Water industry regulator Ofwat has published details of the financial model it has developed as part of the price review to help it assess companies' business plans.
The three main purposes of the financial model are to:
- determine the wholesale price controls
- calculate the revenues arising from the retail price controls
- help assess financeability of the company
The new information published on Ofwat’s website sets out further minor changes to the model following external review and feedback from stakeholders.
The regulator has also published information about its feeder models and – following on from risk and reward guidance – its risk assessment tool.
The risk assessment tool tests the impact of various scenarios on companies’ returns and customer’s bills – used by Ofwat to understand how much risk companies have included in their business plans and how the risk is split between the company and its customers.
The feeder models give transparency on how data flows from the business plan data tables, through the feeder models into the financial model.
Ofwat expects the companies to use both the financial model and risk assessment tools, and to explain any variances between the results using the model and any models they have created themselves.
Click here to access a revised version of the model and release notes explaining all the changes that have been made since it was first published.
Comments on any of the models should be sent to This e-mail address is being protected from spambots. You need JavaScript enabled to view it .
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