Thames Water in crisis and the water industry more generally

[Yew]

That may be your personal philosophy, but it’s hardly an absolute.
Given the repeated evidence of the incompetence of the state, I would say the default position is that goods and services should be supplied by private businesses, except where there’s a good reason it shouldn’t.

Indeed, the railways are much better off being ran by private ventures such as the German State Railway and Dutch State Railway.

 

[bavvo]

It has nothing to do with residents and them getting added value. Were the residents provided with clean water as required and the sewage removed from their property as expected? If yes job done.

Hosepipe bans and raw sewage in rivers and seas is fairly convincing evidence of job not done.

== Doublepost prevention - post automatically merged: 2 Jul 2023 ==

The reason we allow companies to make profits are two-fold: Firstly, that if we want people to take the trouble to innovate, invest, and take risks in order to provide services that we all benefit from, then we need to reward those people somehow. To that extent, taking a profit is not much different from earning a salary, and you don't seem to object to anyone earning a salary. And secondly, because when you allow people to make profits, that usually causes people to innovate and develop new products, and that ultimately makes us all better off.

Problem is, where is the evidence for innovation with the private water companies? Have they made significant advances in England that Scottish Water has not? Also, where is the risk? Thames Water should provide an interesting test case becasue I don't see this government allowing the company to collapse and the shareholders or creditors ever losing their 'investment'. Risk and innovation only work as motivators in a with genuine free market competition. Monopolies do not naturally encourage either, so you are reliant on regulation, which has clearly been poor over the last 30 years (under all governments it should be said).

== Doublepost prevention - post automatically merged: 2 Jul 2023 ==

In the case of the water companies, if private investors hadn't invested in them, then the Government would have had to cough up the money instead - and you'd be paying for that through your taxes!

I'd argue that taxpayers shouldn't be involved. Water consumers should be paying for water investment, regardless of whether public or private sector.*

* There is another factor to be considered though. Much of the water supply infrastructure is suffering increased damage through growing average road vehicle weights. Heavier lorries should really contribute more to pay for the damage they cause, and larger, heavier cars (especially the growing weight of electric cars) as well. So it would make sense for vehicle taxes to take that into account and a proportion be transferred for water infrastructure renewal and maintenance.

 

[DelW]

Isn't Thames Water owned by the Saudis and communist China? The latter one of the great capitalist nations of the world.

No it isn't. It's principally owned by Canadian and British pension funds.

A Chinese fund owns less than 9%, there's no Saudi ownership although an Abu Dhabi fund owns just under 10%. Full details here:

Our governance | Governance and Legal | About Us | Thames Water

Learn more about our ownership structure, external shareholders and where to find the Company's Articles of Association.

www.thameswater.co.uk

Ontario Municipal Employees Retirement System 31.777% One of Canada’s largest pension plans, with C$105 billion of net assets and global experience managing essential infrastructure 2017-2018
Universities Superannuation Scheme 19.711% A UK pension scheme for the academic staff of UK universities 2017, 2021
Infinity Investments SA 9.900% A subsidiary of the Abu Dhabi Investment Authority and one of the world’s largest sovereign wealth funds 2011
British Columbia Investment Management Corporation 8.706% An investment management services provider for British Columbia’s public sector 2006
Hermes GPE 8.699% One of Europe’s leading independent specialists in global private markets and manager of the BT Pension Scheme (BTPS), one of the largest UK pension schemes for the private sector 2012
China Investment Corporation 8.688% One of the world’s largest sovereign wealth funds 2012
Queensland Investment Corporation 5.352% A global diversified alternative investment firm and one of the largest institutional investment managers in Australia 2006

The debt causing the problems was largely accrued when it was owned by the Australian Macquarie Bank, a.k.a. the giant vampire kangaroo.

 

[tomuk]

Indeed, the railways are much better off being ran by private ventures such as the German State Railway and Dutch State Railway.

The Dutch state railway doesn't own any UK TOCs anymore they have paid the management team to take them off their hands similarly DB have been trying to offload Arriva for years but can't get anyone to pay the amount they want for it.

 

[Busaholic]

The debt causing the problems was largely accrued when it was owned by the Australian Macquarie Bank, a.k.a. the giant vampire kangaroo.

A point I made a while back which never got countered, basically because it's clear as daylight.

 

[PsychoMouse]

Thames Water: Warnings London may face water rationing 'imminently'

Thames Water: Warnings London may face water rationing 'imminently'

A leading environmentalist tells City Hall streams that provide London with water are drying up.

www.bbc.co.uk

No sign of the CEO rationing their pay check though… obviously.

“In its annual report published this week, Thames Water said it lost 602.2 million litres a day for 2022-23 based on a three-year rolling average.”

To put this in perspective they lose the daily water usage of 4.2 million people every day through leaks!

This is actually insane. There would be no need for rationing if the infrastructure had been looked after properly. They are wasting enough water to meet the demand of almost 50% of Greater London's population.

It's time to nationalise water companies. They have not been run in the best interests of the public, only in the best interests of shareholders.

 

[JamesT]

Thames Water: Warnings London may face water rationing 'imminently'

Thames Water: Warnings London may face water rationing 'imminently'

A leading environmentalist tells City Hall streams that provide London with water are drying up.

www.bbc.co.uk

No sign of the CEO rationing their pay check though… obviously.

“In its annual report published this week, Thames Water said it lost 602.2 million litres a day for 2022-23 based on a three-year rolling average.”

To put this in perspective they lose the daily water usage of 4.2 million people every day through leaks!

This is actually insane. There would be no need for rationing if the infrastructure had been looked after properly. They are wasting enough water to meet the demand of almost 50% of Greater London's population.

It's time to nationalise water companies. They have not been run in the best interests of the public, only in the best interests of shareholders.

As they like to say on More or Less, is that actually a large number? According to https://www.thameswater.co.uk/about-us/performance/leakage-performance they supply 2600 million litres a day, so the leakage rate is about a quarter.
According to OfWat, leakage in the UK is average to good compared to the rest of Europe, and more importantly, leakages in England & Wales are lower than nationalised Scotland - https://www.ofwat.gov.uk/leakage-in-the-water-industry/
Note the improvements compared to pre privatisation, are you sure that a nationalised industry isn't going to go back to the bad old days?

 

[DynamicSpirit]

Thames Water: Warnings London may face water rationing 'imminently'

Thames Water: Warnings London may face water rationing 'imminently'

A leading environmentalist tells City Hall streams that provide London with water are drying up.

www.bbc.co.uk

No sign of the CEO rationing their pay check though… obviously.

“In its annual report published this week, Thames Water said it lost 602.2 million litres a day for 2022-23 based on a three-year rolling average.”

To put this in perspective they lose the daily water usage of 4.2 million people every day through leaks!

That sounds shocking - but there's no way to tell if it is actually shocking if you don't have some data to indicate what level of leaks is reasonable given what today's technology can achieve, and the state of the infrastructure at the time that Thames Water took it over.

Since I don't have access to any of that kind of data, for my part, I simply have no idea whether or not that level of leakage is reasonable. (Although as a London Thames Water customer I certainly won't be happy if water rationing comes in)

This is actually insane. There would be no need for rationing if the infrastructure had been looked after properly. They are wasting enough water to meet the demand of almost 50% of Greater London's population.

Is it insane? Do you have any data on how much it would cost to improve the infrastructure to significantly reduce that level of leakage, as compared to the cost of accepting that leakage? Without knowing that, it's impossible to know how (un)reasonable that level of leakage is.

It's time to nationalise water companies. They have not been run in the best interests of the public, only in the best interests of shareholders.

Ah yes, of course, I'd forgotten, how nationalization is the universal panacea that miraculously fixes all problems, without even any need to figure out what was causing the problems in the first place.

 

[PsychoMouse]

Ah yes, of course, I'd forgotten, how nationalization is the universal panacea that miraculously fixes all problems, without even any need to figure out what was causing the problems in the first place.

It'll be better than the current situation... Obviously.

 

[yorksrob]

That sounds shocking - but there's no way to tell if it is actually shocking if you don't have some data to indicate what level of leaks is reasonable given what today's technology can achieve, and the state of the infrastructure at the time that Thames Water took it over.

Since I don't have access to any of that kind of data, for my part, I simply have no idea whether or not that level of leakage is reasonable. (Although as a London Thames Water customer I certainly won't be happy if water rationing comes in)



Is it insane? Do you have any data on how much it would cost to improve the infrastructure to significantly reduce that level of leakage, as compared to the cost of accepting that leakage? Without knowing that, it's impossible to know how (un)reasonable that level of leakage is.



Ah yes, of course, I'd forgotten, how nationalization is the universal panacea that miraculously fixes all problems, without even any need to figure out what was causing the problems in the first place.

Or how privatisation has been the magic solution to everything under the Tories for the last forty years.

 

[infobleep]

There is an aveeet that has just started on the radio in the last few days. It ends: Thanes Water, eveeyone's water.

I find myself then saying Thanes Water leaks,, eveeyone's water.

 

[gswindale]

It'll be better than the current situation... Obviously.

How so?

Given how badly some public bodies have been run recently, I'd be wary of nationalising the industry.

 

[PsychoMouse]

We deserve the state this country is in, honestly.

 

[DynamicSpirit]

Or how privatisation has been the magic solution to everything under the Tories for the last forty years.

Uhhhh? Past 40 years? I think you're exaggerating there. There was certainly a spate of privatisation during the late 1980s and early 1990s, and I think you could legitimately argue that during that time, the Tories put too much faith in privatisation: It achieved some benefits and also a few disbenefits but on the whole, the legacy of that period of privatisation wasn't as good as the politicians who pursued it believed it would be (other than possibly in telecoms).

But that was a period of about 10 years in total, not 40 years. Since then, there have been almost no significant privatisations under the Tories and indeed in the case of rail, some moves to renationalize.

 

[Yew]

But that was a period of about 10 years in total, not 40 years. Since then, there have been almost no significant privatisations under the Tories and indeed in the case of rail, some moves to renationalize.

Royal Mail, alongside the creeping use of private finance and outsourcing?

 

[yorksrob]

Uhhhh? Past 40 years? I think you're exaggerating there. There was certainly a spate of privatisation during the late 1980s and early 1990s, and I think you could legitimately argue that during that time, the Tories put too much faith in privatisation: It achieved some benefits and also a few disbenefits but on the whole, the legacy of that period of privatisation wasn't as good as the politicians who pursued it believed it would be (other than possibly in telecoms).

But that was a period of about 10 years in total, not 40 years. Since then, there have been almost no significant privatisations under the Tories and indeed in the case of rail, some moves to renationalize.

I should concede that privatisation was also the magic solution to everything under New Labour at that time as well.

What there hasn't been is a sensible evaluation of what things should be in the private and public sector. I would argue that a monopoly over a key utility with a captive audience should be in the public sector.

== Doublepost prevention - post automatically merged: 13 Jul 2023 ==

Royal Mail, alongside the creeping use of private finance and outsourcing?

And 192.

 

[JamesT]

And 192.

How is 192 a privatisation? The network operators who used 192 or 153 were all private companies already. It merely put competing companies on a level playing field that everyone has a 118 xxx number instead of some providers having a short code and others a full length number.

 

[Cloud Strife]

the legacy of that period of privatisation wasn't as good as the politicians who pursued it believed it would be (other than possibly in telecoms).

Even telecoms was largely a swing and a miss until the last 10 years or so. BT were really behind the curve when it came to the internet infrastructure, especially as people were talking in the early 90s about the need for FTTH.

What probably should have been done with BT was to privatise the retail/business operations, but then leave Openreach in the hands of the public. They could then have funded Openreach to bring gigabit fibre to everyone, which would still more than sufficient for the vast majority of users.

The UK left a huge amount of money on the table by not having nationwide fibre by 2000.

 

[najaB]

Even telecoms was largely a swing and a miss until the last 10 years or so. BT were really behind the curve when it came to the internet infrastructure, especially as people were talking in the early 90s about the need for FTTH.

Given that the public Internet didn't exist until 1989, the Web wasn't invented until 1992 and ADSL debuted in 1999, I doubt that there was much call for fiber to the home in "the early 1990s".

 

[JamesT]

Given that the public Internet didn't exist until 1989, the Web wasn't invented until 1992 and ADSL debuted in 1999, I doubt that there was much call for fiber to the home in "the early 1990s".

The issues with being able to progressively increase the speed on copper connections were apparently known about long before then. https://www.techradar.com/news/world-of-tech/how-the-uk-lost-the-broadband-race-in-1990-1224784 repeats the claim that BT offered fibre to the home in 1990 but Thatcher turned them down in favour of competition through the cable companies.

is a Tomorrow's World item from 1986 which explains the compression required to get a fairly poor image down a single phone line. The film 2001 showed a video call from space in 1968. So there were definitely applications in mind awaiting technical feasibility to make them happen.

 

[Ianigsy]

The problem with privatising the utilities is that it was expected (or hoped) that in the great share owning democracy, people would hold on to the shares and see them as an investment rather than treating them as free money and selling at the first possible opportunity.

 

[najaB]

So there were definitely applications in mind awaiting technical feasibility to make them happen.

Indeed there were. What there wasn't was a demand for them. That demand didn't exist until the late 1990s/early 2000s. It's easy to forget that the things that require high-bandwidth connections to residential premises - audio streaming, high-definition TVoIP, video calls and gaming - simply didn't exist until relatively recently. Think about the PC you were using in 1993 - what applications did you have that required anything like the speeds that full FTTH can provide?

BT (and the GPO before it) had been proposing high-speed links into homes since before privatisation, but there was no way that consumers were going to pay the thousands of pounds that would have cost when there were simply no uses for connections that fast.

 

[HSTEd]

The problem with privatising the utilities is that it was expected (or hoped) that in the great share owning democracy, people would hold on to the shares and see them as an investment rather than treating them as free money and selling at the first possible opportunity.

That really wouldn't have helped though.

The water companies would still have been incentivised to generate the highest possible returns by the shareholders. The shareholders would still get annoyed if "line not go up".

The nonsense about "Tell Sid" was just political cover, the real purpose was to make a quick buck to pay for unaffordable tax cuts.

 

[najaB]

That really wouldn't have helped though.

The water companies would still have been incentivised to generate the highest possible returns by the shareholders. The shareholders would still get annoyed if "line not go up".

The nonsense about "Tell Sid" was just political cover, the real purpose was to make a quick buck to pay for unaffordable tax cuts.

In theory, it might have been a little better (or not as bad) since the citizen investor would be more likely to be buying shares as an investment for the kids or grandkids rather than trying to make a quick buck themselves.

 

[DynamicSpirit]

In theory, it might have been a little better (or not as bad) since the citizen investor would be more likely to be buying shares as an investment for the kids or grandkids rather than trying to make a quick buck themselves.

Yeah, I think that was the theory. The practice didn't really work out though because very large numbers of people couldn't resist the urge to make a quick buck when the opportunity arose to sell shares for a lot more than they paid for them (and realistically, for most people who bought shares with the various privatisation offers, that probably was rationally the best decision anyway).

I think the idea of the share-owning democracy with mass share ownership amongst the general population may have been a nice idea but it doesn't work in practice because most people have neither the time nor the expertise required to follow stocks and shares and assess which shares are worth holding etc.

 

[najaB]

I think the idea of the share-owning democracy with mass share ownership amongst the general population may have been a nice idea but it doesn't work in practice because most people have neither the time nor the expertise required to follow stocks and shares and assess which shares are worth holding etc.

It works slightly better in the USA where almost every middle-class family has at least a small amount invested in the market, if only because employer share schemes are more common there than here.

That said, I usually sell the shares that I get through our share save scheme straight away, since they have some silly rules around blackout periods which virtually guarantee that I wouldn't be able to sell them immediately if I did need the money down the road.

 

[dgl]

Even telecoms was largely a swing and a miss until the last 10 years or so. BT were really behind the curve when it came to the internet infrastructure, especially as people were talking in the early 90s about the need for FTTH.

What probably should have been done with BT was to privatise the retail/business operations, but then leave Openreach in the hands of the public. They could then have funded Openreach to bring gigabit fibre to everyone, which would still more than sufficient for the vast majority of users.

The UK left a huge amount of money on the table by not having nationwide fibre by 2000.

BT wanted to do FTTH and even had at least one factory ready to make the cable but Maggie didn't think it was right for the monopoly operator to do this and so stopped them, believe they started a trial in one area but that was it.

 

[najaB]

BT wanted to do FTTH and even had at least one factory ready to make the cable but Maggie didn't think it was right for the monopoly operator to do this and so stopped them, believe they started a trial in one area but that was it.

It was a part of Milton Keynes. In the early 2000s they had to do copper overlay of the fibre connections so that customer could get ADSL!

 

[Fastlane256]

That sounds shocking - but there's no way to tell if it is actually shocking if you don't have some data to indicate what level of leaks is reasonable given what today's technology can achieve, and the state of the infrastructure at the time that Thames Water took it over.

The level of leakage at Thames water Is completely unacceptable with the technology available to them. For example, Bristol water leak 60L per property per day whereas Thames water leak 167L (2021 metrics so Thames Is now higher). However, the leakage data is partially flawed. It works on measuring the consumption during 3-4Am. Smart metered customers are subtracted from this but nothing else can be. This means that customer leakage and customers genuinely using water are counted towards leakage. For example, I run my washing machine at 3Am as the energy is cheaper but that affects the leakage metrics.

Is it insane? Do you have any data on how much it would cost to improve the infrastructure to significantly reduce that level of leakage, as compared to the cost of accepting that leakage? Without knowing that, it's impossible to know how (un)reasonable that level of leakage is.

The cost would be expensive. I don't know how much though I have some ballpark estimates from Thames to cut leakage down to 80L per property per day (which I personally think is too high still but would mean only 10-15% of water produced would be leaked compared to the 25% at the minute) would cost in the range of £1bn - £2.5bn (that's what they have set aside). This is due to be spent however it will be spread along multiple years and won't be achieved anytime soon.

one of the greatest issues with water company leakage is the need to meet the target for leakage and go no further. They are always given a set percentage reduction target over 5 years with a baseline set at the start. Exceeding significantly in one section would make the next 5 years much more difficult, therefore they choose not to. Removing this issue I personally think would improve leakage and encourage water companies to go further. Believe it or not some of them want to do better as it works out cheaper than building new resevour , however the regulator gets in the way.

 

[Nicholas Lewis]

The level of leakage at Thames water Is completely unacceptable with the technology available to them. For example, Bristol water leak 60L per property per day whereas Thames water leak 167L (2021 metrics so Thames Is now higher). However, the leakage data is partially flawed. It works on measuring the consumption during 3-4Am. Smart metered customers are subtracted from this but nothing else can be. This means that customer leakage and customers genuinely using water are counted towards leakage. For example, I run my washing machine at 3Am as the energy is cheaper but that affects the leakage metrics.

The cost would be expensive. I don't know how much though I have some ballpark estimates from Thames to cut leakage down to 80L per property per day (which I personally think is too high still but would mean only 10-15% of water produced would be leaked compared to the 25% at the minute) would cost in the range of £1bn - £2.5bn (that's what they have set aside). This is due to be spent however it will be spread along multiple years and won't be achieved anytime soon.

one of the greatest issues with water company leakage is the need to meet the target for leakage and go no further. They are always given a set percentage reduction target over 5 years with a baseline set at the start. Exceeding significantly in one section would make the next 5 years much more difficult, therefore they choose not to. Removing this issue I personally think would improve leakage and encourage water companies to go further. Believe it or not some of them want to do better as it works out cheaper than building new resevour , however the regulator gets in the way.

London drivers are already moaning about ULEZ think of the disruption that would come from a systematic renewal of the old mains rather than just dealing with leaks.