Ofwat is seeking comment on its proposed approach to the storm overflows performance commitment definition for the 2024 Price Review (PR24) and requirements to install and maintain event duration monitors (EDMs).

The regulator has written to the water companies, environmental stakeholders and campaign groups, the Environment Agency, Natural Resources Wales, Natural England and CCW inviting them to provide their views by 23 May 2023.

Ofwat has an ongoing investigation into all wastewater companies in England and Wales which opened in November 2021 and currently includes enforcement cases against six wastewater companies. The investigation is looking into how wastewater companies are operating their sewage treatment works, including whether sewage has been discharged into the environment at times when this should not be happening.

The letter from Jeevan Jones, Principal Economist at Ofwat follows on from:

• the PR24 final methodology in December 2022;
• responses to Ofwat’s draft performance commitment definition, due by 31 January 2023; and
• workshops held with stakeholders in March and April 2023

Saying that there are “significant concerns that the sector is not meeting its obligations or public expectations on the safe treatment and return of wastewater to the environment”, he comments:

“The rollout of comprehensive monitoring has revealed the frequent use of storm overflows as part of the day-to-day operation of the wastewater system. This is not what was intended when storm overflows were established as a way to deal with unusually heavy rainfall. It cannot continue.”

Jeevan Jones explains that Ofwat is proposing to set the storm overflows performance commitment based on a company's average spills each year – the number of spills divided by the number of storm overflows, commenting:

“While we accept that the average spills measure is not a perfect reflection of harm to the environment, we consider it the best option available to us for PR24.”

The number of spills would be counted using the '12/24' method which partially reflects the duration of spills, by counting each spill that lasts longer than 12 hours as more than one spill (with each additional 24-hour period counted as one additional spill). For example, a spill event that lasts 60 hours would be counted as three spills – one spill of 12 hours and two spills of 24 hours.

The letter says that around 91% of storm overflows were installed with event duration monitors by December 2022 and thatas companies begin to install more sophisticated monitors over the 2025-30 period under new legal requirements, Ofwat “can consider a performance commitment based on data from these monitors in future price reviews.”

Unmonitored overflows – Ofwat wants companies to feel financial consequences of not installing EDMs

Companies are required or expected to install event duration monitors on 100% of their storm overflows by December 2023. Jeevan Jones points out that while some have achieved this with overall coverage was around 91% in December 2022, some companies are far off – such as Thames Water (62%) and Anglian Water (68%). He explains:

“We are proposing to incentivise companies to install and maintain event duration monitors on their storm overflows, with the aim for them to feel the financial consequences for not doing so through underperformance payments. .. For the purposes of this performance commitment, when we refer to 'unmonitored overflows' we mean those storm overflows where an event duration monitor was not installed or not operational.”

According to Jones, recent data has suggested that action is needed and that even when companies have event duration monitors installed, “they may not work all of the time.”

The letter says that based on companies' annual returns, Ofwat estimates that companies' monitors worked 92% of the time over 2022 and that around 1 in 6 monitors worked less than 90% of the time over the same period.

This includes companies that report full coverage, with Severn Trent Water reporting that its monitors only worked 87% of the time. More significantly, he states that “our analysis suggests that nearly 30% of that company's monitors worked less than 90% of the time and 8% of its monitors worked less than half of the time.”

To address this, for the purpose of calculating outcome delivery incentive payments, Ofwat is proposing an unmonitored overflows adjustment which would require companies to assume a level of spills for any storm overflows that do not have monitors installed or are only partially monitored during the year.

To provide strong incentives on companies to install and maintain their monitors, The regulator is proposing that this is “well above the average measured by the company's monitored storm overflows.”

Ofwat welcomes views from stakeholders on its suggestion that as a starting point, this should be 50 spills. Under its proposed approach, this would scale based on the uptime of each monitor – for example, if a monitor works for 50% of the time, the company would be required to assume 25 spills for when it was not monitored.

Jeevan Jones explains:

“While this approach risks overstating the level of spills from a company's storm overflows, we consider this is outweighed by the benefits of providing a strong incentive on companies to consistently monitor their storm overflows in the first place..

“We consider our proposed approach provides a strong incentive on companies to have operational event duration monitors on their storm overflows in the first place, reducing the risk that they financially benefit from unmonitored overflows,”

The regulator is also proposing to introduce new reporting requirements relating to emergency overflows and to keep them separate from the storm overflows performance commitment. Companies currently have over 6,000 'emergency overflows' on their networks.

Ofwat intends to introduce a new reporting requirement for companies' annual performance reports from 2023-24 on the number of spills from emergency overflows. “This will help us and stakeholders to assess how companies are performing as they install monitors on emergency overflows after 2025 and inform whether a change is required,” the letter says.

According to Ofwat, the two-week consultation period reflects prior stakeholder engagement and will enable it to update the performance commitment definition on its website in June 2023. The water companies must take account of it when submitting their business plans in October 2023.

Click here to download the letter in full - responses should be sent to This e-mail address is being protected from spambots. You need JavaScript enabled to view it by 23^rd May 2023.