Draft Water Resources Management Plan 2019 Annex 9: Strategy for the Western area. February 26, 2018 Version 2

Transcription

1 Draft Water Resources Management Plan 2019 Annex 9: Strategy for the Western area February 26, 2018 Version 2

2 Contents Executive summary... 5 Real Options Appraisal modelling... 8 States of the world... 8 Futures modelled by branches... 9 Scenario testing to inform the plan...11 Drought Orders...12 Key scenarios investigated to aid formulation of the strategy...12 Alternative scenarios for the Western area...13 Inclusion of customer preferences...15 Summary WFD, HRA & SEA assessment...17 Environmental cumulative impact assessment and programme appraisal17 Environmental assessment of Western area strategy...18 Assessment of alternative scenarios...21 Final strategy (portfolio of schemes)...23 Drought Orders...24 Demand management...27 Leakage reduction...27 Resource developments...29 Desalination...29 Water reuse...31 Reservoirs and other options...31 Bulk supplies...32 Imports 32 Exports 33 Enabling transfers (inter-zonal transfers)...34 Asset enhancements...37 Catchment management options...38 Strategy A summary...40 Scenario B summary...43 Scenario C summary...45 Scenario D summary...46 Sensitivity testing of the strategy...49 Strategy A...49 Scale of the Fawley desalination scheme Draft Water Resources Management Plan 2019

3 Drought Order policy decisions...49 Uncertainty around new bulk supplies...50 Increased connectivity between the two Southampton WRZs...52 Water reuse options...53 Allow deficits until What if there were future environmental effects?...55 Alternative deployable outputs, developed using different input data 56 Scenario B...57 Drought Order policy decisions...57 Uncertainty around new bulk supplies...59 Increased connectivity between the two Southampton WRZs...61 Water reuse options...62 Allow deficits until What if there were future environmental effects?...62 Scenario C...63 Drought Order policy decisions...63 Uncertainty around new bulk supplies...65 Increased connectivity between the two Southampton WRZs...68 Water reuse options...68 Allow deficits until What if there were future environmental effects?...69 Scenario D...70 Drought Order policy decisions...70 Uncertainty around new bulk supplies...72 Increased connectivity between the two Southampton WRZs...74 Water reuse options...74 Allow deficits until What if there were future environmental effects?...75 Comparison of strategies with traditional EBSD approach...77 No sustainability reduction scenario...77 Comparison of results...77 Comparison of strategies with WRMP Summary of strategy and strategic alternatives...84 Comparison of alternative strategies...84 The impacts of the sustainability reduction on the Test...84 Does the strategy change with timing of the sustainability reductions?85 Desalination versus water reuse Draft Water Resources Management Plan 2019

4 Large scale bulk supplies versus desalination...86 Large scale catchment solutions...87 Alternative surface water deployable outputs...87 Strategic options and investigations in next years...88 Greenhouse gas emissions...93 Resilience...95 References Draft Water Resources Management Plan 2019

5 Executive summary The Western supply area will see the most significant changes to its supply arrangements over the next ten years. This plan sets out a series of interventions that will be required to meet these future challenges. Whilst there are some core solutions that feature in a number of scenarios there are also some key choices that could influence the scale of the some of the solutions, such as desalination. These are explored in this annex. The number of changes occurring across many of the components in the supply-demand balance for this area mean that it can be difficult to understand what is causing particular investments. To help analyse this, we have set out three scenarios which look at different licence changes over the next ten years. The standard approach to an analysis of this type would typically involve turning off a particular licence change to assess its impact on the plan. However, this might be interpreted as unwillingness on part of the company to implement the changes. Instead we have adopted an alternative approach of adjusting the implementation dates of each of the various licence changes over a 10-year timescale. This helps to identify which of the licence changes triggers certain investments. A Real Options approach has been used to inform the strategy for this plan. This approach solves the supply-demand deficits simultaneously for seven different states of the world (which represent a snapshot of different climatic conditions and intra-annual pressures on water resources) across three different futures or branches (which represent a plausible set of future supply-demand balances for which different solutions may be most appropriate). The use of different futures in the Real Options approach effectively recognises that the future is not certain, particularly around climate change, population growth and additional sustainability reductions. This new technique identifies how solutions may change through time in the face of different possible future water resource pressures. To develop a strategy for this area, an initial least cost Real Options run was undertaken to develop a basic solution, without further consideration of potential constraints. This was then tested by modifying assumptions about the availability of certain options to progress our understanding of the impacts these assumptions might have on the strategy. From examination of the various model run tests, and taking into account the company s policies and pre-consultation discussions with regulators and stakeholders, policy decisions and refinements were introduced to reflect a constrained least cost strategy. The constrained least cost strategy was then examined and tested against Strategic Environmental Assessment criteria, outcomes from regional planning exercises (Water Resources in the South East), and the preferences arising from customer engagement activity. Following this review, any refined decisions on the feasible options were fed into the Real Options model to derive the strategy for the draft WRMP. The strategy was then subjected to scenario and sensitivity testing to understand whether there were key alternative strategies that the company should seek specific feedback on during consultation on this plan, and also to understand what alternative strategic schemes may be needed, should the schemes in the plan not be implementable. Our Western area has traditionally not experienced water shortages like our other supply areas, and has not had a hosepipe ban imposed to restrict customers supplies. There has, to date, been sufficient water available within our abstraction licences to provide secure supplies to customers. However, the Environment Agency s recently notified proposed licence changes on the River Itchen, 5 Draft Water Resources Management Plan 2019

6 River Test and Candover Stream, together with future as yet uncertain further licence changes that may be required, fundamentally change the water resources position in Hampshire. Our strategy for securing public water supplies in the Hampshire and the Isle of Wight Water Resource Zones is thus driven by the timing and scale of the sustainability reductions (licence changes) on the River Itchen and River Test notified by the Environment Agency. Without these sustainability reductions, Southern Water would not have a supply-demand deficit and would not need to promote new water resource developments. However, the scale of the sustainability reductions is such that we will have to promote large scale new water resource developments alongside demand management measures in order to meet our obligations under the Habitats Regulations, the Water Industry Act and the Water Resources Management Plan Regulations. For the purposes of this plan, we have considered four alternative scenarios, each making different assumptions about the timing and scope of the Environment Agency s proposed licence changes (also referred to as sustainability reductions). This enables us to explore the sensitivity of the strategy to these different assumptions. Strategy A, our core strategy for the Western area, assumes the Environment Agency s proposed licence changes are implemented in full and immediately. Scenarios B, C and D demonstrate the impact on option selection and the relative costs of the different solutions based on alternative licence change assumptions. The key strategic schemes selected in the next years under Strategy A are as follows: Work with Portsmouth Water to secure the additional bulks supplies (of up to 30Ml/d) in a phased manner additional supplies in AMP7, and then further supplies in AMP8. Desalination scheme at Fawley by AMP8. - Examine whether a reduced capacity for the Fawley desalination plant would be preferable, achieved through parallel development of a water reuse scheme on the Itchen. Develop increased transfer capacity from Southampton West to Southampton East, with a pipeline from the Test treatment works to the Itchen treatment works. - In parallel investigate smaller scale options, such as with the Woodside transfer. Develop the bulk supply from South West Water from the Bournemouth area and/or the Test Estuary WTW industrial reuse. Plan and develop the Hampshire grid scheme between Hampshire South East, Hampshire West and Hampshire Andover Water Resource Zones (and consider extension to the Hampshire Kingsclere Water Resource Zone from a resilience perspective). Water reuse scheme at Sandown by AMP8. - In parallel investigate the potential for a smaller water reuse scheme in combination with a small desalination scheme at Sandown to achieve the targeted capacity. Develop additional nitrate treatment at identified sources and implement catchment management activity at these sources. Work with regulators and stakeholders to identify and implement (where possible) river restoration measures on the Test and Itchen that may help to mitigate the potential impacts of Drought Orders in low flow conditions. Undertake extension of the universal metering programme, and enhance meter reading frequency. Media and education water efficiency campaign as part of the first phase of the company s Target 100l/h/d vision. 6 Draft Water Resources Management Plan 2019

7 Progress leakage reduction activity throughout AMP7 and AMP8, across all leakage options identified. Undertake investigations of key strategic alternative schemes. For new resource developments, it will be necessary for detailed engineering and environmental assessments to be undertaken, for planning and other consents to be secured and for the schemes to be constructed and commissioned. For transfers from other water companies there may be a need for asset enhancements, and/or for the development of new water resources within those companies in order to free up water to make the transfer available. The timings within this plan are our best estimates for delivery at this point in time, but may be updated to reflect further investigations and the outcomes of public consultation in the revised draft plan. If the future turns out to have limited demand growth, climate change impacts and sustainability reductions (the lower deficit futures ), then a number of these options may not be required. As we prepare for our next plan in 2024, it may be possible to confirm that the implementation of some of the AMP8 options will not actually be required. However, the timescales are such that we will need to have done much of the feasibility and environmental investigations and the preparation of planning documentation in AMP7 regardless of whether schemes ultimately need to be delivered in AMP8. 7 Draft Water Resources Management Plan 2019

8 Real Options Appraisal modelling We have developed an economic least cost model (the investment model ) to help select the combination of options the portfolio of options to ensure that there are always enough supplies available to meet anticipated demands in all Water Resource Zones (WRZs) under every planning scenario or design condition, at least cost. Separate investment models have been developed for each of the three supply areas (Western, Central and Eastern), which are geographically separate and each consisting of between three and seven WRZs. Although the building blocks for the strategy are the individual WRZs, there are interconnections (either current or potential) between them, and thus actions in one WRZ can have an impact on other inter-connected WRZs within the supply area. The model must take account of the supply-demand balances for each planning scenario, including transfers and bulk supplies, in all the WRZs in each supply area at the same time in order to develop a co-ordinated solution for the supply area. There are a number of investment modelling approaches that a company could use to support decision making for its Water Resources Management Plan (WRMP). The problem characterisation section of Annex 1 sets out our analysis for identifying our preferred decision making tool. For this plan, we have employed a Real Options Appraisal methodology for all three supply areas. There are two key aspects of the Real Options investment model, as described previously in Annex 8. States of the world : which represent a snapshot of different climatic conditions and intraannual pressures on water resources, from normal year through to severe and extreme droughts, and looking at periods when water supplies are at their minimum, and at periods of peak demand for water during summer months. Different possible futures modelled by different branches : these represent a plausible set of future supply-demand balances for which different solutions may be most appropriate. This plan is focused on solving supply-demand balances for the period from 2020 to We have not considered solutions needed through the end of AMP6 ( ). States of the world The various states of the world allow differing drought conditions to be considered in combination with inter-annual variability in supplies available to meet demand for water. Each state of the world will therefore have its own supply-demand balance i.e. its own profile of surpluses or deficits over the planning period. The model must solve each of the states of the world simultaneously (i.e. so that any deficit in any state of the world is solved). Inclusion of the states of the world is useful for a number of reasons: It ensures that the plan is robust against a range of supply and demand conditions that could be faced by the company in any given year across the planning horizon; It allows consideration of how the water available from different options may vary in different drought events; It ensures that the costs are appropriately weighted in relation to how options are likely to be used under each state of the world (known as utilisation). Hence an option that is only required to meet an extreme event is likely, on average, not to have significant total variable operational costs, as it would only be required to supply water very infrequently. Note that the capital costs of the option and any fixed operational costs would still need to be paid for 8 Draft Water Resources Management Plan 2019

9 regardless of how frequently the scheme may actually be used in practice i.e. the capex and fixed opex are independent of the utilisation. The states of the world are related to the following climatic conditions (these are described more fully in Annex 3): Normal year 50% annual probability Drought condition a 1 in 20 year drought, or 5% annual probability Severe drought condition a 1 in 200 year drought, or 0.5% annual probability Extreme drought condition a 1 in 500 year drought, or 0.2% annual probability For each of these climatic conditions (except the normal year) there is a state of the world for each of the minimum resource period and peak demand period. These are described as follows: The critical period this corresponds to the period of peak water demand, which normally occurs during the summer months of June, July and August. The peak period of demand is generally defined in terms of the average day peak week (ADPW) demand. The peak demand is compared to the supplies available during that same summer period. This is also known as the peak-period Deployable Output (PDO) planning scenario. The minimum deployable output period this is used to assess the period where available supplies are expected to be at their lowest or most stressed i.e. it represents the minimum resource period. This normally occurs during late summer/early autumn when river flows are at their minimum following the summer, and groundwater levels are at their lowest prior to the onset of winter recharge. The demands under this scenario are based on the minimum rolling 30-day average daily demand over the same relevant period. The exception to this is for the normal year, for which there is not generally a deficit. Under this condition the annual average period is used (not the critical period) this compares the average daily demand over the year against the average daily supplies that are available over that same year. The inclusion of the normal year annual average state of the world is to ensure the appropriate calculation of variable costs based on expected utilisation. Futures modelled by branches This is the key component of a Real Options Appraisal model; which effectively recognises that the future is not certain, so tries to identify how solutions may change through time in the face of different possible future water resource pressures. The futures (also referred to throughout this annex as branches ) are built up from a combination of possible demand growth scenarios, climate change impacts on water supplies, and sustainability reductions (changes to the licenced amount of water that a water company can abstract, with the aim of ensuring that the abstraction does not pose an unacceptable risk to the water environment). Annexes 2, 3, and 5 describe how the demand and supply elements have been combined to derive the different futures. The development of the branches and their underlying assumptions is discussed in greater detail in Annex 5. For the Western area there are three branches which relate primarily to assumptions around potential future sustainability reductions, as described in Table 1. Each of the branches is assumed to be equally likely in the Real Options Appraisal model. 9 Draft Water Resources Management Plan 2019

10 Table 1 Summary of Western area branches based on sustainability reduction assumptions WRZ Lower scenario Middle scenario Upper scenario Hants Andover None Andover to recover to EFI MDO: 11.5Ml/d PDO: 15.4Ml/d Hants Kingsclere As middle scenario None None MDO: 2.9Ml/d PDO: 2.9Ml/d Hants Rural None None MDO: 0.3Ml/d PDO: 0.3Ml/d Hants Southampton East Hants Southampton West Hants Winchester Itchen, Twyford. Included in baseline DO figures Lower Test. Included in baseline DO figures None As lower scenario As lower scenario Winchester and Alresford limited to recent actual abstraction MDO: 11.2Ml/d PDO: 12.3Ml/d Isle of Wight None Newport and Lukely Brook to recover to EFI Varies by return period Max MDO: 8.0Ml/d Max PDO: 10.8Ml/d Western area total Itchen, Twyford, Lower Test. Included in baseline DO figures As lower scenario, plus Andover, Newport, Lukely Brook, Winchester and Alresford Varies by return period Max MDO: 30.6Ml/d Max PDO: 38.5Ml/d As lower scenario As lower scenario As middle scenario Varies by return period Max MDO: 10.8Ml/d Max PDO: 18.6Ml/d Varies by return period Max MDO: 36.6Ml/d Max PDO: 49.4Ml/d Excludes Lower Test and Itchen, which are included in baseline DO A probability is assigned to each of the potential futures or branches to represent the perceived likelihood of that future. This probability is applied as an expected cost weighting to the total cost calculation. For the purposes of the draft WRMP, we have assumed that each branch will have an equal probability, because there is little information on which to base an alternative weighting scheme. The development of the branches and their underlying assumptions and generation of the subsequent range of supply-demand balances (surpluses or deficits over the planning period) for each of the futures is described in Annex Draft Water Resources Management Plan 2019

11 Scenario testing to inform the plan As described in Annex 8, an initial phase of scenario testing was conducted to help understand the sensitivity of the strategy to various possible constraints. The purpose of this testing was ultimately to inform the selection of our plan. As shown in Figure 1, an initial least cost run was undertaken to develop a basic solution, without further consideration of potential constraints. This was then tested by, for example, modifying assumptions about availability of certain options such as Drought Orders, to progress our understanding of the impacts these assumptions might have on the strategy. From examination of the various model run tests, and taking into account our policies and preconsultation discussions with regulators and stakeholders, policy decisions and refinements were introduced to reflect a constrained least cost strategy. The policy decisions were in regard to the inclusion of water efficiency assumptions and the availability of Drought Orders in severe and extreme drought events. Figure 1 Development of final WRMP strategy The constrained least cost strategy was then examined and tested against: Strategic Environmental Assessment (SEA) criteria; Outcomes from regional planning exercises (Water Resources in the South East - WRSE); and The preferences arising from customer engagement activity. Following this review, any refined decisions on the feasible options were fed into the Real Options Appraisal model to solve the supply-demand balances for each future to derive the strategy for this plan. 11 Draft Water Resources Management Plan 2019

12 Note that, overlaying the SEA, regional planning and customer preference considerations on the constrained least cost strategy does not necessarily mean it will need to be changed i.e. it may already adequately address aspects of these considerations from these tests. Additionally, although some schemes may score less favourably against the SEA, regional plans, or customer preference considerations, the non-availability of suitable, better alternatives, or the size and timing of the deficit faced, may mean that some options nevertheless need to be retained in the feasible list. For the Western area, this was the case to some extent, due in large part to the large scale of potential (and uncertain) sustainability reductions with limited alternative options available. The strategy for this plan was then subjected to scenario and sensitivity testing to understand whether there were key alternative strategies that we should seek specific feedback on during consultation on the plan, and also to understand what alternative strategic schemes may be needed, should it not be possible to implement the schemes in the plan. This is particularly important for those schemes in the strategy that are required in AMP7 or AMP8. Where there may be some uncertainty around the delivery of these schemes, we may need to conduct feasibility investigations of alternative schemes (and potentially environmental surveys and planning activities) in parallel to developing the portfolio of schemes selected in the draft strategy. This approach was applied to each of the four alternative scenarios developed for the Western area. Drought Orders For the Western area, a key concern arises in regard to the use of Drought Orders in the severe drought, as well as the extreme drought conditions. Use of a Drought Order in severe droughts would align with the company s target Level of Service, however, the company is seeking to improve its resilience to drought. Therefore, for the purposes of the investment planning for this WRMP, the company has only applied Drought Orders in the extreme drought condition. This is discussed in greater detail in annex 3. The exception to this is in the early part of the plan for the Western area, where under some assumptions the scale of the supply-demand deficit from the implementation of the Test and Itchen sustainability reductions is such that there are no suitable options to solve the planning problem. Therefore, for the period from the start of the planning period into early AMP8 ( ), we allowed the investment model to select Drought Orders where necessary in both the extreme and severe drought states of the world. This is discussed in more detail later in this annex. This compromise ensures that the target Level of Service has been met and also that the company continues to work to improve its resilience to drought. Note that whilst some of the Western area drought supply intervention options will have to be Drought Orders, it is possible that some may be Drought Permits. For simplicity we have referred to all supply interventions during droughts as Drought Orders throughout this Annex. Key scenarios investigated to aid formulation of the strategy The key scenario tests that were considered as part of the investigations to help formulate the strategy were: Reduced benefit of the Test surface water Drought Order; Identification that a Drought Order may be required in the short term (AMP7) in a drought, even when the drought is not severe or extreme; Excluding the availability of the Itchen Drought Order in a severe drought; Excluding the availability of all Drought Orders in Western area; 12 Draft Water Resources Management Plan 2019

13 Excluding the availability of the Itchen Drought Order entirely, with a reduction in the current bulk supply from Portsmouth Water (assuming this would also depend to some extent on a Lower Itchen Drought Order); Inclusion of an option for large scale river restoration on the Lower Test, to mitigate against the potential need for a change in licence conditions; Excluding all desalination options; Limiting the amount of leakage reduction that could be achieved within an AMP; and Remove those options that may be at risk should the Common Standard Monitoring Guidance (CSMG) targets (revised) become policy. This may affect, for example, water reuse schemes on the Itchen, and transfers from the south west region into Hampshire. As discussed above, the outcome from these runs was considered alongside other policy decisions to develop the constrained least cost strategy, which was then examined and tested further against the criteria set out in the sections below. Alternative scenarios for the Western area In this section, we outline the approach that was adopted to identify alternative scenarios to solve the potential deficits in the supply area and the work undertaken to determine what the key drivers for investment are. Our Western area has traditionally not experienced water shortages like our other supply areas, and has not had a hosepipe ban imposed to restrict customers supplies. There has, to date, been sufficient water available within our abstraction licences to provide secure supplies to customers. However, the Environment Agency s recently notified proposed licence changes on the River Itchen and River Test, together with future as yet uncertain further licence changes that may be required, fundamentally change the water resources position in Hampshire. These licence changes are currently subject to Section 52 notices by the Environment Agency, which the company has made representations on. Decision on implementation will be made following a public inquiry in March In order to understand which of the licence changes are driving the investments we have developed four scenarios, each making different assumptions about the Environment Agency s proposed licence changes (also referred to as sustainability reductions). The summary focuses primarily on the outcomes of Strategy A, which is based on the Environment Agency s proposed licence changes being implemented in full and immediately. Scenarios B, C and D provide a useful sensitivity test to demonstrate the relative costs of different solutions needed to meet alternative assumptions surrounding the timing and magnitude of the licence changes. The assumptions for each of the four scenarios is summarised in Table Draft Water Resources Management Plan 2019

14 Table 2 Summary of assumptions for the 4 scenarios within the Western area Strategy/scenario Description Strategy A Scenario B Scenario C Scenario D Both sustainability reductions (SRs) are implemented as soon as possible Both SRs are implemented but the licence conditions are not introduced on the Test until there is time to develop new resources Implementation of both SRs is delayed until there is time to develop new resources and ensure an optimum strategy The licence changes are not imposed at Test surface water, so abstraction continues at current levels Itchen sources sustainability reduction Implemented now Implemented now Implementation delayed until 2027 Implemented now Test sustainability reduction Implemented now Implementation delayed until 2027 Implementation delayed until 2027 No sustainability reduction 14 Draft Water Resources Management Plan 2019

15 Inclusion of customer preferences As part of the process to prepare this plan, the company engaged with stakeholders and customers between May 2015 and October 2017 to: learn about their priorities and views on the development of our plans; to find opportunities for collaboration; and to learn from examples of best practice. We also engaged with our regulators to keep them informed on the developments of our plan, to explain our methods approaches and report results. This is described in Annex 1. We have taken account of customer preferences from our previous plan. We have also assessed whether those preferences had changed by collecting and analysing more data through a scheme preference online survey, willingness to pay research and scheme preference workshops. Our key findings from stakeholders include: Stakeholders are keen to work with us on catchment management and to support us doing more of it; We should work with landowners to help slow and manage flows; Water efficiency should be the first option we implement to increase the amount of water available, followed by further leakage reduction; Stakeholders want us to consider demand reduction options before implementing new supply options such as transfers and water reuse; After demand reduction options, water reuse is the most popular supply option. Our customers preferences are given in Table 3. The main findings are: Customers are averse to accepting reductions in service in exchange for lower bills; Underground water storage was our customers preferred measure for maintaining a supplydemand balance; Leakage improvements are the highest priority to customers amongst the water service measures; For the majority of customers, a bill increase to help implement schemes would be considered reasonable. Our pre-consultation was important to better understand customers views. It has informed us on appropriate levels of service and, together with stakeholders, their views on the supply and demand management options. It has contributed to the development and formulation of our strategy by excluding options that were not likely to meet customer or regulator expectations in the options appraisal. 15 Draft Water Resources Management Plan 2019

16 Table 3 Customer preferences for different options types from pre-consultation customer engagement work Option type Underground water stores 1 Catchment management 2 Helping people to use water more wisely 3 Reducing leaks 4 Water saving fittings & gadgets 5 Reservoirs 6 Water re-use 7 Trading water 8 Tariffs 9 Rank Sea water (desalination) Draft Water Resources Management Plan 2019

17 Summary WFD, HRA & SEA assessment Environmental cumulative impact assessment and programme appraisal A detailed environmental assessment, covering Strategic Environmental Assessment (SEA), Habitats Regulations Assessment (HRA) and Water Framework Directive (WFD) assessment, was carried out of a wide range of feasible options considered for inclusion in the Western area strategy to help inform decision making on the final strategy. In particular, the findings of the feasible option assessments were used to evaluate the environmental and social performance of a range of alternative strategies and scenarios for maintaining a supply-demand balance in the Western area, with each alternative strategy comprising a different mix of options and option types. For each alternative strategy or scenario, the likely scale of adverse and beneficial environmental and social effects for each option was considered, both on its own but also in combination with the other options included in that strategy. The potential effects in combination with any other relevant projects, plans or programmes (for example, any planned major infrastructure schemes that may be constructed and/or operated at the same time and affecting the same environment and/or communities) was also assessed. This appraisal of each alternative strategy also included consideration of the potential for any regulatory compliance risks associated with the HRA and WFD. The environmental and social performance of each alternative strategy or scenario was used to help make decisions on which strategies to explore further through the programme appraisal modelling process and to finally determine the appropriate strategy for inclusion in the draft WRMP19. Due to the scale of the forecast supply deficit in the Western area, it was not considered appropriate to remove any of the feasible options from consideration for inclusion in the final strategy but we assessed the relative magnitude of the environmental effects of each alternative strategy or scenario in reaching a decision on the strategy. In particular, the strategy has included the desalination scheme at Fawley rather than the Portswood and/or Portsmouth Harbour indirect water reuse schemes reflecting the relatively lower magnitude of potential environmental effects of the Fawley scheme compared to potential greater effects of these reuse schemes on the River Itchen Special Area of Conservation (SAC). The ability to achieve our aim of restricting Drought Orders/Permits to extreme drought conditions only was examined as part of developing the strategy taking account of the costs, risks, feasibility and environmental effects of the measures required to deliver this objective. The assessment concluded that the objectives were achievable in the longer term, but in the short term Drought Orders and Permits in the Western area would be required in less severe drought conditions due to the scale of the supply deficit in the area in the period up to In particular, in the short term up to 2027, the Test Surface Water Drought Order will be required during drought conditions along with more frequent use of the Candover augmentation scheme and Lower Itchen sources Drought Order compared to the position after From 2027, the development of alternative water sources will remove the need for the Lower Itchen sources Drought Order, and the frequency of use of the Test Surface Water and Candover Drought Orders is reduced to extreme drought events only. This balances the temporary, infrequent effects of these Drought Orders with the environmental effects associated with the development of additional major new water sources to safeguard essential water supplies in extreme drought conditions. As well as the adverse effects of options, we looked at the beneficial effects of options to decide whether any options should be prioritised in view of the environmental or social benefits they may bring. This led to our decision to preferentially include additional water efficiency measures in our WRMP strategies as part of our target to help our customers achieve an average per capita water consumption of 100 litres per day by This involves an intensive media and engagement 17 Draft Water Resources Management Plan 2019

18 campaign as part of an initial phase of the Target 100 policy, concentrated throughout AMP7, but helping to influence customers water use behaviour over the longer term. There are also various measures to further reduce water leakage rates where it is economic to do so. Once the final strategy had been determined, environmental assessment (SEA, HRA and WFD assessment) was carried out to examine any cumulative effects from construction and/or operation. Environmental assessment of Western area strategy The SEA summary of the draft WRMP19 strategy (Strategy A) for the Western area is presented in Table 4. The HRA of this strategy has concluded that there would be no likely significant effects on any European site with appropriately agreed mitigation measures in place to address any identified risks during construction and/or operation. Similarly, the WFD assessment has concluded that this strategy would not result in any deterioration of WFD status of any water body, with the exception of the Sandown indirect water reuse scheme where there is currently some uncertainty as to the potential effect on WFD status due to the effects of additional flow discharges to the River Eastern Yar on top of the existing river flow augmentation scheme, thereby further modifying the low flow regime of the river Table 4 SEA effects summary for the Western area - Strategy A 18 Draft Water Resources Management Plan 2019

19 The strategy includes four catchment management options to improve nutrient management and land-use practices as well as in-stream river restoration works for the lower River Itchen and lower River Test (in particular providing increased environmental resilience to the abstraction of water from these rivers in times of drought under Drought Order powers). The SEA assessment findings for the catchment management options are very similar and have been grouped together in Table 4. The effects of these options are assessed as beneficial in relation to many of the SEA objectives with predominately negligible or no adverse effects, except for minor adverse effects associated with carbon emissions for water treatment. Demand management measures are a core feature of the strategy, including: enhanced Automatic Meter Reading (AMR) for existing metered households; installation of AMR meters as part of increasing household meter penetration from 88% to 92%; further leakage reduction; and water efficiency media and engagement campaigns. These demand management options have been grouped in Table 4 to summarise the environmental and social effects of these options. The effects are mainly beneficial but with some minor temporary adverse effects in respect of materials required for water leak repairs and metering, as well as the risk of temporary traffic disruption and associated carbon and air quality effects of street works for leak repair activities. The strategy contains ten water supply augmentation options. This includes two water reuse schemes: as already identified above, the Sandown indirect water reuse scheme could result in adverse effects regarding the Isle of White Area of Outstanding Natural Beauty (AONB) and further investigations are needed to assess the magnitude of effects on the River Eastern Yar from discharges to the river at times of low flows and determine any additional mitigation measures to protect the environment. By contrast, the Test Estuary WWTW industrial use scheme has a lower magnitude of adverse effects on the environment. Both options have beneficial effects relating to the provision of additional reliable water supplies by reusing treated effluent, increasing resilience to the future effects of climate change. The strategy involves the development of a 100Ml/d capacity desalination plant at Fawley: typical of desalination schemes of this scale, major adverse effects have been identified in relation to the operational use of non-renewable materials and generation of wastes in the treatment process, as well as carbon emissions. Potential major adverse effects relating to biodiversity, fauna and flora as well as landscape and visual amenity may arise arising from construction of pipelines within or near to the New Forest National Park and a designated European conservation site; however, these effects are considered temporary and, with careful design, planning and mitigation measures, these effects should be reducible to acceptable levels. The Fawley desalination scheme brings major beneficial effects in respect of provision of a substantial reliable water supply that is very resilient to the future effects of climate change. Many of the water supply options involve the transfer of water by medium to large diameter pipelines and these have been assessed as having negligible adverse effects on the environment once operational. However, there is the potential for moderate to major temporary adverse effects associated with the construction of these pipelines. The import from Bournemouth Water involves a 19 Draft Water Resources Management Plan 2019

20 proposed 32km pipeline to the Southern Water distribution system near Fawley. The outline pipeline route partly runs through the New Forest National Park and a designated European conservation site. The Test to Lower Itchen pipeline scheme has the potential to result in adverse effects relating to biodiversity, flora and fauna due to the potential for adverse effects to designated European conservation sites as well as some areas identified as Ancient Woodland. For both of these options, careful design, planning and mitigation measures will be needed to reduce the identified adverse effects to acceptable levels. The borehole rehabilitation scheme near Cowes is assessed as having predominantly negligible adverse effects. Minor to moderate adverse effects relate to energy and materials use and associated carbon emissions for materials for construction activities plus operational water pumping and treatment. Minor beneficial effects arise from making optimal use of existing water sources. Cumulative effects have been identified in relation to: Beneficial effects of the proposed catchment management and river restoration schemes with other measures in the South East River Basin District River Basin Management Plan, as well as other catchment improvement activities. Beneficial effects for all the demand management options in relation to these measures acting in combination to increase the overall demand savings, thereby contributing to sustainable abstraction. Potential construction related cumulative effects due to the proximity and overlap of likely construction periods between the Hampshire grid system options (2026 and 2027) and the Test to Lower Itchen pipeline ( ). The potential effects are limited to temporary effects to the local population and are considered low risk. Potential adverse effects on Southampton Water from abstraction for the Test Estuary WWTW industrial water reuse scheme and the Fawley desalination scheme. These potential cumulative adverse effects are considered of being no greater than minor magnitude given the volume of water in the tidal prism of Southampton Water relative to the volumes of water being abstracted. Potential minor risk of cumulative effects with respect to three options that would be partly constructed within the New Forest National Park (Test Estuary WWTW industrial reuse; Fawley desalination; and Bournemouth Water import). Careful planning, design and mitigation will be needed in relation to the pipeline construction activities to minimise impacts to habitats, heritage features and landscape features that provide the basis for the National Park designation Potential cumulative effects with wider infrastructure and housing development activities around Fawley and in the area to the south-west of Southampton between the edge of the New Forest and Southampton Water. Careful co-ordination will be required to plan the WRMP schemes to minimise risks of cumulative temporary adverse construction effects with these other developments over the near-term (2020 to 2027). Overall, the environmental assessment has concluded that Strategy A has predominately minor to moderate adverse effects and negligible to minor beneficial effects. However, given the scale of the schemes required to address the supply deficit, a small number of potential major adverse effects may arise most are related to construction in or near to sensitive environments, but there are also some permanent effects, notably in respect of high energy use and carbon emissions associated with the large desalination scheme at Fawley. 20 Draft Water Resources Management Plan 2019

21 Consideration has also been given to the strategic alternative schemes identified through the development of Strategy A. The SEA, HRA and WFD assessments concluded that: The Newbury asset enhancement scheme has potential adverse construction effects in relation to designated landscapes, Ancient Woodland and several heritage assets Investigation of small-scale Isle of Wight desalination schemes (Western Yar versus Sandown) is likely to identify major adverse effects on biodiversity, flora and fauna (particularly in the Western Yar setting), as well as on designated landscapes. In this respect, while much smaller in scale than Fawley desalination scheme, the environmental effects are of a similar magnitude due to the environmental sensitivity of the local settings on the Isle of Wight. Minor beneficial effects would arise in respect of provision of a reliable water supply that is resilient to the future effects of climate change. The schemes to convert (or extend) Test Lake into a surface water storage site have mostly minor to moderate adverse effects on the terrestrial environment, but a major adverse effect associated with construction carbon emission impacts. This scheme is broadly comparable in effects significance to the schemes included in Strategy A. Assessment of alternative scenarios Consideration has also been given to the strategic alternative scenarios identified through the programme appraisal process (Scenarios B to D). From an environmental effects perspective, there is generally relatively little difference between Strategy A and the alternative scenarios B and C; the main difference is the much later implementation of the Test Estuary WWTW industrial reuse scheme (after 2050 rather than in 2023), reducing the risk of cumulative adverse effects in the early to mid-2020s between schemes in the area to the south-west of Southampton between the New Forest and Southampton Water (but the Bournemouth Water import and Fawley desalination pipeline construction will continue to overlap in this area). The other difference between Strategy A and scenarios B and C is the generally lower utilisation rates of some of the larger schemes which will act to reduce some of the more significant effects on carbon emissions and energy use (e.g. for the Fawley desalination scheme). Scenario D differs more markedly from Strategy A, notably the absence of the Fawley desalination scheme which reduces the overall operational effect of this scenario on carbon emissions, material asset use and energy use, as well as avoiding the need for temporary adverse effects on the terrestrial environment relating to construction of the treated water pipelines. It also removes most of the risk of cumulative adverse construction effects in the area around Fawley and the eastern fringe of the New Forest: as with Scenarios B and C, the Bournemouth Water import scheme and Test Estuary WWTW industrial reuse scheme no longer have any overlapping construction periods. The other main difference to Strategy A is the generally lower utilisation rates of some of the larger schemes which will act to reduce some of the more significant effects on carbon emissions and energy use for water pumping and treatment. As well as the three alternative scenarios, we have also looked at the scenario whereby the Fawley desalination scheme for Strategy A (and scenarios B and C) is reduced in capacity from 100Ml/d to either 75Ml/d or 50Ml/d to reflect the customer research preference for water reuse schemes rather than desalination. For the scenario with the Fawley desalination scheme reduced to 75Ml/d, the Portswood WWTW indirect potable water reuse scheme is required to be included in the strategy to maintain water supplies. This scheme has potential for major adverse effects on various sensitive habitats during 21 Draft Water Resources Management Plan 2019

22 the construction of the pipelines necessary to convey water from the WWTW up to the point of discharge to the River Itchen to augment river flows. Operationally, there are moderate adverse effects in relation to energy use and carbon emissions, but due to the small scale of the scheme, the operational effects on the water environment are assessed as being of minor significance. Minor to moderate beneficial effects are identified in respect of the provision of a reliable water supply that is more resilient to future climate change effects. Additionally, adoption of this alternative scheme would remove the need for the Test to Lower Itchen pipeline, removing the risk of potential major adverse construction effects on sensitive environments. For the scenario with the Fawley desalination scheme reduced to 50Ml/d, the Portsmouth Harbour WWTW indirect potable water reuse scheme is required to be included in the strategy to maintain water supplies. This scheme has potential for major adverse effects on various sensitive habitats during the construction of the pipelines necessary to convey water from the WWTW up to the point of discharge to the River Itchen to augment river flows. Operationally, there are potential major adverse effects in relation to energy use and carbon emissions, as well as potential major adverse operational effects on the water environment due to the discharge of up to 40Ml/d into the River Itchen at times of low river flows, altering the low flow regime of the river with potential implications for aquatic ecology. Before this scheme could be included in an alternative strategy, an Appropriate Assessment would need to be carried out to assess whether they may be adverse effects on the River Itchen SAC (conservation site designated under the EU Habitats Directive). Should the Appropriate Assessment be unable to rule out adverse effects, this scheme would not be able to be progressed as alternative schemes are available that do not adversely affect designated European sites. Major beneficial effects are identified for this scheme in respect of the provision of a reliable water supply that is more resilient to future climate change effects. Additionally, adoption of this alternative scheme would remove the need for the Test to Lower Itchen pipeline, removing the risk of potential major adverse construction effects on sensitive environments. 22 Draft Water Resources Management Plan 2019

23 Final strategy (portfolio of schemes) The section is structured to provide an overview on each of the key option categories from the feasible list of options, and the relative differences between each alternative strategy and the key cost drivers. The key option categories from the feasible list of options are: Drought Orders Demand management Leakage reduction Resource developments - Desalination - Water reuse - Reservoirs and other resource options Bulk supplies - Imports - Exports Enabling transfers (inter-zonal transfers) Asset enhancements Catchment management options Many of the strategic schemes required to solve the supply-demand balances for the Western area in each of the scenarios are the same, although the timing of implementation and driver behind the selection of the option differs. For new resource developments, it will be necessary for pilot plants, detailed engineering and environmental assessments to be undertaken before planning and other consents are applied for and secured and for the schemes to be constructed and commissioned. For transfers from other water companies there may be a need for asset enhancements, and/or for the development of new water resources within those companies in order to free up water to make the transfer available. The timings within this plan are our best estimates for delivery at this point in time, but may be updated to reflect further investigations and the outcomes of public consultation in the final plan. The implementation of the sustainability reductions on the Itchen and Test result in significant deficits in the supplies available to meet demand for water affecting the Hampshire Southampton East (HSE) and Hampshire Southampton West (HSW) WRZs respectively. The deficits faced in the other Hampshire WRZs (Hampshire Rural (HR), Hampshire Winchester (HW), Hampshire Andover (HA) and Hampshire Kingsclere (HK)) tend to be smaller initially (or are in surplus), although under some of the sustainability reduction scenarios faced under the different futures, the deficit can become significant. The Isle of Wight WRZ is supported by the HSW WRZ through the existing cross-solent main. Therefore, when the Test (and Itchen) sustainability reductions are implemented, the support to the IoW WRZ becomes stressed. 23 Draft Water Resources Management Plan 2019

24 Drought Orders Drought Orders are required to avoid deficits in the early part of the planning period from 2020 to 2026 (inclusive). This is driven by the implementation of the sustainability reduction on the Itchen and the possible sustainability reduction on the Test. Only scenario C does not require Drought Orders in the period 2020 to 2026, as the assumptions for this scenario are that the Itchen and Test sustainability reductions will not be introduced until The implementation of the Drought Orders will also result in an increased imposition of Temporary Use Bans and the application for non-essential use bans. We anticipate that over the interim period, until the final solutions are in place, we will not be able to meet our stated levels of service to customers in the Western area. As schemes are delivered, the likelihood of implementing restrictions will be reduced. From 2027 onwards, the approach to Drought Orders changes, following discussions with regulators and policy decisions from the company: The Itchen Drought Orders are not available in any drought event. This reflects the Environment Agency s position; The current bulk supply from Portsmouth Water is assumed to be reduced from 15Ml/d to 5Ml/d in both severe and extreme droughts to represent the uncertainty/availability of a Lower Itchen Drought Order (related to the above) for Portsmouth Water to continue abstracting from the Itchen to provide the bulk supply to Southern Water. The current bulk supply is assumed to remain at 15Ml/d for normal and drought states of the world; it is only the severe and extreme drought conditions that are impacted; The Candover Drought Order is only available to be used in extreme drought events (i.e. not in severe drought events); Drought Orders at Test surface water are only available to be used in extreme drought events (i.e. not in severe drought events). The availability of the Test surface water Drought Order in the drought state of world ceases. Note that Test Drought Orders were not available in scenario D, as it was assumed that the source would be able to operate at its current deployable output; no option was examined to increase the use of Testwood beyond the current treatment works capacity of 105Ml/d; and All other Drought Orders are only available to be used in extreme drought events (i.e. not in severe drought events). Under our proposed strategy (strategy A), a Drought Order is required in the HSW WRZ to recover the lost DO from Test surface water to achieve a DO of up to 105Ml/d. This is needed in the early years of AMP7 (before new schemes are available) in the drought MDO state of the world, which presents a risk that, should these conditions occur in AMP7, we will not meet our stated target level of service for Drought Orders. Under a severe drought, the Test surface water Drought Order is used to 2026, at which point we no longer allow the Drought Order option to be available in severe drought conditions. This reflects an increase in drought resilience from 2027 onwards. The Test surface water Drought Order is utilised in the extreme drought conditions throughout the planning period, although under the lower scenario future it is not required until later in the planning period (from the 2050s), because the deficit can be met from the desalination and other options required to meet the other futures. 24 Draft Water Resources Management Plan 2019

25 The Drought Order in this extreme drought condition (and in the severe drought states of the world before 2027) is assumed to recover a DO of 105Ml/d from the Test surface water abstraction. This is higher than the daily licence constraint proposed by the Environment Agency in its recent Section 52 licence change, in which a daily limit of 80Ml/d has been proposed. Under an extreme drought (equivalent to a return period of the order of 1 in 500 years) and also in the interim period before we have had a chance to develop new water resource schemes, we may require a Drought Order to abstract up to 105Ml/d. Although the Drought Order modelled in the plan is to achieve up to 105Ml/d, equivalent to the current DO, this may not necessarily be required in. In the severe drought states of the world up to 2026, it is expected that the Drought Order required would be under the 80Ml/d proposed licence condition, and so we would not necessarily need to apply for a Drought Order to recover the 105Ml/d DO of the Test surface water source. In an extreme drought state of the world in the period, there is the potential need for a Drought Order of around 90Ml/d up to the period when the Test Estuary WTW industrial use scheme is implemented (in 2023); after that point the requirement for the Drought Order is around 80Ml/d. From 2027, the Drought Order is only available in the extreme states of the world, and the utilisation of the Fawley desalination scheme is reduced to its minimum sweetening flow, because it is more economic to do this and utilise the Test Drought Order; in reality therefore, the Drought Order could be operated at the 80Ml/d licence condition with up to 100Ml/d available from the Fawley desalination scheme. The Itchen Drought Orders (both Portsmouth Water s and our sources on the Itchen) are required up to 2026 in both the severe and extreme drought states of the world. We have assumed that it will not then be available from 2027 onwards in either the severe or extreme states of the world, reflecting pre-consultation dialogue with regulators, as discussed above. The other Drought Order selected under Strategy A is for Candover which is used in both the severe and extreme drought states of the world, but only in the early part of AMP7. Following discussions with regulators, we would generally propose to implement Drought Orders in the HSE and HSW WRZs in the following order: 1. Drought Order for the Test surface water; 2. Drought Order for Candover; 3. Drought Order for the Lower Itchen (Portsmouth Water s surface water source); 4. Drought Order for the Lower Itchen (Southern Water s sources). This order of implementation of Drought Orders is not explicitly modelled in the Real Options Appraisal model. What the model tells us is that the Candover Drought Order would be insufficient to meet the potential deficit should an extreme drought arise in the period This means that the model requires the larger Drought Order benefit from the Itchen sources. In reality, the Candover Drought Order would be operated prior to the Itchen sources Drought Order, but there would still be a need for the Itchen sources Drought Order in an extreme drought event. Neither the Candover nor Itchen sources Drought Orders are needed from 2027 onwards, as the Test Drought Order and the resource developments are sufficient to support the HSE WRZ. Figure 2 below summarises the use of the Drought Permits/Orders over the planning period, as described above for Strategy A. 25 Draft Water Resources Management Plan 2019

26 Figure 2 Summary of Drought Permits/Orders by branch Strategy A Under scenario B there is a deficit in the HSE WRZ, but none in the HSW WRZ until Therefore, there is no Drought Order option to recover DO at the Test surface water source. However, Drought Orders are required for both the Candover and Lower Itchen for the period , where they are used in both severe and extreme drought conditions. The Candover Drought Order continues to be used from 2027 onwards in extreme drought conditions, except in the lower scenario future, where it is only used from 2060 onwards (i.e. it is not required in the period ). Under scenario C there is no sustainability reduction on either the Itchen or the Test until 2027 (when both are implemented), and therefore no significant deficits that need to be solved in the period. From 2027, once both the sustainability reductions have been implemented, a Drought Order is required; in this case the Test Drought Order is used to return the DO of the source to 105Ml/d. It is only available for use in the extreme drought states of the world, and is implemented in the upper and middle scenario futures. Under the lower scenario future, it is not needed until later in the planning period (from 2050 onwards). The Drought Order could be operated below the 80Ml/d licence condition, with up to 100Ml/d available from the Fawley desalination scheme during extreme drought conditions. Under scenario D as there is no sustainability reduction at the Test surface water source, there is no need for a Drought Order option to recover lost DO at that source. However, Drought Orders are required for both Candover and the Lower Itchen for the period , where they are used in both severe and extreme drought conditions. 26 Draft Water Resources Management Plan 2019

27 The Candover Drought Order continues to be used from 2027 onwards in extreme drought conditions, except in the lower scenario future, where it is only used from 2045 onwards (i.e. it is not required in the period ). In addition to the above, the Drought Orders on the Isle of Wight are required from 2027 to 2034 in the extreme drought states of the world in the upper scenario future only. Demand management Under all four scenarios (A to D), a number of demand management options are selected. These options are assumed to commence at the start of AMP7, but may run over a number of AMP periods and also deliver longer term demand savings. The options are discussed in greater detail in Annex 6: Extension of the Universal Metering Programme to provide coverage to around 92% of customers; Enhanced Automated Meter Reading (AMR) frequency for existing metered households (HOUSEHOLDs), including benefits in terms of reduced supply pipe losses, and additional savings from the introduction of customer offerings or propositions to encourage efficient use of water. - Note that tariff options are not favoured by customers. The application of customer offerings or propositions to encourage efficient use of water is assumed to be gradual, with trials in AMP7 to better understand the potential savings and to optimise the structure of any customer offering/proposition that is applied. Intensive media & education campaign as part of an initial phase of the Target 100 policy, concentrated throughout AMP7, but helping to influence customers water use behaviour over the longer term as part of the company s strategy to reduce average per capita consumption to 100 litres per head per day. It is expected that this AMP7 campaign will encourage changes to water using behaviour that should increase confidence that the Target 100 will be achieved and more quickly than otherwise would be the case. It should help to minimise the risk that the demand forecast could be higher than the central estimate. Leakage reduction The amount of leakage reduction under each scenario varies depending on the need for and timing of implementation of other schemes in each of the four alternative scenarios. Figure 3 below summarises the leakage reduction from both active leakage control (ALC) which contributes the largest component of leakage reduction, and also the non-alc leakage reduction options selected i.e. from fixed link pressure reduction valves (PRVs), acoustic loggers and mains renewal (note that these are water resource-driven mains renewal schemes). It also presents the supply pipe leakage reductions from the metering options. The option types are described more fully in Annex 6. For each of the four alternative scenarios, the amount of leakage reduction selected differs markedly between the different branches over the plan, and in particular in terms of what may be required in the shorter term (AMP7 and AMP8). 27 Draft Water Resources Management Plan 2019

28 Figure 3 Leakage reduction strategy for each of the four scenarios under each future 28 Draft Water Resources Management Plan 2019

29 Figure 4 provides a summary of the demand management options (water efficiency, metering and leakage reduction) that are selected under each branch for Strategy A. Figure 4 Summary of demand management activity by branch Strategy A Resource developments We have summarised the resource developments by option type below. Desalination One of the key developments in the Western area is the need for a large scale (up to 100Ml/d) desalination plant in Hampshire to ensure there are adequate supplies for customers following the significant sustainability reductions for the Test and Itchen abstractions. The preferred site for the 100Ml/d desalination plant is at Fawley in the HSW WRZ. The driver for this size of scheme is the severe drought condition (from 2027 Drought Order benefits in the severe drought condition are not allowed), and particularly the critical period. The 100Ml/d desalination plant is fully utilised under the severe drought critical period state of the world in both the upper and middle futures, although even in the low scenario future, the scheme is utilised almost fully by the end of the planning period (it exceeds 75Ml/d from 2040 onwards). Utilisation is broadly similar in the severe MDO period. Under the extreme states of the world, the desalination scheme does not need to be fully utilised it is only used at its minimum sweetening flow (one quarter of its capacity) i.e. a total of 25Ml/d. This is because, for the purposes of investment modelling, the Test surface water Drought Order is required in addition to the Fawley desalination scheme, so the model minimises the overall solution cost by minimising the use of desalination water. This is the case for both the upper and middle scenario futures; although for the lower scenario future, it is possible not to implement the Test surface water Drought Order at all until the 2050s, and just use the Fawley desalination scheme 29 Draft Water Resources Management Plan 2019

30 only. As discussed under the Drought Order section above, the Test Drought Order may be limited to 80Ml/d by the Environment Agency s proposed licence conditions, in which case the Fawley desalination scheme may need to be operated at more than its sweetening flow of 25Ml/d. We also looked at some scenarios in which we constrained the size of Fawley desalination scheme to 50Ml/d and 75Ml/d, as this better reflects our customers preference to minimise the use of desalination schemes (whilst being least preferred, customers did recognise that desalination schemes may need to be part of a strategy). The key impacts that these desalination size constraints have on the strategy are discussed in the Strategy A summary section below. Under the upper scenario branch only, a scheme for desalination on the Western Yar on the Isle of Wight is also selected from 2045 onwards. Although this is sized to provide up to 10Ml/d it is generally only utilised at its minimum sweetening flow (one quarter of its capacity). The only exception is in the severe drought critical period state of the world when utilisation may be up to 9Ml/d at the end of the planning period. We would not necessarily develop this desalination plant, but would conduct feasibility investigations to identify the optimum small scale scheme for the Isle of Wight, accounting for local demands, should the upper scenario future come to pass, rather than the middle or lower scenarios. Under scenario B Fawley desalination of up to 100Ml/d is also selected in In the severe drought states of the world, it is used to at least 85Ml/d in the upper and middle scenario futures (it is more fully utilised in the critical periods), while in the lower scenario future, it is used between 57Ml/d and 90Ml/d across both states of the world (more fully utilised in the critical period). In the extreme states of the world, even where the Candover Drought Order is used from 2027 onwards, it is still utilised significantly the least in the lower scenario future is 70Ml/d, but mostly in excess of 75Ml/d in all futures. The desalination scheme for the Western Yar is similarly selected to Strategy A: under the upper scenario branch only from 2045 onwards, with higher utilisation under the severe drought conditions than in the extreme (which only uses the minimum sweetening flow of one quarter of its capacity). Under scenario C the Fawley desalination scheme to 100Ml/d is selected in 2027 and is utilised in a similar way to that described in Strategy A, alongside the Test Drought Order from 2027 onwards. The Western Yar scheme is selected and utilised in a similar way to that described for A and scenario B. Under scenario D there is no requirement for a Fawley desalination scheme, as there is no sustainability reduction at the Test surface water source, and consequently there is a large initial surplus. Under the upper scenario branch only, a scheme for desalination on the Western Yar is also selected from 2045 onwards. This is sized to provide up to 10Ml/d it is often only utilised at its minimum sweetening flow (one quarter of its capacity), although it is sometimes used more particularly towards the end of the planning period. We would not necessarily develop this desalination plant, but would conduct feasibility investigations to identify the optimum small scale scheme for the Isle of Wight, accounting for local demands, should the upper scenario future come to pass, rather than the middle or lower scenarios. 30 Draft Water Resources Management Plan 2019

31 Water reuse Under Strategy A there are two key water reuse schemes. On the Isle of Wight, there is the need for a water reuse scheme from 2027 at Sandown. It is utilised fully in the drought, severe drought, and extreme drought states of the world. However, where there is sufficient additional supply available in the lower scenario future, the output from Sandown water reuse scheme may be reduced and supplemented by the cross-solent main. It is not utilised under normal annual average conditions, as there is sufficient surplus and capacity in the cross-solent main to allow Hampshire to support the island. The other key scheme is the Test Estuary WTW industrial use scheme in HSW WRZ, which is also selected in AMP7 (in 2023). It is fully utilised in both the drought and severe drought states of the world, but under the extreme states of the world may be used in a limited capacity as it is largely interchangeable with the Bournemouth Water bulk supply, and is not required where the Test Drought Order is available. As mentioned above in the desalination section, we also looked at some scenarios in which we constrained the size of Fawley desalination scheme to 50Ml/d and 75Ml/d, as this better reflects customers preference to minimise desalination schemes (whilst being least preferred, customers did recognise that desalination schemes may need to be part of a strategy). Under these scenarios, water reuse options were required on the Itchen either Portswood WWTW (if Fawley desalination is 75Ml/d) or Portsmouth Harbour WWTW (if Fawley desalination is limited to 50Ml/d). These schemes are utilised in all three futures in both the severe and extreme drought states of the world. Under scenarios B and C, a water reuse scheme is required at Sandown in 2027, which is consistent with the other scenarios. It is needed in all three future branches in all the states of the world (except the normal year average). The Test Estuary industrial reuse scheme is only required late in the planning period (2055 onwards) for the all the states of the world (except normal), but only under the middle scenario branch (except in the extreme under scenario C, where the Test Drought Order is available to be used instead of the Test Estuary industrial reuse scheme). The Testwood Estuary scheme is used in preference to the reservoir option and/or Western Yar desalination scheme, both of which are needed later in the planning period in the upper scenario future. Under scenario D, a water reuse scheme is required at Sandown in 2027, which is consistent with the other scenarios. It is used in the upper and middle scenario futures in all states of the world, except the normal annual average, where it is not required. Under the lower scenario future it is only required later in the planning period in the severe drought conditions, although in the extreme critical period state of the world it is used throughout. The Test Estuary industrial reuse scheme is only required late in the planning period (2050 onwards) and only under the middle scenario branch for the severe and extreme states of the world (this is used in preference to the reservoir option and the Western Yar desalination scheme in the upper scenario future). Reservoirs and other options There is only one reservoir option (although two variants of this option), and no other resource development options that form part of the primary strategy for the 4 alternative scenarios A-D. Under Strategy A, the option is to convert the Test lake into a surface water storage site (providing 5.7Ml/d in critical periods). It is only selected under the upper scenario future, and then only in the 2060s. 31 Draft Water Resources Management Plan 2019

32 Under scenarios B and C the larger option to convert and extend the Test lake (providing 17.5Ml/d at critical periods, but only 0.3Ml/d at other times) is selected in 2035 under the upper scenario future only and is fully utilised in severe and extreme droughts, and also used significantly in the drought states of the world, particularly by the end of the planning period. It is not required under normal year average conditions. Under scenario D both variants of the Test lake scheme are selected, depending on the future under consideration. The larger option to convert and extend the Test lake (providing 17.5Ml/d at critical periods, but only 0.3Ml/d at other times) is selected in 2035 under the upper scenario future only and is fully utilised in severe and extreme droughts. Whereas when the smaller Test lake scheme (5.7Ml/d at critical periods) is selected, it is not until 2065 under the middle scenario future. Figure 5 below provides a summary of the resource development options selected in Strategy A under each branch and their timing. Figure 5 Summary of resource development options selected by branch Strategy A Bulk supplies Imports The investment modelling assumes an existing bulk import from Portsmouth Water to HSE WRZ of 15Ml/d which is due to be implemented in This is assumed to be available in all alternative scenarios, however, as discussed above, this has been assumed to reduce to 5Ml/d from 2027 onwards under the severe drought and extreme drought states of the world to reflect the uncertainty in a Drought Order for the Lower Itchen which may affect Portsmouth Water s Lower Itchen abstraction, and consequently their ability to provide a full supply to Southern Water. Under Strategy A, a number of additional bulk imports have been selected. There are two additional bulk supplies from Portsmouth Water in the HSE WRZ. The first is selected in 2023, and provides 32 Draft Water Resources Management Plan 2019

33 an additional 9Ml/d to Southern Water. It is, to some extent, dependent on Portsmouth Water undertaking further resource development work. It is used fully post-2027 in the severe and extreme drought states of the world, under all three futures. The second Portsmouth Water bulk supply is selected in 2027, with a capacity of 21Ml/d. This is based on development of the Havant Thicket reservoir. However there is a risk that this scheme is not fully implemented by 2027, so we have investigated the implications of this in the sensitivity testing on the plan. We would mitigate this risk by working closely with Portsmouth Water to develop the additional resources it needs to provide us with this additional bulk supply. There is a possible interim solution before Havant Thicket is completed, whereby surplus resource from Havant and Bedhampton Springs is transferred directly to our supply area. This needs further discussion and investigations with Portsmouth Water. The additional 21Ml/d is fully utilised under the severe drought states of the world, and is generally fully utilised in the extreme states of the world too. Its utilisation in drought states of the world is variable, but we have assumed that a sweetening flow of 10% of capacity would be required at the least. These three bulk supplies from Portsmouth Water (existing, plus two additional supplies) form a key component of the strategy for meeting the Itchen sustainability reduction in HSE WRZ. In addition to these, there is a further bulk supply to HSW WRZ from the Bournemouth area (South West Water). The scheme provides up to 10Ml/d of water and it is used in the drought, severe drought and extreme drought states of the world, but is not needed under the lower scenario future. The earliest date it is required under Strategy A is under the upper scenario future. It is therefore a scheme that we should investigate further in AMP7. As mentioned previously in the desalination section, we also looked at some scenarios to test Strategy A further, in which we constrained the size of Fawley desalination scheme to 50Ml/d and 75Ml/d, as this better reflects customers preference to minimise desalination schemes (whilst being least preferred, customers did recognise that desalination schemes may need to be part of a strategy). Under these sensitivity tests of the plan, the bulk supply from Bournemouth is required earlier in 2027 and is utilised more fully in all three futures in the drought, severe drought and extreme drought states of the world. Under scenarios B, C and D the three bulk supplies from Portsmouth Water (existing, plus two additional supplies) also form a key component of the plan for meeting the Itchen sustainability reduction in HSE WRZ, similar to Strategy A. The main difference is that the first bulk supply providing an additional 9Ml/d is not required until 2027 (whereas in Strategy A it was needed at the earliest possible implementation year of 2023). The bulk supply from the Bournemouth area (South West Water) providing up to 10Ml/d of water to HSW WRZ is selected earlier under scenarios B, C and D it is required in This seems to be selected in preference to the Test Estuary industrial reuse option, as the Testwood sustainability reduction is delayed to 2027 or not implemented at all in scenarios B, C and D. The Test Estuary scheme is available from 2023, so under Strategy A, it is brought in then as there is a deficit to solve as quickly as possible in HSW, as well as in HSE WRZ. Whereas, under scenarios B, C and D, this is not the case, and the similar sized Bournemouth bulk supply is preferred over the Test Estuary industrial reuse scheme on cost grounds. These two schemes can therefore effectively be considered as alternatives if the Bournemouth bulk supply is not feasible, then the Test Estuary industrial reuse scheme can be used in its place. Exports There are no additional options to provide bulk supplies to neighbouring water companies from the Western area water resource zones. There are a number of existing bulk supplies which are 33 Draft Water Resources Management Plan 2019

34 assumed to continue throughout the planning period, and are applicable to all four alternative scenarios: Small supply to Wessex Water from Hampshire Andover (less than 0.5Ml/d) Supply to commercial customer from Hampshire Southampton West (10Ml/d) Enabling transfers (inter-zonal transfers) The Western area has a number of existing inter-zonal transfers, and a number of options for increasing the connectivity between the WRZs. Figure 6presents a summary of these inter-zonal transfers and the key bulk supplies for the Western area. Figure 6 Schematic of inter-zonal transfers and bulks supplies for the Western area The two critical elements of all the alternative scenarios (A, B, C and D) are: That the HSW WRZ supports the HSE WRZ, which is achieved through continued use of the existing (24Ml/d capacity) transfers between the two WRZs, and the development of a new pipeline from the Test to the Itchen treatment works in 2027; That a Hampshire grid option linking HSE, HW and HA is needed in 2026 and Under Strategy A, there are a number of existing transfers available to move water from HSW WRZ to HSE WRZ, with a total capacity of up to 24Ml/d. In addition to this, the Test to Itchen pipeline is also needed in 2027 to ensure that additional water can be transferred, and that the strategy of HSW WRZ supporting HSE WRZ is viable. The additional pipeline is utilised up to a maximum of around 40Ml/d, and hence the maximum total transfer from HSW WRZ to support HSE WRZ is around 65Ml/d. 34 Draft Water Resources Management Plan 2019