Yorkshire Water has today announced that it will not accept the final determination published by Ofwat on 16 December 2019 as part of its 2019 price review.
It has instead asked the water sector regulator to refer its final determination to the Competition and Markets Authority for review.
Announcing ths decision to reject Ofwat's determination, Yorkshire Water said significant work had been undertaken to establish the deliverability of the final determination and the levels of risk to which it will expose the company.
The company has concluded that the long term risks to its resilience and customers would be at a level which it cannot accept.
Yorkshire Water said Ofwat's overall approach to the determination, "including as it does poorly designed penalty measures over the next five years", means that the company would be forced to focus on short term performance at the expense of longer term capital investment, vital for securing resilience of critical water and waste water infrastructure in Yorkshire.
Commenting on the decision, Yorkshire Water chief executive officer Liz Barber said:
“Everyone at Yorkshire Water shares a common purpose to provide safe and reliable services to our customers and our county, long into the future. We’re naturally committed to being the most efficient company we can, but have decided that accepting this determination would jeopardise Yorkshire’s resilience and our own.”
Commenting in an Expert Focus article for Waterbriefing last October ahead of publication in December of Ofwat's final determinations, competition law expert Thomas Sharpe Q.C. said that the battle ground in most price control appeals lies in the notion of “financeability” i.e. the price control leaves insufficient revenue for an efficient undertaking to finance its functions. Regulators have a duty to secure that each company must be able efficiently to provide and finance its core licensed services.
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