Ofwat is proposing changes to the regulatory accounting guidelines (RAGs) for the water companies which will see an increased focus on water resources and bioresources.

The regulator has set out details of the proposed changes in a second, short, focused consultation on the regulatory accounting guidelines (RAGs) for the 2016-17 reporting year which follows and builds upon its first consultation in March.

Introducing the consultation, Ofwat said it expects companies to report on their performance directly to customers and other stakeholders. The regulator wants companies to explain their performance and their leading indicators of risk.

While the companies should decide how they report on their performance each year, Ofwat also expects them to publish some common content in an annual performance Report, commenting:

“This is important as it allows customers and stakeholders to compare the performance of individual companies to the rest of the sector, and sets out a minimum we would expect companies to report on.“

The regulator proposed separate binding price controls for both water resources and bioresources the Water 2020 December consultation- subsequently confirmed in its May Water 2020 document.

In support of the decision to have separate controls for water resources and bioresources, Ofwat said it is planning to raise the status of reporting for these areas.

Although the proposed change may not significantly change the scope of information currently reported, the regulator said it increases the emphasis on this information and reflects the move to separate controls. Ofwat believes that this will bring increased focus to cost reporting in these areas, leading to the development of more robust data and should result in the data receiving more focus under companies’ individual assurance frameworks.

The consultation covers three areas.

• Proposed changes to reporting to support Ofwat’s regulatory decisions in its ‘Water 2020: our regulatory approach for water and wastewater services in England and Wales’ (May Water 2020 document), with an increased focus on water resources and bioresources.
• The findings from the first year of reporting under the new Annual Performance Report (APR) format, as well as earlier consultation responses and further feedback from companies.
• More generally, it provides an update on Ofwat’s future plans for developing reporting for 2017-18 onwards.

The regulator is working to a tight timetable for the consultation - deadline for responses is 13th September 2016.

Click here to access the consultation document.