RD 23/08: External review of sewer flooding risk registers

To Regulatory Directors of all
water and sewerage companies
and water only companies

Dear Regulatory Director

External review of sewer flooding risk registers

In May 2008 we commissioned a review by independent consultants of the processes used by each sewerage provider relating to DG5 sewer flooding risk registers. The review aimed to:

• identify and set down the various processes and procedures used to identify and record flooding from sewers, allocate properties and areas to the appropriate risk register, and update risk registers as the risk of flooding is reduced by company action;

• establish whether a property would be allocated to the same risk register irrespective of which company’s methodology was used;

• check alignment with reporting guidelines, identify the most common approach and recommend amendments to the guidance and/or processes to ensure consistency and promote good practice; and

• establish the impact on the risk registers if Ofwat adopts any recommendations arising from the study.

We are pleased to publish the report and welcome its findings. We have considered carefully the recommendations and set out below the next steps.

We intend to revise our guidance for June return reporting. We will clarify the following issues:

1. Ensure our reporting requirements align with the best practice for dealing with sewer flooding and DG5 registers.
2. Set out guidance on best practice and require each company to compare their procedures with best practice and comment on any plans they have to move towards best practice. In particular we want to clarify:
   • whether all integral garages or cellar flooding should be included as internal flooding;
   • our expectations of initial investigations following notification to a company of a flooding event;
   • the approach to repeat flooding events and how to record properties affected by repeated sewer flooding;
   • the approach for recording properties discovered at a much later date to have been affected by flooding; and
   • separating the monitoring of properties that have mitigation measures installed.
3. Guidance on how to account for the number of additions to, and removals from, the risk registers through better information in the June return confidence grades.

The consultants’ report recommends wider consultation with stakeholders and interested parties on a number of issues. We are using the publication of this report as an opportunity to seek the views of stakeholders on the questions set out below.

Please send your views on the following questions to us at [email protected] by 31 December 2008. We will also hold a workshop to discuss the future of the DG5 sewer flooding registers and related matters on 21 January 2009 at our offices in Birmingham. Please let us know if you would like a representative of your organisation to attend and contribute to the workshop, using the contact e-mail address above.

1. A definition of sewer flooding

Section 3.2.2 of the report:

“We also recommend that a definition of sewer flooding is provided with a clear statement of what it includes and what it excludes. This could also be the subject of consultation with the industry and other organisations with responsibility for drainage. The aim would be to ensure that all stakeholders in the management of flooding agree on a common definition and understand the boundaries between water company responsibilities and their own. This could help initiate or reinforce conversations that companies are already having with stakeholders in the context of integrated urban drainage.”

What should a definition of sewer flooding include, and what should it exclude?

To ensure that investment is focused on flooding that sewerage companies are clearly responsible for, how should the boundaries between sewerage company responsibilities and those of other stakeholders be addressed to more clearly define sewer flooding?

2. Moving to a risk assessment approach

Section 3.2.1 of the report:

“The risk registers record frequency, but not severity of flooding, so they do not record ‘risk’ (probability x consequence). This can make it difficult to distinguish between small internal flooding problems and large external flooding problems, for example. The impact extends to home information packs (HIPs), where the presence of a property on a register can have the same impact irrespective of its flooding ‘risk’, as it is conventionally understood. An alternative approach that could be considered would be a measure of the frequency, severity (depth, area) and location of flooding, rather than location and frequency alone. The result would be a continuous risk scale that would more closely align with the cost-benefit approaches now in use in most companies, although for reporting the risk would be grouped into a few (e.g. five) categories.

A risk-assessment approach also applies to mitigation, where interventions reduce the frequency of flooding but do not eliminate the risk of flooding. Such properties currently remain on the register after mitigation has been delivered (although they are reported as having received mitigation). This can cause anomalies with neighbouring properties that are not on the risk register but have a greater flood risk than those with mitigation in place. A risk measure could therefore include mitigation measures, to demonstrate the benefit that they deliver.

If properties on the registers had a full risk rating, it would enable a distinction to be made between frequent small flooding incidents and infrequent large flooding incidents. It would also enable the benefits of mitigation to be recognised, where a property would remain on the register, but its risk rating would change. This would also reduce the potential impact of the register on property value and recognise the efforts made by companies to manage flood risks, when increasing the capacity of the network is not always cost-beneficial.

Some companies already record flood severity information, (such as depth and extent of flooding and duration) to inform their prioritisation methods and flooding cost-benefit assessments. Consistent methods of assessment would need to be agreed if this was taken forward. We recommend that Ofwat considers reviewing these comments with the industry and other stakeholders, to establish support for developing full risk registers, and what form the measures should take. It would be important, for example, that the risk categorisation was simple and easily understood by customers and property owners, and would require careful consultation.”

• How should both frequency and severity of floods be handled in assessing and monitoring sewer flooding risk? For example, how should a frequently externally flooded area be considered alongside a less frequently internally flooded property?

• How could we classify severity in a way that could be consistently applied across the industry?

• How confident can we be in hydraulic modelling to inform our understanding of sewer flooding risk?

• How should properties with reduced risk of flooding due to the installation of mitigation measures be accounted for on a risk register?

• How quickly could we introduce improvements to regulatory reporting in this area?

3. Defining best practice for calculating storm return periods

Section 4.3.1 of the report:

“We recommend that the assessment of return periods should be subject of an industry-wide study to share information and establish consistent yet workable methodologies which companies can apply in practice in their areas. This will enable a consistent approach for allocation to be developed, when companies should then use the method to assign properties to registers. The benefit will be to ensure that severe weather is identified consistently, and that the selection of registers for repeat flooding is consistent between companies.”

• Should we define best practice for calculating storm return periods? Doing so could improve consistency in approach and customer service across the industry. However, there could be significant changes to some companies’ practices if we insist on a particular methodology.

• Should we define the approach to the addition of first-time flooding to the risk registers? The advantage would be a consistent approach and an understanding among customers of the implications of their property flooding for the first time.

4. Regulatory outputs

The sewer flooding risk registers are important to underpin regulatory outputs in reducing flooding risk. However there is increasing emphasis on demand management approaches through integrated urban drainage, source control and sustainable urban drainage systems (SUDS) in managing flooding risks. The Pitt review also highlighted the importance of managing surface water effectively. If sewer flooding risk registers are the only dimension of regulatory outputs, companies may focus too heavily on ‘end of pipe’ interventions. We believe it is worth exploring the scope for alternative output measures relating to demand (or network) management aspects of flood risk management. Any move towards a risk assessment approach to risk registers and output monitoring could also have implications for regulatory outputs.

• What output measures would ensure proper focus on upstream demand management interventions to reduce flooding risks?

• Should there be standard targets or outputs for demand management or surface water management interventions (a) in relation to new development, and (b) for areas with existing sewer capacity and flood risk issues?

• How should regulatory outputs be set if we move away from an incident-based register to a risk-based register? We need to ensure that funding and delivery of solutions are targeted at the properties at greatest risk of flooding from sewers. We also need to be able to monitor progress against company forecasts of activity.

We recognise that some of the review’s recommendations, and any changes that we introduce following our workshop in January, could have implications for outputs and register positions in the period 2010-15. We expect companies to build on their draft business plans and the existing regulatory approach to DG5 sewer flooding outputs in preparing their final business plans. However, companies may well wish to take account of the contents of the review, as well as our initial thinking as set out in this letter, in their final business plans. If new output measures or guidance on risk registers have a clear significant impact, there may be scope to take account of non-trivial changes through the AMP5 change protocol.

We look forward to your responses to the consultation questions. If you wish to discuss this letter, please contact Alison Fergusson ([email protected]) or Vykky Botcherby ([email protected]).

Yours sincerely

George Day
Director of Network Regulation