Ofwat has written to the water companies in England notifying them that they must submit PR19 Business Plans by 3 September 2018.

The price review planning processes have been streamlined to align with the next round of Water Resource Management Plans (WRMP).

The alignment follows Ofwat consultations and ongoing engagement which made it clear that stakeholders supported better alignment of the WRMP and PR19 timetables and would welcome clarity on the issue.

Ofwat said it had listened to the concerns raised about alignment and recognised the benefits that greater alignment between the two planning processes will bring. Defra, the Environment Agency and Ofwat have now agreed a timetable for companies operating wholly or mainly in England.

Image: Source Ofwat

The regulator has also set out proposed dates for draft and final determinations, although these will be subject to further consultation through Ofwat’s Water 2020 programme. For companies operating wholly or mainly in Wales, the Welsh Government has already separately published its own timetable.

Ofwat told the water companies:

“We have reached the conclusion that the revised timetable offer an appropriate balance of the risks between the WRMP and PR19 planning processes. It ensures that public consultation on WRMPs will be completed before business plans are submitted to Ofwat; this is a change to earlier proposals that should help ensure companies have the evidence needed to underpin future water resources investment. We believe that this will ensure that water resources planning outcomes, including long term, strategic and resilient solutions, are reflected through the price review process.”

The regulator has drawn attention to what it regards as two potential risks to the timetable:

1. The water companies will need to publish their WRMPs for consultation promptly during January 2018 to ensure there is sufficient time available to produce a Statement of Response by July 2018 within the statutory 26 weeks consultation and response period. The 1 December 2017 deadline for draft WRMP submission is a backstop date to enable regulators to support this and Defra and the Environment Agency will welcome earlier submission of draft plans.

2. As it is likely business plans will be submitted before the Secretary of State makes decisions on WRMPs, companies will need to ensure that their business plans as far as possible reflect their WRMPs when they are submitted on the 3 September 2018.

The letter says that delays to either of these stages of the process would create issues for the PR19 and WRMP timetables. However in Ofwat’s view the risks are manageable with effective planning and use of risk-based approaches from the regulators.

If water companies do need to update their WRMPs during the price review process, for example due to the outcome of a public hearing, then Ofwat said it would allow an appropriate level of flexibility to update business plans, as it has done in previous price reviews. Companies will not be penalised where delays and discrepancies could not have been reasonably foreseen or fall outside a company’s control.

Ofwat said it is also important to recognise that the two planning processes sit against the backdrop of wider decisions to be taken by the Government later this year on a potential direction on level of service and a National Policy Statement for water resources, as well as the National Infrastructure Commission’s first National Infrastructure Assessment expected in early 2018.

The detail of the PR19 price review design currently remains under development through Ofwat’s Water 2020 programme. The final guidelines for WRMP for companies that operate wholly or mainly in England will be published shortly.