Ofwat has set out its expectations for the way it expects all monopoly water companies to report on their annual performance for 2017-18.

Introducing the guidance, the water sector regulator said it expects the companies to be transparent about their performance and explain clearly, and in a balanced way, what is driving performance and the steps they are taking to improve.

The reporting should cover all aspects of performance, including financial and operational performance. For the first time the companies are also required to report their financial flows to investors for 2017-18 – the data will cover the periods 2015-16, 2016-17, 2017-18 and an average for the 3 years.

Ofwat also wants the companies to set out in a short, annual statement how they are delivering for everybody who depends on their services and how the company has set its aspirations. Areas where the regulator says it sees value in each company explaining clearly include:

• how its board sets its ambitions and targets and how the company is performing against them - providing customers with insight into how key decisions are made
• that the board is thinking dynamically about the expectations of customers in the long term and the company’s commitments do not remain static
• the relationship between its financial performance, executive rewards and delivery of services to its customers and how these impact future plans

As a minimum, Ofwat expects companies to publish the following:

• An annual performance report which provides specific information on progress on delivery of customer outcomes, service levels, transparent cost information and financial performance.
• A risk and compliance statement, appropriately signed off, in which the Board clearly confirms that the company: 
• considers that it has full understanding of, and is meeting, all its relevant statutory, licence and regulatory obligations and has taken steps to understand and meet customer expectations; 
• has satisfied itself that it has sufficient processes and internal systems of control to fully meet its obligations; 
• has appropriate systems and processes in place to allow it to identify, manage, mitigate and review its risks.
• A data assurance summary of the results of the data assurance that the company has carried out to evidence that the information provided is accurate. 
• A demonstration through their annual reporting of how the company is meeting board leadership and governance principles.

The companies are due to publish their annual performance reports by 15 July 2018.