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Scottish Water’s Costliest Upgrades Due to Climate: CEO

Scottish Water Ltd., the publicly owned utility with the lowest sewage and water bills in Britain, said the most costly upgrades ever to Glasgow’s wastewater system are due in part to climate change.

The U.K.’s fourth-largest water company with about 5 million customers is spending 250 million pounds ($378 million) on the biggest infrastructure improvements to Glasgow in at least a century to cope with intensifying weather.

The five-year spending plan stems from Glasgow suffering three 1-in-100-year storms over two weeks in 2002 for a system designed to cope with that occurring once every 30 years, Chief Executive Officer Douglas Millican said in an interview. U.K. weather swings included the coldest March in 51 years last month, a 2012 drought and the wettest April to June on record. Scottish rainfall in 2011 was the highest in at least 100 years.

“Whatever way the climate may go in the future, what is undoubtedly clear is that we are having more intense storms,” said the CEO, who took over in February following the death of predecessor Richard Ackroyd. “That means that at certain peak periods there are ever-higher volumes of surface water going into sewers.”

New investments will separate waste surface water and sewage pipes to take into account the growing population and urban creep, with more areas being paved over and higher standards demanded for sewage treatment, he said from company headquarters in Dunfermline, 17 miles (27 kilometers) north of Edinburgh.

Scottish Water is having to make more weather-related investments due to changing climate than it estimated five to 10 years ago, the 48-year-old water head said last month. Still, “you cannot engineer your way to deal with any possible weather event, that would just be horrendous.”

Renewable Electricity

The spending is part of an investment program currently running at about 500 million pounds a year in which Scottish Water plans to increase the amount of renewable electricity generated on land it owns about 15-fold by 2020 to become more energy-efficient and help cut carbon emissions.

Only 7 percent of the electricity it consumes currently comes from renewable sources such as wind, hydro or solar power and that’s expected to rise to 10 percent by 2015.

“Our hope would be that by 2020 the total renewables being generated from our estate would be double the amount of electricity we are consuming,” Millican said. “We should be delivering as much net to the grid as we consume ourselves.”

The Scottish government’s target is for 100 percent of Scotland’s electricity to be generated from renewable sources by 2020. Renewables provided 39 percent of Scottish electricity consumption last year, the government said.

Power Consumption

Whitelee, the U.K.’s largest onshore wind farm, is partly situated on land owned by Scottish Water, giving the company commercial benefit from its output. The farm, which has 215 turbines with a maximum output of 322 megawatts, generates the equivalent of about 80 percent of Scottish Water’s annual electricity consumption.

In the longer term Scottish Water’s ambition is to generate up to three times as much energy from its own estate as it consumes, Millican said.

One advantage Scottish Water has as the operator of almost 1,900 sewage treatment plants is the lowest carbon intensity to produce water of any U.K. utility. That’s because more water comes from upland, gravity-fed sources in Scotland, reducing electricity requirements, he said.

Leakage Levels

The combination of lower power usage and fewer carbon emissions means it can afford a higher “sustainable economic leakage level” than other U.K. water companies, or the point at which the cost of finding all the places where water leaks and fixing it exceeds the cost of the water that’s wasted.

“Now for the first time we are at the economic level of leakage,” Millican said. “In our case, it is 629 million liters of water a day. In broad terms, it is 30 percent of the water we produce.”

The leakage rate of 30 percent compares with 23 percent in England and Wales in 2010-11, according to company-compiled data published by the regulator Ofwat. Figures for 2011-2012 aren’t yet available, said Ben Fisher, an Ofwat spokesman.

Government Rates

The ability to borrow at government rather than market rates of interest also means Scottish consumers have the lowest water and sewage bills in Britain. At 324 pounds, they were 52 pounds below the average for England and Wales for the year ended March and at 334 pounds this year will be 54 pounds lower, Millican said.

Studies similar to the one for Glasgow’s upgrades are now underway in Edinburgh, Aberdeen, Dundee, Grangemouth and the Ayrshire coastline around Irvine, he said.

To contact the reporter on this story: Peter Woodifield in Edinburgh at pwoodifield@bloomberg.net.

To contact the editor responsible for this story: Douglas Lytle at dlytle@bloomberg.net

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