Compensating for the effect of a change

What are your views on water companies paying compensation to downstream abstractors if a change to a discharge impacts on water available for their abstraction and, as a result, their business?

Why the contribution is important

Compensation may assist a business to off-set losses caused by reduced water availability. However, the amount of compensation would need to be calculated, and we welcome your views on a process for this and any appeals mechanism that could be needed.

by abstractionreform on September 12, 2014 at 04:57PM

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  • Posted by psmith September 28, 2014 at 20:12

    Changing a discharge could put an irrigation-dependent farmer or grower out of business. Compensation under present law could run into many £ millions to be paid by water company customers.

    Alternatively, if compensatio is paid do we really want to stop growing food this country?
  • Posted by JLNeedle September 29, 2014 at 16:32

    I would agree that there should be some protection for abstractors against the reduction of an upstream discharge on which they rely. This is very similar to the exisitng and proper rights of existing abstractors to be taken into account where new upstream abstractions are applied for.
  • Posted by EnergyUK October 06, 2014 at 15:19

    Whilst there may be a role for compensation to be paid by Water Companies in some circumstances, we do not feel that this should be a primary mechanism by which society seeks to manage this issue. The significance of the management of water resource is too far-reaching in scope for this to be an efficient means. There is the potential for changes in sewage treatment works discharges to create downstream distressed assets, affecting all of the operation of the asset, the value of the asset and the value of the land on which the asset is sited. In the case of power stations it may also deny society return from related assets such as the electricity transmission system and may contribute to reduced energy infrastructure resilience. It seems unlikely that in such circumstances an appropriate and realistic schedule of compensation payments could be agreed in practice.

    We consider that a more comprehensive plan-based approach is required (see our responses to Question 3 - How could Water Companies best take account of the impacts of changing discharges on downstream abstractors?). However, we note that within the existing abstraction regime there is scope for the Regulator to grant an abstraction right that would adversely affect a downstream user if the applicant is able to reach an agreement with the downstream user. There may be a role for similar agreements in management of changes in discharges in the context of variations from a strategic plan, including minimum STW-derived flow distributions.
  • Posted by YW October 08, 2014 at 15:41

    Water companies are not in a commercial agreement with downstream abstractors and should not be liable for abstractions granted by the Environment Agency, who does not guarantee licence availability when granting licences or compensate for reductions in reliability. Any obligations to continue discharging should be for environmental benefits only.
  • Posted by CCWater October 09, 2014 at 14:23

    We have several concerns with this proposal.

    At present, water companies do not receive payment for augmenting flows when they return water to the environment. It, therefore, seems perverse that water companies would be required to pay compensation to downstream abstractors if the latter were to be negatively affected by changes to water company discharges which could derive from environmental legislation.

    How would compensation to downstream abstractors (potentially including other water companies) be calculated, awarded, and paid for by water companies? And, what would effect could have on customers’ bills?
    Water companies are being encouraged to reduce abstractions, with active leakage control and water efficiency messaging helping them do so. But, as noted above, there may come a time when, through changes to the abstraction licensing regime, water companies make greater use of water re-use schemes. It would be perverse to then penalise water companies, through the payment of compensation to downstream abstractors, for being progressive and making better use of the limited water available in that river or catchment.

    We consider that this proposal needs further consideration because of the unintended consequences it could presage.
  • Posted by DCWW October 10, 2014 at 10:28

    It is not appropriate to consider compensation for abstractors when unrelated wastewater discharges are moved, varied or ceased. The Regulator should be mindful of the sensitivity of an abstraction license to wastewater flows, and the potential variability of those flows, when setting and reviewing abstraction licenses.
  • Posted by PeelUtilities October 10, 2014 at 16:31

    For much the same reasons as the payment for continuous discharge is impractical and unfair, this proposal does not seem workable.

    As a question for DEFRA - What is the scope for a broader discussion on discharges to the waterways? As the focus appears to be purely on where these discharges are a benefit to a waterway; whereas on the vast majority of discharges the flows are a burden on the receiving channels? With flow management, erosion, sedimentation, eutrophication etc all resulting in costs from the discharge with no payment from the companies?
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