Water and Effluent Treatment Magazine
Issue link: https://read.utilityweek.co.uk/i/805302
APRIL 2017 WET NEWS 7 Industry change is needed • Pollutions incidents between 2012-14 have landed Thames Water with a record fine of £20M-plus. But Will Thames Water's fine shake up the industry in more ways than one, asks Siltbuster's Dr Richard Coulton. T he implication of Thames Water's £20.3M fine represents a wake-up call not only for the UK's water industry but for anyone involved in the treatment of potentially contaminated water and its release into the environment, be they in the construction, food and drink or industrial sectors. Although the magnitude of the fines for pollution incidents has been going up following the introduction of new sentencing guidelines in 2014, the judgement against Thames Water establishes a new framework against which the size of future fines will be set. The 2014 sentencing guidelines established the principle that fines should be proportionate to the degree of culpability as well as the size of the company - i.e. equal financial pain for all, irrespective of a company's size. However, the Thames Water judgement takes this process a step further by establishing the following principles in environmental law: • It should not be cheaper to offend than to take appropriate precautions • Shareholders need to understand that the environment is to be treasured and protected, not poisoned • Significantly sized fines will get that message across Clearly, the implications from this case are that all companies now have little choice but to ensure they adopt best environmental practice – or face the risk of incurring greater costs by not complying. This case makes it clear that environmental compliance is now the least-cost option as the precedent set by Judge Francis Sheridan means that, from now on, the magnitude of any fine imposed will be greater than the original cost of treatment. In addition to the direct cost of a fine, companies will also be faced with indirect costs, as a result of loss of corporate credibility, lost future business opportunity and the public relation costs incurred in trying to restore a damaged reputation. The municipal water business has always faced the challenge of trying to meet the o'en conflicting requirements of shareholders, regulator Ofwat and the Environment Agency (EA). Up to now it can be argued that corporately, the greatest focus has been on maximising share value whilst complying with the investment rules set by Ofwat, with environmental protection taking a slightly back seat. I think this will be change as of March 22. I believe another fall-out of the judgement is to emphasise the growing need for the industry to change its approach and accommodate more resilience into its infrastructure, be that pipelines, pumping stations or at wastewater treatment works. Although there is no single solution, this represents an opportunity for the industry to broaden its outlook and accept approaches that may be considered non-standard to current behaviours but are proven in other sectors and countries. As a result, there is a tendency to default to standardisation models that do not provide as much flexibility, particularly when looking to responsive solutions. The impact of the judgement should result in placing greater emphasis on effective maintenance, process redun- dancy or resilience within the existing operating environment. Furthermore, it is the responsiveness called upon in this decision that requires the industry to challenge current design horizons, standards and approaches; there is no better time for the water companies and regulators to align on this. Procurement Traditional capital procurement routes can take long periods of time to deliver enhancements or improvements. This is largely due to complex procurement mechanisms and many investment decisions that seek to be based on long-term forecasts for multi-AMP cycles where demographics, climate and regulatory permits can all change. The majority (>80%) of the wastewater asset base is associated with small- to medium-sized works and whilst these may be perceived to have been lower priority given their size; the sentencing guidelines establish rules of culpability and without due consideration of mitigation, failures of these works can also lead to negligence. If sufficient harm (Category 1 to Category 4) is experienced at these works then the guidelines will also establish an appropriate level of fines proportional to the company's turnover. It is therefore essential that a flexible, responsive and responsible approach is considered for the vast number of works that can be stretched by the changing demographics, environment and investment programme. Adopting modular treatment solutions for temporary or semi- permanent effect can help facilitate mitigation for seasonal or peak load scenarios for small- to medium-sized works. By using a modular approach, construction costs can be reduced and spares costs minimised. This leads to providing more semi-permanent solutions using a building block approach rather than conventional procurement design and delivery. Whilst this is non- standard to the majority; the industrial effluent sectors are well versed in functional treatment solutions. But more importantly, such an approach offers the increased level of resilience required to minimise the magnitude of the fines imposed following any pollution incident. Potentially it is a win-win situation. The only real question is will the industry recognise and act upon this need for change in time to at least partially implement it during this AMP cycle? It will certainly highlight the need to take an appropriate course of action for mitigation of interim solutions to ensure such significant fines are not repeated and shareholder confidence declines. n Dr Richard Coulton is chief executive officer at Siltbuster. The majority of the wastewater asset base is associated with small- to medium-sized works News+ "…such an approach offers the increased level of resilience required to minimise the magnitude of the fines imposed following any pollution incident. Potentially it is a win-win situation" Dr Richard Coulton