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Council reassures over South West Water news

The Council of the Isles of Scilly has issued a statement attempting to answer residents' questions about South West Water extending its license to cover the islands.

In its end of year financial results, Pennon Group Plc - which owns South West Water - said that "following customer consultation and support" a license expansion has been agreed by DEFRA with water regulator Ofwat to cover Scilly".

The news caused concern among islanders that bills will increase, with some saying they have not been consulted on a possible transfer to South West Water.

The Council insisted on May 26th that South West Water extending its licence was "great news for the islands".

In a statement released today, the Authority has further explained the new arrangements and attempted to allay residents' fears.

Read the statement in full below:

As you may know on 20 November 2014, the Department of Environment, Food & Rural Affairs (Defra) launched a consultation on their intention to introduce water and sewerage legislation relating to the Isles of Scilly.

The Council of the Isles of Scilly welcomed the proposals insofar as they provided benefits to public health and the environment, offering the same protections to Scilly’s consumers as those enjoyed in the rest of England.

However, the financial and practical implications for islanders and businesses were profound. The investments required to improve services and infrastructure to meet public health and environmental standards would be substantial and, for example, effectively require the Council to rebuild its sewerage infrastructure with similar investments required by other water suppliers across the islands. The Council estimated the cost to run into tens of millions of pounds, well beyond what the islands’ small number of bill payers could collectively afford and potentially threatening the viability of living and working on the islands.

In response, the Council wrote to residents on 5 January 2015, informing them of the consultation and explaining our views. We followed this up with information sessions on each of the islands ahead of public meetings from Defra later that month. Attendance and engagement at all of these events was excellent, with residents displaying their knowledge of the proposals and passion for the islands.

The response from Defra to the community’s concerns was very positive. They formed a working group to find realistic solutions to enable compliance with the legislation. It was also recognised that more time would be required before legislation could be applied to the islands.

In March 2016, Defra wrote to all water and wastewater companies inviting them to submit expressions of interest in running the water and wastewater services on the Isles of Scilly. South West Water responded positively confirming the company’s interest. It was the only positive response received by Defra. Since then, South West Water has been assessing the condition of the water and wastewater infrastructure on the islands and developing a business plan for the Isles of Scilly to submit to Ofwat, the water industry regulator, and the working group.

The working group has made excellent progress in finding a solution in principle whereby the licensed water company, South West Water, would be permitted to apply to extend its licence to include the Isles of Scilly and make the required investments to improve quality and ensure compliance with the appropriate legislation. This approach has been agreed by the Minister for the Environment, Thérèse Coffey MP, and the draft business plan has also received the support of Pennon Group Plc, owners of South West Water.

Before South West Water can operate on the islands, two elements need to be enacted. The first is that the Water Industry Act 1991 has to be amended to include the Isles of Scilly and is laid before Parliament for approval. The second stage of this process is for South West Water to make a formal application to Ofwat, to extend South West Water’s licence to include the Isles of Scilly. This application will include an Ofwat-led consultation phase, planned for later this year, to ensure that the proposals are fair to residents of the Isles of Scilly and to existing South West Water customers. The consultation will be an opportunity to review and comment on South West Water’s proposed plans for operating on the Isles of Scilly.

We understand that the proposed changes may raise questions for residents. We have tried to answer some of the main questions you may have below, but please feel free to contact us directly if there is any other information we can provide.

We hope that you share our enthusiasm for this proposed solution to the islands’ water and sewerage needs. The scale of the investment – up to £36m by 2025 – demonstrates the absolute commitment from Government and the private sector to invest in the islands as a place to live, work and visit for generations to come.

If you have any questions or concerns, please do not hesitate to contact us at the following details: 01720 424403

Can we carry on as we are? No. Whilst we have an excellent and extremely dedicated water team, the Council’s bill payers could not afford to pay for the required investments alone. The additional testing, restrictions on sewage discharge and other requirements cannot be delivered under our current arrangements. The transfer of responsibilities would be at zero cost but the investment from South West Water would be around £36m by 2025 to bring the infrastructure up to the required standard.

Does the Council support a transfer? Absolutely. There are no funding alternatives from Government as the extension of the licence to a licensed water company is their preferred option. The Council not only supports this, but considers the transfer to South West Water to be an excellent outcome for the islands. It represents an unprecedented level of investment in our infrastructure and safeguards the viability of the Isles of Scilly as a place to live and work.

Does this affect the Council’s status as an independent unitary authority? Absolutely not. Currently, the Council of the Isles of Scilly is the only Local Authority in the UK to offer water and sewerage services. An extension of South West Water’s licence would regularise this anomaly and is no different to the current situation with the electricity network, which is run by Western Power Distribution.

Will my water bills be higher? We can’t comment on the detail of future water bills, however the differences in bills are likely to be small, but this will depend on many factors including who your current supplier is (Council of the Isles of Scilly, Tresco Estate or the Duchy of Cornwall), whether you are a household or commercial customer, whether you are a water only or water and wastewater customer and whether you are metered. Some users may pay less and some may pay more. Either way, any change will be negligible compared to the cost to the islands’ tiny number of bill payers in servicing the required investments in infrastructure.

Water bills for South West Water are regulated by the independent economic regulator, Ofwat, who undertakes price reviews for all water companies every five years. The current price review (PR19) occurs during 2019 and the costs of the Isles of Scilly programme are included within the price control process and are expected to be reflected within the determination of prices for 2020-25, (subject to amendments in the Water Industry Act and extension of the South West Water licence).

Will everyone be covered? The intention at present is that anyone who currently pays the Council, Duchy of Cornwall or Tresco Estate for their water and/or sewerage services would be covered under an extension of the South West Water licence. Any additional private connections would be dealt with on a case by case basis.

What will change? An investment from South West Water would bring benefits to the environment and to public health. To align with the legislation, investment will be required to improve water and wastewater treatment facilities, on some islands, with further investment in water and wastewater networks (pipes), pumping stations and water tanks. There will be increased operational activity, including additional sampling and testing of water and wastewater across all of the islands.

The Council’s opinion is that the resulting changes will be overwhelmingly positive and will provide environmental and public health benefits.


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