Water industry regulator Ofwat has set out the way in which it expects the water companies to prepare their regulatory information for 2014-15 – including regulatory accounts, accounting separation information and performance reporting information.

The water companies must follow Ofwat’s  regulatory accounting guidelines (RAGs) – the current guidelines will be replaced after the end of the 2014-15 reporting year and new RAGs will come into force for the 2015-16 reporting year.

The regulator is also looking to the companies’ Boards to transparently demonstrate how they meet its Board leadership, transparency and governance principles for regulated companies which were published in January 2014.

Last month Ofwat set out the information it expects all the monopoly companies in the water sector in England and Wales to publish about their performance for 2015-16 onwards, highlighting the fact that it would be doing further work on proposals for getting water companies to publish more detailed information about their wholesale services. This latest guidance says that given the likely changes in this area, Ofwat does not require any procedures to be performed on the existing upstream services information.

However, the regulator is continuing to ask the companies to publish extra information about their costs in delivering the less customer-facing (upstream) services they deliver as part of a trial. For 2014-15, Ofwat will require them to:

• complete a form with their upstream services data and publish it along with a methodology statement and commentary on their website; and

• report the main factor causing changes to their costs (‘cost drivers’) for each of the upstream services they provide.

Each company currently has the flexibility to choose the cost driver it decides is the most appropriate for each service. Ofwat also wants them to explain in their commentaries why the cost drivers they have chosen are the most appropriate.

No changes to performance information

This year Ofwat has made no changes to its guidance for companies on preparing their risk and compliance statement and reporting their performance against their indicators.

As they did last year, companies can choose how they explain their performance to their customers and other stakeholders. Ofwat expect each company to clearly set out how it has performed, its risks and how it has dealt with them.

The regulator said it also expects the companies to bring to its attention risk and performance issues that they identify as they arise, commenting:

“Where we find issues that companies have not made us aware of we will take action. This may include taking formal action, in line with our approach to enforcement.”

Click here to read the Guidance