Ofwat has published a paper setting out its expectations, assurance and information requirements for water company charges for 2020-21, including how it expects water companies to engage with customers and stakeholders when developing their charging policy and charges.

Introducing the paper, Ofwat said:

“Water companies need to be transparent about how they set charges. Customers and other stakeholders expect water company charges to comply with all relevant statutory obligations, including our charging rules. They also expect water companies to engage meaningfully on proposed charges and ensure that the information they publish is subject to high-quality assurance. “

The paper says that where water companies introduce new charging policies which lead to significant increases, the regulator expects them to have met “a high evidential bar”, including:

appropriate third party support for why the changes are being proposed, for example, a change in drivers or activity;

proven interactions with customers; and

evidence of engagement with and support from customer representatives, where appropriate, especially with the Consumer Council for Water (CCWater)

For each set of charges, Ofwat also expects each company to provide an assurance statement from its Board of Directors that the charges comply with legal obligations and the relevant charging rules, together with assurance that the water company has systems and processes in place to ensure that the charging information published is accurate.

In addition to the Board assurance statement, Ofwat also requires each large water company to publish a statement on its website setting out details of any significant increases (i.e. more than 5%) it anticipates in its Wholesale Charges Schedule and/or Charges Scheme.

For significant changes in charges for new connections and new developments, the water companies will need to report whether bills for typical developments have increased by more than 10% and what handling strategies they have developed to manage the impact that such increases would have on customers where such price increases have taken place. Information the companies will be required to provide includes:

• Worked examples of typical development bills for new connection services
• That its Board of Directors has assessed the effects of the new charges on customers’ bills for a range of different types of development, and approves the impact assessments and handling strategies developed in instances where bill increases for particular developer types exceed 10%;
• Confirmation of whether the water company is expecting there to be any bill increases of more than 10% from the previous year (for a given type of development)
• If such increases are expected: what size increase is expected; what types of typical developments are likely to be affected; andthe handling strategies adopted by the water company or why the water company considered that no handling strategies are required

Due to PR19, Ofwat is allowing the water companies additional time between receiving their final determinations in December to provide the information and moving the deadline to 21 January 2020.

Click here to access the Information Notice