Ofwat has launched a new consultation on its forward work plan for 2024-2025 setting out what the regulator proposes to do over the coming year to improve water companies’ performance and prepare the sector for longer-term challenges.

Introducing the consultation, Ofwat said:

“We know the water sector faces profound challenges associated with climate change, population growth, and, increasingly, public distrust as a result of operational and corporate governance shortcomings, and high-profile concerns about the sector’s environmental impact.

“Companies need to show their customers and the communities they serve that they are listening and taking effective action.

“Companies need to modernise, to open up, and be laser focused on delivery of what they have promised to do. They must embrace the possibilities from AI, big data and disruptive tech, and make greater use of nature based and catchment-based approaches.”

Ofwat also says it recognises that its regulation will also need to change, to modernise, if it is to hold companies to account effectively. In addition, it will also have to continue to be transparent, open and accessible.

Ofwat’s proposed key priorities for the next year include.

• The 2024 price review - PR24 is the overarching programme of work this year, which will shape the delivery of critical infrastructure and investment for 2025-30 and beyond.
• Transforming water companies’ performance - Ofwat intends to further develop its approach to monitoring company performance in 2024/25, to generate deeper insight into where there are performance issues for specific companies or at a sector level.
• Protecting customers - The new customer-focused licence condition, put in place in 2023/24, is aimed at establishing high standards of customer service and support for the full diversity of customer needs.
• Enforcement - Ofwat will aim to conclude its current enforcement cases into companies’ operation of their wastewater treatment works and networks; and continue to assess whether further enforcement action is required against the other companies in its overarching investigation of all wastewater companies.
• Markets - In collaboration with the business retail Market Operator, MOSL, and market participants, Ofwat will continue the drive to resolve market frictions in the business retail market.

Collaborating to meet long-term challenges

Ofwat says that population growth and improving drought resilience will require significant improvement in water efficiency, as well as major new infrastructure such as reservoirs and interconnectors. The regulator will be increasing its capacity to support a significant increase in the programme of major infrastructure projects. Major initiatives include:

• Continuing to support delivery of the Thames Tideway Tunnel
• RAPID (the Regulators’ Alliance for Progressing Infrastructure Development) develops and delivers strategic water resource solutions to enhance the underlying resilience of water supplies to protect customers and the environment
• Consulting on the future design and delivery of the Innovation Fund.

Ofwat says it will continue to collaborate with the Environment Agency and Natural Resources Wales on a joined-up approach to monitoring and managing the delivery of the water industry national environment programme (WINEP) in England and national environment programme (NEP) in Wales.

The regulator is inviting comments on its proposed forward programme of work 2024-2025 – deadline to submit comments is 5 pm on Friday 23 February 2024. Ofwat will publish its final forward programme of work by the end of March 2024.

Click here to download Ofwat's draft forward work programme 2024-25