Water industry regulator Ofwat has written to the 17 largest water companies in England and Wales setting out its expectations and approach to pre-consultation engagement for the Water Resources Management Plans 2019.
In the letter, David Black, Senior Director Water 2020, says Ofwat expects the companies to integrate the development of their WRMPs into their mainstream business planning.
The letter explains that the regulator is working closely together with Government and the regulators in both England and Wales to ensure that water resources planning outcomes, including long term, strategic and resilient solutions, are reflected through the price review process.
A number of companies have already started preconsultation engagement with stakeholders - in Ofwat's view early engagement by companies with their stakeholders and regulators reduces the likelihood of issues and concerns coming to light at a later stage of the planning process.
David Black told the companies:
"We believe it is important that the pre-consultation engagement with Ofwat is proportionate and does not impose an undue burden."
The letter says that Ofwat expects to have a pre-consultation discussion meeting with each company (before autumn 2017), focusing on the key issues for the WRMP19. The regulator would share feedback with Government and other regulators where it felt that this is appropriate.
David Black said that within the context of PR19, Ofwat expects the pre-consultation engagement to focus on the approach that companies are following to develop their WRMP19, including:
- evidence of customer requirements and outcomes (e.g. level of supply resilience) that need to be delivered over the WRMP19 period;
- the risks in delivering these outcomes and the options for managing those risks;
- the range of options assessed to deliver the outcomes including involving other water companies (water trading as both a supplier and purchaser), other sectors (third party options) and demand management; and
- for companies involved in regional water resource groups, the company role in the development and delivery of the regional water resource plan.
The letter says Ofwat would also be interested to understand how the companies are integrating the WRMP19 process into the development of their business plans.
The meetings will take the place of formal responses to companies at the preconsultation stage and will allow Ofwat to provide early feedback, challenge and identify areas where more justification may be required to inform the WRMP and business plan.
The letter concludes:
"Depending on the outcomes of these initial discussions further engagement may be necessary, based on the challenges facing companies and the risks identified with the company approaches. It is important to note that comments regarding a company’s WRMP, at any stage of the WRMP19 process, are made without prejudice to Ofwat’s decision regarding business plans at PR19 and any subsequent price review. "
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