RD 03/06: Sewer flooding and Ofwat's approach to enforcement
TO REGULATORY DIRECTORS OF ALL
WATER AND SEWERAGE COMPANIES AND
WATER COMPANIES ONLY
Dear Regulatory Director
SEWER FLOODING AND OFWAT'S APPROACH TO ENFORCEMENT
The price limits we set for 2005 –10 will enable water and sewerage companies to significantly reduce internal sewer flooding problems caused by overloaded sewers by 2010. They can also deal with any emerging sewer flooding problems and begin to tackle serious external flooding. We expect the companies to prioritise those problems which impact most seriously on customers while taking account of the costs and benefits of individual schemes.
However there will still be some customers unfortunate enough to experience flooding from sewers. We have consulted separately on possible improvements to the assistance available to those flooded. We also consider that it would be helpful to set out more clearly how we will approach cases of sewer flooding where customers consider a company may not be meeting its statutory duty.
Section 94 of the Water Industry Act 1991 (WIA91) places a duty on sewerage companies, amongst other things, to maintain their sewers to ensure that their area is effectually drained. The Director must take enforcement action under section 18(1) WIA91 where he is satisfied that a company is, or is likely to be, in breach of its section 94 duty. Under section 19(1) WIA91(i) there are three exceptions to the duty to take enforcement action. In summary, these are, where the breach of duty is not serious, where the company has given the Director an undertaking to take whatever action the Director considers appropriate, for example to carry out remedial works, and where the Director cannot take enforcement action because this would be incompatible with certain of his other duties.
This paper outlines the issues we are likely to consider in concluding whether or not sewer flooding incidents represent a breach of duty and, if so, what considerations will inform our decision whether to take enforcement action.
Has a breach of the duty in section 94 WIA91 occurred?
We will consider each case on its facts. In terms of sewer flooding, the factors which we are likely to consider when assessing whether the company is in breach include the following:
- Physical factors relevant to the flooding, for example, the location of the property.
- The severity of the weather at the time of flooding. - Factors outside the company's control which are contributing to the flooding. These could include inadequate drainage arrangements, for which the company is not responsible, for example highway, surface or land drainage. - Where flooding has resulted from a blockage, the cause of the blockage (eg third party action, lack of maintenance).
- The number of properties affected.
- The frequency and extent of the flooding.
- Whether the flooding is internal (inside the building) or external (eg restricted to gardens or outbuildings). - Usage of the property – for example, whether it is domestic or non-domestic.
- Whether the company has a scheme of works reasonably prioritised.
We will look at all the relevant factors in each case. An example of a case where we are more likely to conclude that there has been a breach of section 94 WIA 91 would be where several properties have been flooded, internally, several times annually.
Examples of cases where we are less likely to conclude there has been a breach of section 94 WIA 91 would be a single property, which has experienced one incident of internal or external flooding, or several properties flooded once internally or externally, or flooding events that are caused by exceptional weather.
It would be unreasonable for us to conclude that a breach of section 94 WIA 91 has occurred if the sewer flooding results from exceptional weather. There is no statutory definition of exceptional weather and the information we obtain either from the companies or the Met Office on return periods is relatively high level. In considering a company's claim that sewer flooding was the result of exceptional weather we will have regard to factors including the volume of rainfall, the length of storm and its location compared to the flooding incident.
We would not necessarily accept a company's argument that weather was exceptional and that there had therefore been no breach of section 94 WIA91 simply because the intensity of a storm exceeded that for which the sewer was originally designed. Some companies have asserted that, were we to accept their argument for existing sewers, this could mean that storms of an intensity that is likely to occur once in every ten years would be classed as exceptional. However, we are more likely to conclude that weather is exceptional where the storm is one which is likely to occur only once every 30 years or more.
Where flooding results from a storm with a shorter return period (ie a less intense storm) we are likely to consider the intensity of the storm as one factor in conjunction with the other factors set out above.
Where we conclude that the company is in breach of its duty we will consider whether enforcement action under section 18(1) WIA91 is appropriate having regard to the exceptions to that duty set out in section 19(1) WIA91.
How the company prioritises its capital schemes to resolve flooding problems and the cost of the scheme for the particular case compared to the benefits of that scheme are likely to be relevant considerations when assessing whether Ofwat should take enforcement action. In general, we would normally expect companies to implement schemes where benefits outweigh estimated costs. We may require evidence of how a company has prioritised a case and the data it has considered in support of its cost benefit analysis.
We will also consider in such cases whether it would be appropriate to seek an undertaking from the company to carry out such works as the Director considers appropriate in the circumstances.
Our Approach: Some Scenarios
Each case will be considered on its merits but the following are possible approaches for different circumstances -
If the company has an alleviation scheme reasonably prioritised, we may conclude that there is no breach of section 94 WIA 91.
If we conclude that a company is in breach of the section 94 duty and the company will not give an undertaking to carry out necessary works, we would consider taking formal enforcement action. If we did decide to take enforcement action, we might require the company to either identify a cost beneficial solution or to install mitigation measures. If we make an enforcement order but a company fails to comply with it, affected customers would then be able to sue for compensation for any loss or damage they suffer as a result of the company's failure to comply with the enforcement order.
We regard it as highly unlikely that a company both cannot identify a cost beneficial solution and finds that mitigation measures are impractical. However, in such circumstances we might conclude that the Director is not required to take enforcement action.
Acting Head of Consumer Affairs Division
(i) Section 19(1) provides that the Director is not required to make an enforcement order if he is satisfied that:-
a) The contraventions were, or apprehended contraventions are, trivial;
b) The company has given, and is complying with, an undertaking to take all such steps as it appears to the Director to be appropriate for the company to take to secure or facilitate compliance with the licence condition or requirement in question; or
c) The duties imposed on the Director by Part 1 of the WIA91 preclude the making of the enforcement order.