AT first glance, running a water company seems a simple affair. Make sure water comes out of the tap when it is turned on, make sure it has somewhere to go when the plug is pulled, and then send out the bills. Not so.

Around the country, water companies are being forced into unusual lines of work as they get to grips with one of the most ambitious pieces of legislation to come out of the European Union, the Water Framework Directive (WFD). It is forcing the companies into the business of land management.

United Utilities (in northwest England), AWG (Anglia) and Kelda (Yorkshire) all reported rises in operating profits from their core utilities businesses of between 13% and 19% at their interim results last week. The rest of the quoted water companies report this week.

The companies have been able to boost profits thanks to water charges rising by an average of 11.8% this year. Ofwat, the water regulator, set these rises as part of the price review for the five-year period to 2010 because of the levels of investment needed to comply with a range of government and EU directives.

However, the biggest one, the WFD, is just round the corner. It requires all inland and coastal waters to reach “good status” by 2015.

John Roberts, the chief executive of United Utilities who last week announced that he will leave his post in March, said: “The WFD is the next big step for the water industry and is a challenge we will all have to rise to meet together.”

Roberts claims the directive will not start hitting companies’ bottom lines until 2010, but it is already affecting how they work. United Utilities is running a pilot project to “re-wet” parts of the Ribble Valley in the Peak District where, over 30 to 40 years, farmers had drained the moorland to graze more sheep, thus removing a natural filter for the ground water.

In southwest England, Wessex Water, which estimates that the WFD could force the industry to invest between £500m and £600m a year, is subsidising local farmers to change the way they spray their crops because it is cheaper than building a purification plant for the area.

Agriculture is one of the main creators of “diffuse pollution”, where water runs off the land and into local rivers.

“If you use the principle that the polluter pays, then agriculture should pay its share,” said Keith Harris, finance and regulation director for Wessex Water. “However, identifying which farm is creating what level of pollution is tricky and the default position is to fall back on the water companies.

“We can build purification plants to remove pesticides from river water but it is often cheaper to stop it happening in the first place.”

There is another issue that is keeping water companies on their toes — climate change. Most companies agree that storms have become heavier. This results in massive amounts of floodwater surging into sewers that can’t cope.

A stomach bug outbreak in North Wales last week has been linked to untreated sewage getting into the water supply.

A more extreme example of overflow occurred in London on August 3 last year when one month’s rain fell in two hours. The storm drains overflowed and Thames Water, faced with the prospect of the capital being revisited by its own effluent, had no choice but to send it all into the Thames. About 600,000 tonnes of untreated sewage poured into the river, killing thousands of fish.

This was said to be an isolated incident. But later it emerged that the sewer systems had been regularly emptied into the Thames over the past four years, though on a smaller scale.

“From an environmental perspective, things like that should not happen, it undoes all the good work that has been done for the river,” said Thames Water. “The issue for London and the southeast is one of capacity. Sewers must deal with all the household waste water as well as rainwater.”

The solution is to construct a “super sewer” under the Thames to intercept sewage and carry it to processing plants in east London. However, it would cost £1.7 billion, a sum that is not covered by Thames Water’s recent 21% rise in water charges, and the government has given no indication of when it will reach a decision.

There is no chance of the super sewer being ready for the 2012 Olympics or the deadline for the WFD, three years later.

The government will define “good status” in 2007. It would take a monumental feat of squirming for this to include the pumping of raw sewage into the Thames.

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