ALG Housing Directors
Thames Water Update
Report by:
Nigel Minto
Date:
30 September 2005
Contact
Officer:
Rangan Momen
Telephone:
Summary:
Recommendations
:
020
9816
7934 Email
:
Item
no:
Job
title:
1
Head of Housing Services
and Equalities
[email protected]
Although an agreement was not reached at the
negotiations meeting on the 31st of August 2005,
there was some positive progress. Thames Water have
agreed to review their present offer on pump costs
and to work with the ALG on establishing a robust
estimate on backflow prevention costs prior to coming
to an agreement in this area. Thames Water have
indicated that they will also “work with local
authorities on funding” in relation to backflow
prevention costs and have also agreed to consider
increasing the time period of their offer of an
interest free loan for remainder pump costs from the
current offer of two years.
Members are requested to Note:
1. The continuing negotiations with Thames Water on
the financial costs to boroughs resulting from
water pressure reductions.
2. London boroughs should continue to co-operate
with Thames Water in providing access to
buildings in-order to establish the impact of
pressure reductions.
3. Boroughs should inform Thames Water of
incidences of low supply pressure.
S:\HOUSING\Public\ALG Housing Directors Meetings\2005\Sept 05\Final\INFO_Item_11_Thames_Water.doc
1.
1.1
Introduction
This report up-dates members on the negotiations between Thames
Water and ALG regarding costs that London boroughs will face as
a result of the reduced water supply pressure resulting from
Thames Water’s Network Improvement Programme.
2.
2.1
Background
There have been ongoing problems with water pressure reduction
across London. These problems are set to get worse with the
introduction of Thames Water’s Network Improvements Programme.
Boroughs have already started to incur significant costs in the
pilot area of the Woodford zone.
2.2
Following intensive negotiations and a high profile publicity
campaign, Thames Water offered to pay 50% of the costs relating
to booster installations that will be required as a result of
supply pressure reductions caused by their Network Improvements
Programme. In addition they have offered an interest-free two
year loan for the remaining 50% of the costs.
2.3
Most significantly this offer does not include the cost of
installing backflow prevention valves. Any costs related to
achieving compliance with Water Regulations are a direct result
of Thames Water’s reduction of supply pressures, and should be
included in any cost contribution offer from the water company.
2.4
ALG’s initial rough estimate of the split between backflow costs
and pump costs is that the backflow valves will constitute 60% of
the total costs and pumps will constitute 40%. This estimate is
based on actual costs provided by Haringey arising from water
pressure reduction. By excluding these costs Thames Water is
effectively offering to pay 20% of the total costs.
2.5
Sir Robin Wales and Cllr Stephen Cowan met with Thames Water’s
Chief Operating Officer on 31st August 2005 to discuss Thames
Water’s offer.
3
Thames Water’s Network Improvement Programme: the cost to
boroughs
3.1 Sample data from a borough indicates that the
capital/installation cost for a single booster set could be
£22,827, and the on-going revenue costs £2,577 per annum. This
would result in a £17m cost to London based on an estimate of 754
affected buildings. This sample was drawn from a digital mapping
exercise carried out by Thames Water.
3.2
The estimated costs associated with Water Regulations compliance
i.e. installation of backflow valves is £365 per each individual
dwelling. This estimate is derived from a borough example with
simple physical layout. This cost could potentially double where
complex layouts are involved.
3.3
As the installation of back flow valves is a per dwelling cost
the cost can very quickly mount. If each building affected by
pressure reduction has 40 dwellings this would add an additional
£12m (based on £365 per dwelling). If each building has 100
dwellings costs would reach £30m.
4
Cost negotiation – current position
4.1 No agreement was reached at the meeting with Thames Water on 31
August 2005. The ALG confirmed that the present offer from Thames
Water is not acceptable and that the water company should pay the
full cost of pumps and backflow prevention costs, arising from
their Network Improvement Programme.
4.2 Thames Water agreed to review their present offer on pump costs
and to work with the ALG on establishing a robust estimate on
backflow prevention costs prior to coming to an agreement in this
area. Thames Water have indicated that they will “work with local
authorities on funding” in relation to backflow prevention costs.
Thames Water has also agreed to consider increasing the length on
the interest free loan offer to more than the current offer.
5
Anecdotal evidence of supply pressure reductions
5.1 The cost offer from Thames Water is restricted to buildings
identified by the water company as being impacted by the Network
Improvement Programme. Thames Water has however agreed to
investigate all reported pressure problems in-order to ascertain
if a connection exists between the Network Improvement Programme
and the pressure problem.
6
Local Authorities Bill
6.1 The ALG has submitted the following clause to the Local
Authorities Bill in relation to consultation between water
companies and local authorities on changes to water pressure:
‘Without prejudice to its duty under section 65(1) of the Water
Industry Act 1991 (c. 56) (duties of undertakers as respects
constancy and pressure), before lowering the mains water pressure
in its water mains and other pipes as are used for providing
supplies of water for domestic purposes in any borough, a water
undertaker shall consult the borough council.
If a water undertaker fails, without reasonable excuse, to comply
with subsection (1) above, the undertaker shall be guilty of an
offence and liable on summary conviction to a fine not exceeding
level 5 on the standard scale.’
6.2 Thames Water, Three Valleys Water Company and the National Joint
Utilities Group are formally opposing this clause.
6.3
At the meeting on 31st August Thames Water, stated that they felt
that it was unnecessary to go down the legislative route and that
there is a conflict between the regulations and the proposed
legislation.
7
7.1
Operational Protocol
The ALG and borough technical officers are continuing to work
with Thames Water to arrive at a protocol or memorandum of
understanding in respect to consultation and working
relationships between the Water Company and local authorities.
8
Equalities
8.1
Water is a basic necessity for all sections of the community.
Supply disruptions however are likely to have a particularly
adverse affect on families with children and the elderly and
other vulnerable groups.