The Ofwat-led Regulators’ Alliance for Progressing Infrastructure Development (RAPID) has acknowledged that there are areas where it needs to improve its performance, following feedback from stakeholders in its annual stakeholder survey for 2021-2022.

Image: RAPID Annual Progress Review 2022-23

The acknowledgement comes in the newly-published RAPID Annual Progress Review 2022-23. The RAPID Board is chaired by the Chief Executive of Ofwat, and comprises members from the senior leadership teams of partner regulators the Environment Agency and Drinking Water Inspectorate.

Image: RAPID Annual Progress Review 2022-23

RAPID conducts an annual stakeholder survey to generate intelligence on what it is doing well and to identify areas where it falls short and requires improvement. The survey, which is sent out to a range of stakeholders that RAPID works with on a regular basis, contained a mixture of 10 questions that asked respondents to either agree or disagree and those which asked for longer, anecdotal responses.

According to the Progress Review, while the survey received slightly less responses this year, the responses came from a cross section of sectors and was completed by those at a senior level.

The Review says:

“We are always willing to listen to feedback and adapt our work appropriately.

“There are some areas where we need to improve. One area that scored lower than previous years was 'RAPID is successful in providing effective oversight of strategic schemes'. We also heard that we are not working hard enough to act on stakeholder feedback.

“We are taking these comments on board, and we commit to determine the issues and make improvements where possible.”

This year, the Alliance has increased its focus beyond technical progression of the solutions to the supply chain and the investor communities, describing engagement with these groups as “critical to the successful delivery of these major infrastructure projects.”

Image: RAPID Annual Progress Review 2022-23

There are currently 18 solutions in the RAPID programme – some of these have changed from the 17 outlined in the PR19 final determinations. During the last three years of the programme, the Review says RAPID has seen water resource solutions join, merge and leave and it envisages more will join in the future.

Introducing the Annual Progress Review, RAPID MD Paul Hickey says:

“The year 2022-23 has been another positive year for the RAPID programme. By March 2023, the majority of the standard gate two draft decisions were published, with two further solutions following in April, and the final decisions on these solutions were published in summer 2023. The solution owners have made good progress, and the work being delivered is of high quality, which is a testament to the huge amount of effort that is going into exploring the key risks and challenges.”

At the end of June RAPID published twelve final decision documents with two more published in July 2023.

Image: RAPID Annual Progress Review 2022-23

Commenting on working towards the accelerated gate three submission which is due in spring 2024, the review says that accelerated gate three has been “very challenging” and the RAPID team are “continuing to work closely with Southern Water and Portsmouth Water to resolve emerging issues with the development of the solution.”

Risk management

Part of the RAPID programme has included working through and determining the key risks to the strategic solutions. The Review says the regulators “have flexed the scope of our regulatory and commercial programme accordingly, to consider how each risk might otherwise stop the solutions' progression in the programme.”

During the year, some of the common risks raised affecting strategic solutions were:

• Customer acceptability
• Planning and timetable-related risks
• Land acquisition
• Third party funding
• Budgets
• Alignment with water resource planning
• Environment

Building relationships with investors and the supply chain

The Review flags up that during year RAPID has also embarked on wider engagement with the water sector, the supply chain and the investment community, describing the regulators’ relationship with these stakeholders as “vital for the future success of the programme to ensure that the solutions can be financed and that there is a healthy market appetite to design, construct and operate the solutions.”

Looking ahead, RAPID says it intends to continue with this engagement over the next year to cultivate strong relationships with key stakeholders, commenting:

“This will help us shape and develop the commercial and regulatory models to deliver best value and timely major infrastructure projects. We want to promote a broad and deep competitive bidding market for the programme.”

As part of the engagement process, RAPID held its first investor event in October 2022 where it presented the current water supply and demand deficit challenges in the water sector and highlighted the opportunities for investors to play a part in the upcoming pipeline of RAPID solutions.

According to the Annual Review, the investor event enabled RAPID “to start to build a relationship with investors.” The feedback from the event and the contacts made have been beneficial, the Review says, which will be particularly useful over the next year when RAPID will looking at doing more one-to-one engagement and roundtables.

Supply chain community engagement

The Review says that RAPID is also keen to engage further with the construction supply chain to ensure they are fully informed about the possibilities of the RAPID pipeline and that with many large infrastructure projects taking place in the UK over the next decade, early engagement with this group will be important.

RAPID has now expanded the advisory group to include a specialist in the major infrastructure industry and is “using their insight and experience to help us to engage with this key audience.”

RAPID has also recently set up a specialist LinkedIn page to engage directly with all parties who are interested in the RAPID programme and will be using it as a tool to engage with both investors and the supply chain.

National modelling update

Image: RAPID Annual Progress Review 2022-23

The Review also highlights the output of the second phase of the project to develop a National Supply Simulation Model (NSSM) that incorporates the solutions within the RAPID programme. The model gives a national scale platform to test the RAPID solutions to explore the implications of inter-regional drought coherence on large-scale transfers.

According to RAPID, the NSSM gives the regulators a unique and independent view of the strategic solutions – RAPID is now at a point where it can use the model to answer its own specific RAPID questions, for example:

• what happens if RAPID brings in a new solution
• which solutions provide the best resilience to certain types of drought
• how solutions can operate independently or in concert

Regulatory and commercial frameworks

The Review says that "delivering big supply infrastructure means navigating regulatory and commercial barriers" and that, building on the success of the Thames Tideway Tunnel project, competitive delivery models are a requirement for new major infrastructure.

RAPID is working with industry to develop the applicability of different delivery models including DPC (Direct Procurement for Customers) and SIPR (Specified Infrastructure Project Regime).

The regulators are developing their policy thinking around the following areas:

• Planning for long-term outcomes (water resources planning process)
• Solution development activities (such as procurement)
• Construction (including allocation of risk and commercial models)
• Service delivery and operations
• Future proofing of the RAPID framework

The Review says the regulators have also been considering the future role of RAPID, including the merits of “expanding RAPID's oversight to include smaller water resources solutions that have similar characteristics, risks and opportunities as the current portfolio of strategic resource solutions.”

RAPID has now identified a number of potential water recycling, reservoir and desalination schemes based on the draft water resources management plans and will be engaging with the companies developing those solutions over the next year.

Developing a commercial and legal model for multi-sector reservoir systems

The Review goes on to point out that in June last year Ofwat published a paper on developing a model to deliver multi-sector reservoir systems which presented work carried out on behalf of RAPID, Anglian Water, Northumbrian Water, Yorkshire Water and Water Resources East. However, the review states:

“Although this has not progressed since the report was published, we remain willing to explore the opportunities of multi-sector reservoirs further. We have left this with industry to take it a step further, looking at what the models are and to unlock the wider benefits. We are keen to engage further once they have advanced their thinking on it.”

The Review also comments on RAPID’s relationship with the upcoming 2024 Price Review, saying RAPID will be engaging with the PR24 process, including supporting the evaluation of the PR24 business plans when they are submitted in October 2023.

The Review concludes:

“Ofwat welcomes the improved collaboration and will continue to engage with the companies to ensure that the regulatory framework is supportive of the best value solutions being delivered and that companies are not inadvertently disadvantaged by doing the right thing.”

Click here to download the RAPID Annual Progress Review 2022-23.