At a glance: The Strategic Review of Charges cycle is the regulatory mechanism that sets the level of investment and funding for Scottish Water, the publicly owned supplier of water and wastewater services in Scotland. The latest, SR27, will see Scottish Water invest £8.1 billion in maintenance and improvements to the water and wastewater infrastructure, as well as environmental recovery and enhancement.
The six-year period from 2027 to 2033 will see a significant investment in water assets and resources across Scotland through Scottish Water’s SR27 plan. Here James Pryce, Business Development Manager here at Veolia looks at the details of the business plan for SR27, what it means, and the role that specialist water treatment partners have in delivering Scottish Water’s objectives.
Scottish Water, the publicly owned water company that delivers water and wastewater services for every area of Scotland, is entering a period of major investment in line with its long-term objectives. Through the Strategic Review of Charges 2027-2033 (SR27), Scottish Water is setting out an ambitious programme to modernise infrastructure, improve environmental performance and build long-term resilience against climate change and population pressures.
What is SR27?
All UK water companies operate within regulatory cycles. In Scotland it is referred to as the Strategic Review of Charges. Every six years Scottish Water is required to submit a business plan setting out the funding required to deliver its obligations to customers and the level of investment it intends to make over the next six years. This in turn determines how much money it needs to raise from customers through council tax for unmetered homes and water bills for metered properties and business premises.
Scottish Water’s business plan for 2027-33 is designed to address the challenges facing the water sector in Scotland over the coming decades and shaped by feedback from over 25,500 customers. The plan requires a total of £13.4 billion of funding, comprising £5.3 billion for day-to-day operational costs and £8.1 billion for investment in water and wastewater assets, maintenance and improvements. Scottish Water aims to spend at least 90% of investment funds with businesses that operate in Scotland and it is estimated that delivering the investment will support as many as 8,500 jobs.
The expenditure planned for the next six years includes investing around 24% more in asset maintenance compared to the 2021-27 (SR21) period to ensure the longevity of the water infrastructure as well as £1.7 billion in delivering high quality drinking water. The plan also includes reducing the drought risk to 350,000 homes and businesses; reducing leakage by 10% at a national level, focusing on water resource deficit zones; and ensuring enough capacity to allow the connection of around 120,000 new homes and business premises. Scottish Water will also plant around 2.4 million trees, creating 1,500 hectares of new woodlands as well as restoring peatland environments.
How does the Strategic Review of Charges compare to the approach in England and Wales?
There are a number of similarities with the process in England and Wales. The six-year Strategic Review of Charges cycle is comparable to the five-year Price Reviews and Asset Management Period (AMP) cycle in England and Wales. The aims of both regulatory cycles are similar in that they set investment levels and consumer prices for the coming years through a review and approval of submitted business plans.
However, the nature of the water sector in each area of the UK means there are also clear differences. The biggest distinction is that Scottish Water is publicly owned. This means that all money raised from customers is directly invested in the water infrastructure; that the Scottish Government has a direct influence on the strategic direction; and that Scottish Water has a duty to protect the environment of Scotland and support the nation’s economy.
By contrast, in England all water companies are all privately owned. This means they have access to other sources of funding through private investment, but it also means they have shareholders who anticipate a return on their investment. Therefore, the water regulator, currently Ofwat, must also consider the level of shareholder return that each water company may pay as part of its review of the water companies’ five-year business plans.
In Wales the situation is slightly different with Dŵr Cymru (Welsh Water), a not-for-profit organisation, providing water and wastewater services to most of Wales with Hafren Dyfrdwy, a subsidiary of Severn Trent, delivering services to a smaller number of homes and businesses in northeast and mid-Wales. Both Dŵr Cymru and Hafren Dyfrdwy are regulated by Ofwat in the same way and included in the Price Review process.
How can Veolia can support the delivery of SR27?
Delivering an investment programme of this scale requires proven technologies and engineering expertise. Water treatment specialists such as Veolia can act as a strategic partner to ensure the most effective solutions are implemented in a way that delivers value for money for Scotland and its people.
At Veolia, we have extensive experience delivering advanced water and wastewater treatment solutions for water companies across the UK including a number of projects with Scottish Water. Our services are built around fully supporting projects from concept through to operation and beyond. Our comprehensive portfolio of technologies includes those for drinking water and wastewater treatment as well as digital monitoring and optimisation, which is a stated on-going priority for Scottish Water.
Scottish Water’s SR27 plans will see significant investment in the water infrastructure of Scotland and forms part of the long-term objectives of the water company to build a stronger, more resilient and more sustainable water network.
Find out more about our municipal water treatment solutions here.
