Regulation research theme


Regulation research is primarily driven by the economic regulatory frameworks that the water industry works within, in particular the requirements for water company Business Plans. It also covers the quality regulation frameworks that apply to the water industry, i.e. those that protect environmental and drinking water quality.

This research area covers issues such as customer engagement, metering, assessment of potential changes to regulatory requirements or frameworks, asset deterioration, uncertainty and benchmarking. In particular, a considerable amount of work has been undertaken to produce a Common Framework for Capital Maintenance which has been widely adopted by many companies and their regulators as the process for company business planning and reporting.

Programme Lead(S)

This research theme currently has no programme lead.






BQ9 Deep Dive Project Two - How should customers’ and stakeholders’ views be used in regulatory decisions?

Project Status Project Commenced


Environmental Assessments for Water Resources Planning

Project Status Project Completed

The preparation of strategic water resource plans[1] requires several supporting environmental assessments to be undertaken alongside plan development. A water company must determine if its plan falls within the scope of the Strategic Environmental Assessment (SEA) Directive and/or requires Habitats Regulations Assessment (HRA). The plan must also be able to demonstrate that implemnation of  it would not cause a deterioration in waterbody classification and/or demonstrate that it would not preclude the delivery of measures to facilitate the improvements needed to attain good status, as required under the Water Framework Directive (WFD).  Drought plans also require consideration under the SEA Directive and Habitats Regulations, although WFD assessments are usually undertaken as part of the ‘shelf-copy’ drought permit/order environmental assessments prepared in support of the drought plan in line with regulatory guidance.

 Relevant UKWIR guidance relating to SEA and HRA of WRMPs and drought plans[2] was last updated in 2012. Since then, there have been several developments in regulator guidance and current best practice (including a revision to Environment Agency drought plan guidance anticipated in late 2019), and several important Habitats Directive rulings with implications for strategic water resource plans in particular, including the 2018 ‘People over Wind’ judgment[3]. The requirement to prepare a stand-alone WFD assessment is an additional requirement since the 2012 UKWIR guidance was published.

 There is an increasing move to use an Ecosystem Services (ESS) approach to environmental valuation. An UKWIR project in 2016[4] reviewed the potential benefits of ESS/Natural Capital Accounting (NCA) approaches and made some recommendations for future implementation, but at time of writing these had not been taken forward.

 Clearly with increased focus on development of water trading and regional transfer schemes, it is crucial that environmental assessments of strategic water resource plans for both regional and company level plans adopt the same methodology, baseline environmental data collation and approach to environmental valuation to allow direct comparison of intra- or inter- company or region water resource options. This applies to all aspects of assessment including SEA, HRA, WFD and ESS/NCA. This would require an update to the current UKWIR SEA and HRA guidance, and development of standard methodology for WFD and NCA/ESS assessments for strategic water resource plans. It is essential that the regulators are fully involved in the project steering group to ensure they are signed up to the approaches and guidance developed at a National level[5]. 

 Drought plans are different to strategic water resource plans in that they do not comprise a preferred plan or programme of water resource options, but rather a basket of measures that will be considered for implementation during a future drought event. The measures selected and the programme will depend on other factors including the timing, duration and spatial extent of the dry weather event experienced. The drought plan SEA Environmental Report is therefore a comparative assessment of the environmental effects of implementing each drought option, which should be used to review the potential environmental impacts of implementing supply side or drought permit/order options should they be progressed in the future. However, although a fundamental requirement of the Directive (and demonstrated by the SEA post-adoption statement) there is a need for better integration of SEA into the decision making process for both drought plan implementation and strategic water resource plan preferred programme selection.   

[1] Including Water Resource Management Plans (WRMPs) in England and Wales, Water Resource Plans in Scotland and National Water Resources Plans in Ireland.

[2] UKWIR (2012) Strategic Environmental Assessment and Habitats Regulations Assessment - Guidance for Water Resources Management Plans and Drought Plans. Prepared by Cascade Consulting.

[3] In summary the judgement was that best practice mitigation measures cannot be taken into account when considering screening plans or projects to determine if there is a likely significant effect on a European designated site. This can result in an increased burden of assessment at the ‘Plan’ stage and/or Plans being ruled as non-compliant with the Regulations.

[4] UKWIR (2016) Benefits and Limitations of Integrating Natural Capital Accounting (NCA) and Ecosystems Services Assessment (ESA) into Water Company Activities (2016) Prepared by Cascade Consulting.

[5] Including Environment Agency, NRW, Northern Ireland Environment Agency, Environmental Protection Agency, Natural England, Scottish Natural Heritage, Historic England, Historic Scotland, Cadw and others as appropriate.


Extending the Capability of SAGIS to Take Account of Climate Change, Growth and Mains Water Leakage

Project Status Project Commenced

What is the emerging legislation or other threat that lies behind the proposal?
The Adaptation Reporting Power of the Climate Change Act 2018 requiring companies to demonstrate how climate change effects their operations and that they understand and are dealing with any risks.

The Water Framework Directive requires measures to be implemented to improve ecological status and prevent deterioration. Companies need to understand more about the role of water mains leakage and the contribution that reducing leakage will make to improving compliance with the phosphorus targets.

 Why is the Industry concerned about this issue?

There is a need to understand the risks to water quality using climate change predictions so that the industry can start developing future strategies in catchments. The industry would also like to be able to consider these risks alongside other pressures such as growth.

In urban areas in particular the industry would like to understand whether they are already delivering their fair share to resolving phosphate non-compliance.

 What is the specific problem that the Industry needs to address?

There are currently no standard tools or methodologies for understanding the climate change risks to water quality. Since its development in 2012, the Source Apportionment Geographic Information System (SAGIS) model has proved a useful tool when developing suitable water quality measures required to comply with the Water Framework Directive (WFD). By estimating the relative sources of point source and diffuse pollution in rivers, lakes, transitional and coastal waters, the SAGIS model also helps to ensure that the water industry is not targeting pollution arising from other sources or sectors.


As part of project WW02B209, UKWIR commissioned a climate change scoping study report to consider how climate change modelling could be done in SAGIS. The scoping study has recently completed and recommended the development of an automation spreadsheet to create climate change scenario SIMCAT files, to run these files and to analyse the results. The SAGIS Steering group have asked that any tool developed also includes the capability to run other sensitivity tests. The SWQWPG SAGIS sub group met on 6th June 2019 and agreed that this should be implemented. The group also suggested that the tool be run and tested on a catchment in order to provide an early idea of how results will be effected.

Project WW02B209 also delivered a scoping study on water mains leakage which was discussed at the User Form meeting held on 11th July. SAGIS users asked for further work to be done to implement the recommendations of the scoping study.


Sustainability of Phosphate Dosing for WQ

Project Status Project Completed

Phosphate is currently used by Water Companies  to provide a barrier between lead supply pipes and the water provided to their customers. This benefit only lasts while dosing continues. As soon as dosing ceases the barrier is removed and lead comes into contact with the drinking water. However, phosphate is a finite non-renewable resource so there will be a point when the dosing of this is unsustainable.


Resilience – performance measures, costs and stakeholder communication

Project Status Project Completed

The Water Act 2014 gave Ofwat a new primary duty to further the resilience objective in the water industry, including highlighting the need for long-term resilience of water and wastewater systems and service provision when faced with increasing external stresses, such as environmental pressures, population growth and changes in consumer behaviour.


For business plans, companies will need to be able to:

  • Develop measures and targets which reflect customer priorities
  • Demonstrate that proposed costs are efficient


Meeting resilience requirements will also affect supply-demand planning. Updated WRMP and Drought Plan guidance moves water resources planning away from simply testing supply systems against historic droughts, with the intention of better understanding resilience to other types of drought. For example the latest Water Resources Planning Guideline states: “By testing your plan to a number of different droughts and aligning with your drought plan, you should be able to identify areas where resilience needs to be increased to meet customer and stakeholder expectations, or government policy”.


Improving resilience can involve choosing appropriate investments in the short-term to reduce risk for future customers, where the probabilities of risks occurring and their impacts are often uncertain difficult to predict. This makes it problematic to develop measures and targets. In addition, communicating risks in order to assess customer priorities poses difficulties.


When is ‘surface water removal’ the most cost beneficial solution?

Project Status Project Commenced

Removing surface water from foul or combined sewers offers a number of benefits, both in terms of reducing operational expenditure and flows (and subsequent flooding and spill frequency), as well as offering wider community benefits.

There is an increasing appetite across the water industry to consider and deliver such interventions to help manage a range of drivers, but this appetite is not matched by an in depth understanding of the scenarios and catchment characteristics that make surface water removal options more cost beneficial than traditional engineering solutions.

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