIDEMSIßEDÛ SHEÛEPTAKIRASINMÛNFÛNOEWÛAMDÛCAOEWÛIMCEMSIUERÛIMÛ NQDEQÛSNÛQELNUEÛDIRIMCEMSIUERÛSNÛSQADIMGÛ4HEÛOQICEÛ OAIDÛBXÛSHEÛQECEIUIMGÛCNLOAMXÛFNQÛVASEQÛSQAMRFEQRÛwhich becomes an operating cost for the purpose
NFÛOQICEÛRESSIMGÛAMDÛCNLOAQASIUEÛEáCIEMCXÛTMDEQÛ CTQQEMSÛAQQAMGELEMSRÛCNTKDÛOQNUEÛSNÛBEÛAÛBAQQIEQÛSNÛ SQADIMGÛAMDÛHEMCEÛDQIUEÛRTBNOSILAKÛIMUERSLEMS
3
7EÛAQEÛCNLLISSEDÛSNÛLAJIMGÛLEAMIMGFTKÛ OQNGQERRÛNMÛDEUEKNOIMGÛNTQÛRSQASEGICÛOKAMRÛFNQÛ ÛAMDÛBEXNMDÛ4NÛACHIEUEÛSHIRÛVEÛAQEÛJEEMÛ SNÛVNQJÛVISHÛSHEÛ%MUIQNMLEMSÛ!GEMCXÛAMDÛ GNUEQMLEMSÛNMÛADDQERRIMGÛSHEÛRCAKEÛNFÛTMCEQSAIMSXÛ IMÛRTRSAIMABIKISXÛQEDTCSINMRÛIMÛABRSQACSINMÛQIGHSRÛ 4HEQEÛIRÛAMÛTQGEMSÛMEEDÛSNÛOICJÛTOÛSHEÛOACEÛNFÛ OQNGQERRÛNMÛSHIRÛAMDÛAÛRSASELEMSÛNFÛGNUEQMLEMSÛ ONKICXÛVNTKDÛGQEASKXÛARRIRSÛSHIRÛOQNCERR4
)MÛSHIRÛQEGINMÛVEÛAKQEADXÛHAUEÛAÛSQACJQECNQD NFÛCNKKABNQASIUEÛVNQJIMGÛAMDÛQERNTQCEÛSQADIMG ACQNRRÛVASEQÛCNLOAMIERÛ)SÛIRÛNTQÛIMSEMSINMÛSHAS SHIRÛVIKKÛCNMSIMTEÛAMDÛVIKKÛOKAXÛAÛQNKEÛIMÛOQNUIDIMG RNKTSINMRÛFNQÛSHEÛCHAKKEMGERÛVEÛFACEÛIMÛSHEÛEWSEMDED OKAMMIMGÛHNQIYNM5
#NMREPTEMSKXÛVEÛDNÛMNSÛBEKIEUEÛEMFNQCEDÛ SQADIMGÛIRÛSHEÛAMRVEQÛAMDÛVNTKDÛVEKCNLEÛSHEÛ QELNUAKÛNFÛBAQQIEQRÛSNÛVASEQÛSQADIMGÛAMDÛSHEÛ IMSQNDTCSINMÛNFÛIMCEMSIUERÛSNÛEMCNTQAGEÛIS6
4HEÛONRRIBKEÛRCAKEÛAMDÛRCNOEÛNFÛIMUERSLEMSÛ QEPTIQEDÛSNÛSQAMRFEQÛVASEQÛIMSNÛSHEÛ%ARSÛ!MGKIAMÛregion in the longer term will raise many complex
RNCIAKÛEMUIQNMLEMSAKÛONKISICAKÛAMDÛECNMNLICÛIRRTERÛ
In our view a cooperative approach involving water
CNLOAMIERÛVNQJIMGÛIMÛOAQSMEQRHIOÛVISHÛGNUEQMLEMSÛ LAXÛBEÛUEQXÛVEKKÛRTISEDÛSNÛLEESIMGÛSHIRÛCHAKKEMGEÛ !MÛAMAKNGXÛLAXÛBEÛDQAVMÛSNÛSHEÛRISTASINMÛIMÛ SHEÛEMEQGXÛRECSNQÛVHEQEÛSHEÛDELAMDRÛNFÛEMEQGXÛ RECTQISXÛQEPTIQEÛGNUEQMLEMSÛSNÛRESÛAÛCKEAQÛONKICXÛ FQALEVNQJÛAMDÛSNÛVNQJÛCNKKABNQASIUEKXÛVISHÛSHEÛ IMDTRSQXÛAMDÛISRÛQEGTKASNQÛSNÛACHIEUEÛSHEÛDERIQEDÛ ONKICXÛGNAKRÛ)MCQEARIMGÛSHEÛQNKEÛNFÛLAQJESÛFNQCERÛIMÛ DEKIUEQIMGÛRSQASEGICÛIMUERSLEMSÛNFÛRTBRSAMSIAKÛRCAKEÛ NUEQÛAÛKNMGÛOEQINDÛVIKKÛQEPTIQEÛCAQEFTKÛSHNTGHS
Positive next steps
We believe collaborative working will be essential between all
parties involved and that there are several key areas to consider
in taking positive next steps.
This project has provided detailed evidence on the practicalities of
water trading in one of the fastest growing areas in the UK which is
also most vulnerable to the impacts of climate change. We hope it will
provide a valuable contribution to the wide ranging debate around
meeting the challenges of future water resource management.
Glossary and
abbreviations
Appendix 1:
Exclusions
Excluded from the project scope were the following: 1. AMP5 schemes: the study assumes that agreed
investment plans for AMP5 have been committed
AMDÞVIKKÞDEKIUEQÞSHEÞARRTLEDÞBEMEâSRÞ-KD
2. Northern, western and south western parts of the AW supply area: these are excluded because: a. Thames Water has yet to publish its Final WRMP
AMDÞARÞAÞCNMREPTEMCEÞSHEQEÞIRÞRIGMIâCAMSÞ
uncertainty about needs and opportunities in
SHEÞ4HALERÞAMDÞ6ENKIAÞ7ASEQÞ#EMSQAKÞ67# Þ
areas that adjoin AW, CWC and ESW;
Þ BÞÞ4HEQEÞIRÞRIGMIâCAMSÞTMCEQSAIMSXÞABNTSÞSHEÞ
scale of future sustainability reductions in the VWC supply area; and
c. The supply-demand balance in the Lincolnshire WRZs is secured by AMP5 schemes.
3. Explicit consideration of VWE needs and related
NOONQSTMISIERÞSHIRÞQEãECSRÞCNOAQSICIOASINMÞIMÞ
the Ardleigh Reservoir Committee and current arrangements for trading the resources of Ardleigh Reservoir. It is assumed that, when required, these will be used to deliver the
67%!7Þ%ARSÞ3TáNKJÞAMDÞ%RREWÞ72:ÞSQAMRFEQÞ SHASÞIRÞIDEMSIâEDÞIMÞSHEÞQECEMSÞ/FVASÞRSTDX Þ"TKJÞSQAMRFEQÞCHAQGERÞSHIRÞFNKKNVRÞFQNLÞSHEÞ
assumption that the study area is a single supply
QEGINMÞVISHÞMNÞIMSEQMAKÞCNRSBNTMDAQIERÞ4AQIáÞ
charges have been used, however, to assess the sensitivity of the modelling outcomes.
5. Future sustainability reductions: the potential exists
FNQÞRIGMIâCAMSÞRTRSAIMABIKISXÞQEDTCSINMRÞIMÞSHEÞRSTDXÞ
area in AMP6 and beyond. However, these have
XESÞSNÞBEÞCNMâQLEDÞAMDÞRNÞHAUEÞBEEMÞEWCKTDEDÞ FQNLÞSHEÞRSTDXÞ/FÞRIGMIâCAMCEÞIRÞSHEÞFNKKNVIMG Þ AÞÞÞ-KDÞQEDTCSINMÞIMÞABRSQACSINMÞFQNLÞSHEÞ2IUEQÞ
Wensum at Costessey Pits, near Norwich. This is scheduled to be determined in AMP6 and,
IMÞCNLBIMASINMÞVISHÞAMÞEPTIUAKEMSÞÞ-KDÞ
reduction in AMP5, would drive a complete re-evaluation of our supply strategy for the Norwich and the Broads WRZ. Since options
FNQÞQERSNQIMGÞSHEÞQERTKSIMGÞDEâCISÞVNTKDÞIMCKTDEÞ
sub-regional transfers, this will also lead to a re-evaluation of the supply-demand strategies
FNQÞSHEÞ!7Þ&EMKAMDÞ.NQFNKJÞ2TQAKÞAMDÞ.NQSHÞ .NQFNKJÞ#NARSÞ72:RÞAMDÞONSEMSIAKKXÞSHEÞ %37Þ3TáNKJÞ.NQSHEQM#EMSQAKÞ72:ÞAMD
b. Possible reductions in output from
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6. Climate change impacts using UKCP09 outputs, including the WAFU reductions in the study area that are described in the Final WRMPs.
DEFINITION
Baseline forecast
A supply-demand balance forecast that assumes no additional investment in options to reduce demand or increase supply beyond our existing level of activity.
Catchment abstraction management strategies (CAMS)
CAMS is the vehicle for reviewing time-limited licences, determining whether they should be renewed and on what terms. It assesses how much water is reliably available on a catchment by catchment basis. CAMS was developed by the EA following the government’s decision to apply more control on how much water is taken from our water sources.
$EßCIS When available water resources are less than total demand plus target headroom requirements. Restoring Sustainable Abstraction (RSA) 23!ÛIRÛAÛOQNGQALLEÛNFÛVNQJÛSHASÛIDEMSIßERÛ
investigates and solves environmental risks or problems caused by unsustainable licensed water abstraction throughout England and Wales.
Water available for use (WAFU)
The value calculated by deducting allowable outages and planning allowances from deployable output.
Water resource zone (WRZ)
%!Û$EßMISINMÛb4HEÛKAQGERSÛONRRIBKEÛYNMEÛ
in which all resources, including external transfers, can be shared and hence the
YNMEÛIMÛVHICHÛAKKÛCTRSNLEQRÛEWOEQIEMCE
the same risk of supply failure from a resource shortfall.”
Water resources management plan (WRMP)
This is closely related to the Ofwat Periodic Review process and also operates on a
RILIKAQÛßUEÛXEAQKXÛCXCKEÛNFÛQEUIEVÛ)SÛIRÛSHEÛ
key regulatory submission to Defra and the EA, setting out our detailed current and forecast water resources needs and investment proposals. By amendment to the Water Act 2003, this is now a statutory document, open to public consultation, and requires the approval of the Secretary of State. More focus is placed on the environmental impact of the business plan, and the WRMP is accompanied by a Strategic Environmental Assessment (SEA) report.
OTHER ABBREVIATIONS
£/Ml Pounds per megalitre
AMP Asset Management Plan
AW Anglian Water
CWC Cambridge Water Company
ESW %RREWÛÛ3TÞNKJÛ7ASEQ
GOGS Great Ouse Groundwater Scheme
EOETS Ely-Ouse to Essex Transfer Scheme
VWE Veolia Water East (Formerly
Tendring Hundred Water Services)
WTW Water Treatment Works
Appendix 2:
Baseline Forecast Supply-Demand Data
Table 7
Cambridge Water Company investment need and WRMP schemes
7!4%2Û2%3/52#%Û:/.% $29Û9%!2Û!..5!,Û!6%2!'%Û "!3%,).%Û3500,9Ұ$%-!.$ "!,!.#%ÛҮҰÛҵÛ-KDү
0/34Û!-0Û3500,9Ұ3)$%Û3#(%-%3ÛҮ!-0ү #/--%.4
Cambridge Water Company MA MA
Veolia Water East MA MA
Table 8
KDIF>K¾4>QBO¾FKSBPQJBKQ¾KBBA¾>KA¾4/*-¾P@EBJBP¾B>PQBOK¾OBDFLK
7!4%2Û2%3/52#%Û:/.% $29Û9%!2Û!..5!,Û!6%2!'%Û "!3%,).%Û3500,9Ұ$%-!.$ "!,!.#%ÛҮҰÛҵÛ-KDү 0/34Û!-0Û3500,9Ұ3)$%Û3#(%-%3ÛҮ!-0ү #/--%.4Fenland 3SNJEÛ&EQQXÛ%WSEMRINMÛ!-0 3EKECSEDÛSNÛAUNIDÛKNCAKÛDEßCISRÛIMÛSHEÛ &EKSVEKKÛ0:
North Norfolk Coast 3ECNMDAQXÛ'QNTMDVASEQÛ5REÛ!-0 ,NCAKÛDEßCISRÛRTOONQSEDÛBXÛSQAMRFEQR
Norwich and the Broads .NQVICHÛ5QBAMÛ3NTQCEÛ!-0 3CHELERÛMEEDEDÛFNQÛSHEÛ.NQVICHÛ0: -NTREHNKDÛ747Û%WSEMRINMÛ!-0 .NQVICHÛ2ETREÛ!-0 .NQFNKJÛ2TQAK .NQVICHÛ4QAMRFEQÛ!-0 Cambridgeshire and 7ERSÛ3TÞNKJ 'QNTMDVASEQÛDEUEKNOLEMSÛ!-0 ,NCAKÛDEßCISRÛRTOONQSEDÛBXÛSQAMRFEQR %ARSÛ3TÞNKJÛAMDÛ%RREW #KIÞÛ1TAXÛ%âTEMS 2ETREÛ!-0 ,NCAKÛDEßCISRÛRTOONQSEDÛBXÛSQAMRFEQR Table 9
"PPBU¾>KA¾0RÕLIH¾4>QBO¾FKSBPQJBKQ¾KBBA¾>KA¾4/*-¾P@EBJBP
7!4%2Û2%3/52#%Û:/.% $29Û9%!2Û!..5!,Û!6%2!'%Û "!3%,).%Û3500,9Ұ$%-!.$Û "!,!.#%ÛҮҰÛҵÛ-KDү 0/34Û!-0Û3500,9Ұ3)$%Û3#(%-%3ÛҮ!-0ү #/--%.4 Essex !-0Û!BBEQSNMÛRCHELEÛVIKKÛDEKIUEQ Û-KDÛ7!&5ÛNMÛCNLOKESINM3TÞNKJÛ.NQSHEQM#EMSQAK .NQSHÛ,NVERSNãÛ'QNTMDVASEQ Delivery of the scheme results in a
]Û-KDÛRTQOKTRÛASÛSHEÛEMDÛNFÛSHEÛ FNQECARSÛOEQIND
3TÞNKJÛ"KXSH
3TÞNKJÛ(AQSIRLEQE $EßCISÛAUNIDEDÛTRIMGÛDELAMDÛ
Anglian Water Anglian House Ambury Road Huntingdon Cambridgeshire Northumbrian Water Abbey Road Pity Me Durham DH1 5FJ
Cambridge Water Company 90 Fulbourn Road
Cambridge CB1 9JN
