Ofwat has said that it is planning to engage with the solution owners of strategic regional water resource solutions under the RAPID programme to discuss the funding framework for AMP8 "in due course."

Ofwat announced its intention to discuss the funding arrangements in its second paper setting out the lessons learnt from gate one and accelerated gate two of the RAPID gated process.  

In March 2021 the water sector regulator published its first RAPID accelerated gate one lessons learnt following the conclusion of the first checkpoint of the gated process. Since then, Ofwat has carried out two more gates – gate one and accelerated gate two.

The latest paper illustrates feedback from regulators and external consultants, alongside Ofwat’s own internal review – the regulator said the collective ambition is to work together to enable assessed solutions to be ‘construction-ready’ by 2025-2030.

The two most common challenges highlighted in the paper were inconsistent approaches and challenges with prescribed timetabling.

As a result of feedback and review, the gate two process will involve more refined training with walk-through examples to ensure a consistent approach to all aspects of assessment. It will also see amended timings and clearly communicated deadlines, the paper says.

According to Ofwat, the gated process is seen to have provided “forward momentum for solutions which had previously been labelled as too ambitious or technically challenging.” In addition, increased collaboration across different regions has resulted in a collective sense of working towards a common goal.

“We welcome the step change in engagement with solution owners and partner regulators that we are now observing as the solutions develop between gate submissions, and the transparency that has brought in working through issues,” Ofwat says.

Ofwat’s first assessment of the accelerated gate one submission uncovered some issues that otherwise might not have been identified until much later in the planning process.

Gate one on RAPID's standard pathway in autumn 2021 was the first gate assessment to follow on from accelerated gate one. With a 2025-2030 construction ready target, this was the first gate for most RAPID's solutions to pass through.

At gate one and accelerated gate two, solution owners interpreted Ofwat expectations of transparency in different ways, heading to some concerns being raised by stakeholders. In one instance this resulted in the extension of the draft decision consultation period for one solution.

Ofwat has now reviewed its approach and strengthened its expectations in this area in the gate two guidance, including the expectation that the gate submission templates and covering letters are published and unredacted, and that annexes are published at the same time as the submission to RAPID.

In response to feedback that more timely guidance, published in time for accelerated gates and for activities with longer programmes, would be beneficial, the regulator published gate three guidance during summer 2022, ahead of standard gate two and accelerated gate three. This also included a draft publication consultation period with the water companies.

Feedback also referred to the length of time between solution gate submissions and draft and final decisions being published. Ofwat has commented in response:

“We recognise the uncertainty experienced by solutions during this period and have emphasised measures to maintain programme certainty such as allowing spend while decisions are produced, and permitting early gate spend for some activities.”

The paper also highlights that feedback from new solutions entering the RAPID programme says that “it is difficult to justify current construction ready criteria is met, and it can take a long period of time for RAPID to confirm acceptance into the programme, and to then ramp up to gate standards.”

The regulator has acknowledged that as the standard RAPID programme progresses, justification against current RAPID programme criteria may become harder for some new solutions to meet.

Ofwat is currently looking at shaping the next evolution of a RAPID-style programme through PR24 that will accommodate newer solutions and says it will “provide clarity of this at the end of 2022.” Ofwat also intends to begin work on gate four guidance for publication in spring 2023.

RAPID have a number of upcoming gates in the remainder of 2022 and 2023, including standard gate two (November 2022), new solutions gate two, and accelerated gate three (both currently scheduled for Spring 2023).

Ofwat's PR24 draft methodology set out the regulator’s intention to fund the development of strategic water resources in the 2025-30 period. Ofwat said it will engage with the solution owners to discuss the funding framework for AMP8 in due course – and use its specialist advisory panel to provide advice to help shape the future arrangements, where appropriate.

Click here to download the Lessons Learnt paper in full 

Click here to download the RAPID annual progress review 2021-22