David Black, interim Chief Executive at Ofwat, has said that taking action to tackle water companies’ unacceptable performance in releasing sewage into the environment is a priority for the regulator in coming months.
Introducing Ofwat’s draft forward work programme for 2022-23 which the regulator is now seeking comment on, David Black said:
“We have made clear our concerns about water companies’ unacceptable performance in releasing sewage into the environment and are taking action with the Government and other regulators to tackle these issues and hold companies to account. This is a priority for the months ahead.”
The year ahead represents the first major step in next upcoming 2024 price review – Ofwat will publish its draft framework for PR24 in the summer.
The regulator has set out three strategic goals:
- To transform water companies’ performance
- To drive water companies to meet long-term challenges through increased collaboration and partnerships
- For water companies to provide greater public value, delivering more for customers, society and the environment
The paper also outlines the themes which Ofwat expects to remain important throughout the rest of the 2020-25 PR19 period and looking to PR24 and beyond, including:
Environment: The regulator is increasing its focus on environmental issues - this work will continue to cover a wide range of areas, including delivering improvements to water quality, reducing the use of storm overflows, and supporting the sector’s net zero ambitions and flood risk management.
Customer outcomes: Ofwat will continue to focus on improving outcomes for residential and business customers via regulatory policy work – this includes considering the case for a new customer-focused licence condition.
Major infrastructure: Ofwat plans to use competition for the market where appropriate for major new infrastructure via Direct Procurement for Customers or other routes (where possible), creating new opportunities for investors.
Open data: Ofwat sees data as a key enabler and tool to support transformation by the sector, stimulate more innovation and collaboration, encourage new business models and service offerings as well as improved transparency. The regulator expects to see measurable progress from the water companies in delivering open data over the course of the next year.
“Our work on asset management and resilience...show that there is much more to do"
On transforming company performance, the paper says:
“Our work on asset management and resilience, and the need to address issues concerning companies’ wastewater discharges and operation of storm overflows, show that there is much more to do if companies are to deliver effectively and efficiently for customers and the environment now and in the future.”
“In the business retail market, market participants have made some progress to address market frictions, but we consider urgent and targeted action is required to improve the quality of market data and to improve incumbent company support for the market.”
Commenting on investment, Ofwat says:
“Investment in the sector is for the long term and we are also beginning to see different funding solutions and investment opportunities for those with a focus on environmental sustainability and long term delivery and we expect the sector to capitalise on these opportunities.”
Key milestones for Ofwat during 2022-23 include:
April – June 2022
- Gate three assessment of the RAPID programme strategic water supply infrastructure projects on the accelerated track
- Publish guidance on Ofwat’s Direct Procurement for Customers Framework
July – September 2022
PR24 – consult on draft methodology for setting the revenue limits, performance commitments and incentive framework (‘price controls’) for regional water and wastewater companies
October – December 2022
- Publish annual league tables on companies’ service to their customers: the customer service measure of experience (C-MeX) to their residential customers and developer services measure of experience (D-MeX) to their developer customers
- Publication of Service Delivery and Monitoring Financial Resilience reports
- Following consultation, publish the final methodology for setting the price controls for regional companies beyond 2025
- Gate two assessment of the RAPID programme strategic water supply infrastructure projects on the standard track
- Draft WRMP consultation
January – March 2023
Gate two final decisions for the RAPID programme strategic water supply infrastructure projects on the standard track
Deadline to comment on Ofwat’s draft forward work programme 2022-23 is Friday 18th February – click here to download the paper in full