andrewducker | Interesting Links for 02-07-2020

Sorry if you already know this but the water industry in the UK is very regulated, whether the companies are privatised or not.

The companies have to meet high legal standards for quality (and provide unrestricted access for testing) and can be fined/prosecuted if they fail to meet them. The overall standards are set by EU directives and individual sites have quality targets set by the Drinking Water Inspectorate or the Environment Agency. Their ability to extract water from rivers/aquifers is regulated by the EA and the prices they charge households is regulated by the DWI.

Every 5 years, each company has to present its plans to the DWI to upgrade their sites to comply with water quality standards and to meet environmental goals set by the EA. If the DWI doesn't think their proposals are value for money, they don't get the funding (from water bills) but they are still required to meet the standards.

As I understand it, privatisation means that the utility companies are completely separate from the regulators, which has improved transparency and the companies can borrow money to support innovation and investment, beyond the requirements of the DWI/EA. There are some daft things (they are v keen on selling off land and buildings and then finding that they need that land for new treatment stages or to get access for construction) and the process is grindingly slow but I am not aware of a distinction between the public and privatised companies in this regard.

They do fuck up sometimes and not everything works perfectly. However, the impression that I have got from working in the industry (as a designer for construction contractors, who in turn work for all the different UK water companies) is that company staff are genuinely motivated to provide clean, safe water, not to cut corners.

Despite how this post sounds, I am not particularly pro-privatisation or capitalism in general. However from what I have seen, the regulators and laws have kept the water companies from exploitation of resources, price-gouging and pollution that you might expect from a 'purely' capitalist enterprise, or the behaviour of companies like Nestle.

I am really not intending to evangelise for privatisation or cheerlead for the privatised water companies. I am happy to hear criticism, different viewpoints or suggestions of alternatives. I just think this is an example of privatisation+regulation working well.

That £57Bn would tend to say otherwise.

As would comparison with Scotland.

Can you explain what you mean by comparison with Scotland? I've done a bit of work for Scottish Water and didn't find them significantly different from the privatised companies I've work with.

"The highest paid CEOs were at Severn Trent, with a salary package of £2.4m, and United Utilities, a salary package of £2.3m.

In comparison, the highest paid director of publicly owned Scottish Water earned £366,000."

And

"Scottish Water, which is publicly owned, has invested nearly 35% more per household in infrastructure since 2002 than the privatised English water companies, according to the analysis. It charges users 14% less and does not pay dividends."

(Both from the article)

Interesting Links for 02-07-2020

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