Ofwat has published new guidance setting out the process for the next stage of the process for water companies to investigate and develop strategic water resource solutions that benefit customers, protect and enhance the environment and benefit wider society.

At the 2019 Price Review the water sector regulator announced a £469 million ring-fenced development fund for companies to provide companies with the ability and certainty to accelerate the development of solutions to be ‘construction ready’ for the upcoming AMP8 2025-2030 period.

Delivery of the solutions is subject to a formal gated process overseen by the Regulator’s Alliance for Progressing Infrastructure Development (RAPID) to support the development of the solutions that benefit from the funding.

RAPID’s role in the gated process (working with the partner regulators, the Consumer Council for Water (CCW), Natural England and Natural Resources Wales) is to assess the progress made in development of each solution and to provide advice and recommendations to Ofwat to enable Ofwat to make decisions on continued ring-fenced funding for solution progression.

The aim of the gated process is to ensure at each gate that:

• companies are progressing strategic water resource solutions that have been allocated funding at PR19 or have subsequently joined the programme;
• costs incurred in doing so are efficient; and
• solutions merit continued investigation and development during the period 2020 to 2025.

The gated process also includes

• customer protection to ensure that funding is returned for non-delivery and if solutions are no longer suitable to progress.
• # decisions about whether companies should continue to receive funding for this purpose - solutions will require planning and environmental consents before going ahead.

Gate three of the RAPID programme represents a checkpoint on the way to solutions being prepared for Development Consent Order (DCO) or Town and Country Planning Act (TCPA) applications. Timing and objective of gate three is to ensure that there is no duplication between gate three submission activities, and planning, consenting and construction ready activities. “This avoids inefficient spend of the RAPID allowances by the solution teams, and de-risks discrepancies arising between the two submissions” the guidance says.

The RAPID assessment at gate three will focus on breadth and comprehensiveness of activities being undertaken in preparation for planning application submission, activities progress including programme through to their completion, and consideration of specific activities to address particular risks or issues associated with a solution.

In addition, activities not covered by the planning and consenting process, such as commercial arrangements and procurement, may still be assessed for quality.

RAPID will make recommendations to Ofwat based on its assessment of each solution at gate 3 on the following:

• whether appropriate progress has been made in investigating and developing the solution in terms of the work in progress or completed and if not, what remedial actions are required to get the solution back on track.
• activities not covered by the planning and consenting process, such as commercial arrangements and procurement, may still be assessed for quality
• the level of delivery incentive penalty, if appropriate, that should apply in the light of the completeness of the evidence
• whether expenditure has been allocated to the solution in line with the PR19 final determination
• whether the solution (and which of its options) should progress through the gated process and continue to use the development allowance to support this and if so whether there should be any adjustment to its allowance
• whether there should be any change to solution partnering arrangements; and
• confirmation of subsequent gate activities for the solution.

By gate four, RAPID expects that solution owners should be submitting for DCO or local planning permission for a firm single solution, including location. RAPID will also expect companies to have tested their design through a digital twin.

Click here to download RAPID’s Strategic regional water resource solutions guidance for gate three