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Bristol Water Plc: a Reference Under Section 12(3)(A) of the Water Industry Act 1991

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Bristol Water Plc: a Reference Under Section 12(3)(A) of the Water Industry Act 1991 Bristol Water plc: A reference under section 12(3)(a) of the Water Industry Act 1991 Appendices 5.1 – 11.1 and glossary Appendix 5.1: Aqua Consultants Technical Support, Report of Findings – June 2015 Appendix 5.2: Supporting analysis for the review of base expenditure in Bristol Water’s business plan Appendix 6.1: Smaller enhancement schemes Appendix 6.2: Cheddar Water Treatment Works – Notified Item Appendix 8.1: Reconciliation of Bristol Water performance Appendix 9.1: Outcome delivery incentives Appendix 10.1: Cost of capital Appendix 11.1: PAYG, financeability and total allowed Bristol Water revenue Glossary APPENDIX 5.1 Aqua Consultants Technical Support, Report of Findings – June 2015 A5(1)-1 Bristol Water Price Determination – Technical Support For Competition and Markets Authority Technical Support, Report of Findings – June 2015 Foreword This document has been produced after considering written information provided to us, answers to questions, statements made in a meeting with Bristol Water and responses received as a result of questions posed at the meeting. The data has been assessed by a team that has a large amount of experience in various aspects of the water industry whose skills include civil engineering, process engineering, asset management and quantity surveying. Together we believe we have the ability to understand all technical aspects of Bristol Water’s Business Plan, Statement of Case and the large volume of supporting information provided. Trevor Perry Associate Director [email protected] This Report has been amended following the receipt of two responses from Bristol Water; a letter from Greenberg Traurig Maher LLP (GTM) dated 18 June 2015 and a more comprehensive list of “the major errors of fact and understanding” dated 22 June 2015. We do not believe that either of these documents provided any references to any substantial issues. Where this report has been challenged we have changed the text to ensure that our opinion is taken in the context it was intended to be, provided additional evidence in an appropriate footnote and made some additions to ensure the reader fully understands our opinion. We have considered the challenges made to the Initial Findings Report and note that they have not changed our opinion or the conclusions we have reached. We have corrected one error on page 25, paragraph 95. We apologise for this error. Amendments to the report regarding the issues raised by BW have been highlighted in blue font for ease of location, generally other amendments have been annotated with a footnote. Paragraphs have been numbered for ease of reference. Table of Contents EXECUTIVE SUMMARY .............................................................................................. 1 INTRODUCTION .......................................................................................................... 5 CHEDDAR RESERVOIR NO.2 .................................................................................... 6 3.1 Cheddar Reservoir No.2 Summary .................................................................... 6 3.2 Information......................................................................................................... 7 3.3 Demonstration of Need .................................................................................... 10 3.4 Solutions .......................................................................................................... 13 3.5 Risk ................................................................................................................. 20 3.6 Cost ................................................................................................................. 21 3.7 Conclusions ..................................................................................................... 25 BEDMINSTER SERVICE RESERVOIR ...................................................................... 27 4.1 Bedminster Service Reservoir Summary ......................................................... 27 4.2 Information....................................................................................................... 27 4.3 Demonstration of Need .................................................................................... 29 4.4 Solutions .......................................................................................................... 31 4.5 Risk ................................................................................................................. 32 4.6 Cost ................................................................................................................. 34 4.7 Conclusions ..................................................................................................... 34 MAINS REPLACEMENT ............................................................................................ 36 5.1 Mains Replacement Summary ......................................................................... 36 5.2 Information....................................................................................................... 36 5.3 Demonstration of Need .................................................................................... 37 5.4 Solutions .......................................................................................................... 40 5.5 Risk ................................................................................................................. 42 5.6 Cost ................................................................................................................. 42 5.7 Conclusions ..................................................................................................... 48 REPLACING 1990 TREATMENT WORKS ASSETS ................................................. 50 6.1 Replacement of 1990s Assets Summary ......................................................... 50 6.2 Information....................................................................................................... 50 6.3 Demonstration of Need .................................................................................... 51 6.4 Solutions .......................................................................................................... 54 6.5 Risk ................................................................................................................. 54 6.6 Cost ................................................................................................................. 55 6.7 Conclusions ..................................................................................................... 55 6.8 Additional Information Considered ................................................................... 56 6.9 Conclusion on Additional Submission .............................................................. 60 RAW WTW ENHANCEMENT (CHEDDAR)................................................................ 61 7.1 Cheddar WTW Enhancement Summary .......................................................... 61 7.2 Information....................................................................................................... 61 7.3 Demonstration of Need .................................................................................... 64 7.4 Solutions .......................................................................................................... 68 7.5 Risk ................................................................................................................. 71 7.6 Cost ................................................................................................................. 71 7.7 Conclusions ..................................................................................................... 73 SOUTHERN RESILIENCE ......................................................................................... 75 8.1 Southern Resilience Summary ......................................................................... 75 8.2 Information....................................................................................................... 75 8.3 Demonstration of Need .................................................................................... 77 8.4 Solutions .......................................................................................................... 81 8.5 Risk ................................................................................................................. 83 8.6 Cost ................................................................................................................. 84 8.7 Conclusions ..................................................................................................... 85 OVERALL VIEW OF BRISTOL WATER APPROACH ............................................... 87 9.1 Summary of BW’s Overall Approach ................................................................ 87 9.2 Information....................................................................................................... 88 9.3 Information Supplied ........................................................................................ 88 9.4 Solutions .......................................................................................................... 90 9.5 Risk ................................................................................................................. 91 9.6 Cost ................................................................................................................. 92 9.7 Conclusions ....................................................................................................
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