Is there another industry that faces such an exacting mix of challenges as the water industry?
As regionally focused businesses, in a (currently) privatised but highly regulated industry, each water company is committed to long-term investment in its water supply and waste-water assets, contributing huge sums to local economies through supplier contracts and purchases, staff salaries and resulting multiplier effects.
The reliability and resilience of each water company’s asset infrastructure are essential to ensure the highest quality product and services are delivered to every home and business, whilst accounting for the daily, seasonal and long-term effects of weather and climate change. Striving to achieve the highest environmental standards is critical, encouraging household and business water efficiency, assuring the highest quality of drinking water and the best quality for the UK’s rivers and coastlines.
Services must be delivered with the minimum of interruption and at an affordable price (broadband providers take note). On average a water bill costs each household approximately £1 per day (not dissimilar to an average smartphone contract value) and whilst no household will ever have its water services terminated through non-payment of the water bill, indebtedness levels are high and rising.
As the industry regulator, Ofwat’s latest draft price review determination for 2020-2025 represents a step-change in targets for the water companies: better services; environmental improvements; increased investment and lower bills. Specifically, incentivised industry targets include: a 40% reduction in sewer flooding; a 64% drop in supply interruptions; a 17% reduction in leakage; and more help for the most vulnerable customers.
These new challenges are presented at a time of unprecedented growth in the number of homes, driven by the government’s aspirational housing delivery targets. New homes result in localised population growth, requiring robust, reliable and resilient water and waste-water services to support demographic change. Planning for growth is a regulatory necessity, with a 25-year Water Resource Management Plan now accompanied by a comparable Drainage and Wastewater Management Plan, each, in turn, underpinned by Local Plan evidence on local authority housing growth intentions.
Robust evidence on the likely scale, distribution and profile of future population change, in combination with comparable forecasts of likely climate change effects, are key components of the water industry’s long-term supply-demand outlook. And collaborative ‘regional’ planning is now the preferred approach, encouraging greater consistency through cooperation between water companies whilst sharing vital experience and expertise.
Data Science plays a key role in supporting the industry’s challenges, providing a critical combination of data, technology and analytical models to generate insight that better informs business planning and decision-making in the face of such complexity and uncertainty. Monitoring macro- and micro-level housing growth intentions, evaluating and estimating likely population change and distributions, assessing the resilience and robustness of existing supply capabilities and waste-water asset capacities. All require a systematic, data-driven approach, underpinned by a robust data science methodology that can be consistently applied across the industry.