Our draft Water Resources Management Plan 2015-2040 Overview and consultation

2 | Our draft Water Resources Management Plan: Overview and consultation

Introduction
Our job is to provide our nine million customers with a safe and reliable water supply, around the clock, whether at home or at work. Its something they naturally take for granted, and which they expect will come at an affordable price.
We aim to keep the taps running whatever the weather. Last year ended up being one of the wettest on record, but until the spring we had seen unusually low rainfall. Our region had experienced two consecutive dry winters the period we rely on to top up the underground sources that feed rivers. Until it began raining in April 2012, we and other water companies in the SouthEast were planning for a drought. The document youre about to read explains what we think we need to do to guard against periods of low rainfall in the future. We also need to consider other major challenges. Among these, there is forecast to be a rise in the number of people living and working in London and the Thames Valley already one of the most densely populated areas in the country. It is hard to overstate the value of water as an environmental resource for our society. A recent independent economic assessment showed that imposing emergency restrictions on water use by businesses would cost Londons economy around 290 million per day. Given this importance, all water companies in England and Wales are legally required to set out their proposals to ensure reliable supplies of water for the next 25 years. These are known as Water Resources Management Plans and are formally reviewed every five years. This document summarises our draft Water Resources Management Plan for the period from 2015 to 2040. Well refer to it throughout as the Plan or our Plan. Before putting it together, we have consulted customers and stakeholders to understand their priorities. Among our questions, weve asked how often they believe it would be acceptable to have restrictions put on their water usage, and what price they can afford to pay. We have then looked at how best to address these views in a way that provides best value for customers, the environment and society as a whole. In their feedback, people have said they want a safe and reliable supply of drinking water, at an affordable price. But they also have clear preferences about how we should achieve that aim. In particular, they have told us they want us to do more to reduce leakage, to provide them with more help to reduce their water use, and that protecting the environment is an important priority. In drafting our Plan we have also looked to the future to understand the impact that uncertainties such as population growth, climate change and other factors will have on the availability and demand for water in our area. Our Plan We have compiled the Plan following statutory requirements and the Water Resources Planning Guidelines issued by Ofwat, the Environment Agency, Defra and the Welsh Assembly. Our forecasts show a significant deficit between the amount of water available and forecast demand in our London supply area. This shortfall grows from 125 million litres per day in 2020 to 367 million litres by 2040 equivalent to the water needed by 2.2 million people. To address this, our Plan proposes that we carry out three main activities over the next 25 years: Reduce leakage from our pipes and undertake a variety of initiatives to encourage customers to use water more wisely. Gain a much more detailed understanding of where, when and how water is used throughout our region, so we can better manage demand. This will include progressively metering all domestic and business premises and the introduction of tariffs. We expect to be able to provide 76 per cent of households across our supply area with their own meters by 2030, but where this is not possible (for instance, in some blocks of flats) we will use bulk meters to monitor demand and identify leaks.

Our draft Water Resources Management Plan: Overview and consultation | 3

Develop new resources where appropriate, with further detailed studies to identify the options that will provide best overall value to customers and the environment. The indirect re-use of treated sewage effluent (wastewater re-use) is currently assessed as the lowest cost solution and is therefore the option included in this Plan for delivery between 2025 and 2030. Overall, our draft Plan focuses heavily on reducing demand for water over the first 10 years (until 2025). Beyond this, we need to find additional resources in order to bridge the gap between supply and demand. Minimising risk to supplies over the long term Water is required by domestic households, by industry and by the environment. We need to carefully balance these competing needs over the long term. In doing so, we have to recognise that demand is increasing and that, in some cases, environmental considerations mean we will be able to take less from rivers and boreholes. We predict a deficit between supply and demand not just for our region, but for the South-East as a whole. Water is vital not just for this area of the country, but for the UK economy as a whole. Thats why we believe it is crucial that the best solutions for this 25-year period and beyond should be identified by the Government, stakeholders and water companies working together.

We must collectively ensure our water supply is well planned and brings the maximum benefit to the region. Since many water resource options take a significant time to develop and implement, we believe we need to agree an approach within the next five years. Historically, a new, large reservoir has been our preferred solution to meet the longerterm need for additional supplies, once we have fully implemented a range of options to manage demand for water. However, this is not the only potential solution and all options need to be thoroughly tested before such a far-reaching decision is taken. From our work so far, we believe there are three possible long-term solutions from which to choose: Implementing carefully planned indirect re-use of treated sewage effluent from our sewage works Transferring water from other areas of the country which can guarantee to have a surplus whenever we might need it Providing additional storage in reservoirs, either on the surface or underground, so that we can take water from the environment when it is plentiful and store it until it is required Each of these options has advantages and disadvantages. Wastewater re-use has lower building costs and is a more flexible option but has high treatment costs. Transfers enable us to use water from wetter areas of the country but

involve high pumping costs. Reservoirs store water for when it is not available in the environment and provide longterm resilience, but surface reservoirs are expensive and disruptive to build and underground reservoirs are only possible in very limited areas. A detailed regional study of these and other potential long-term solutions is needed. It must look carefully at which options would provide the greatest degree of certainty in dealing with the challenges of the future, and the greatest overall benefits to the South-East. After that, some bold decisions will be needed, to agree and implement the right long-term solution. This consultation Arriving at the right solution is important to us, to the Government and to the environment, which is why this is a statutory plan. And it is of course vital to our customers, who naturally place a high value on a reliable and affordable supply of water and expect us to provide it. This consultation is all about sharing our proposals and asking your opinion. The remainder of this document will take you through our Plan step by step, starting with an explanation of the factors involved and ending with a description of our preferred long-term Plan. Details on how to give your feedback can be found on page 35. I very much look forward to hearing your comments.

Martin Baggs Chief Executive Officer