Ofwat has published its five-year business plan for 2015-16 to 2019-20, including a proposal to establish a new independent adjudicator to make decisions on the non-strategic complaints and disputes it receives.

The five-year plan sets out the regulator's overall approach for delivering its strategy, ‘Trust in water’ over the next five years. Ofwat has already set out the shared vision for the sector as one where customers and wider society in England and Wales have trust and confidence in vital public water and wastewater services. Its business plan sets out what it plans to deliver and how it will work to do it in 2015-16 to 2019-20.

Ofwat’s priorities for 2015-16 are to:

• implement Water Act reforms and prepare for the 2019 price review;
• maintain customer confidence through a period of change;
• maintain investor confidence through a period of change;
• monitor the sector’s performance; and
• ensure that Ofwat has the skills, experience, systems, processes and culture that support its new strategy.

The plan also sets out Ofwat’s aim to continue to transform how it regulates the sector by using a broader range of tools, its principles of economic regulation and new ways of operating and delivering its work.

Cathryn Ross, Ofwat Chief Executive, said:

“Our achievements last year, such as a price review that delivered more for less, provide us with a strong foundation for the next five years. But we need to go further. We have an ambitious work programme to inform, support and challenge the water sector to maintain customer and wider society’s trust and confidence in vital public water and wastewater services. But we can’t deliver trust in water alone. That’s why we are publishing our plans. Not only does it provide greater transparency to our stakeholders, but also highlight areas where we could work in partnership together.”

Bev Messinger, Ofwat’s Senior Director, Operations said:

“The sector needs to change culture and innovate to succeed. And Ofwat needs to do the same. We have already begun to transform how we operate to work in more flexible and efficient ways, so that we are able to respond quickly to new circumstances. We will be building on this in years to come, with a particular focus on developing our people so we have the rights skills and experience to deliver. But our work is just one part of securing trust in water, so we will be also be working closely with other organisations – such as the UK Regulators Network –and seeking partnerships where this delivers the best results. We will focus our work on protecting customers’ and society's interests.”

During 2015-16 the regulator is planning to publish the high-level framework for the 2019 price review and development of upstream market reforms set out in the Water Act 2014. In 2016-17 Ofwat is also planning to establish an independent adjudicator to make decisions on the non-strategic complaints and disputes it receives. Other activities include:

• Set monopoly companies’ price controls for non-household retail services.
• Publish annual results of water sector performance – and host stakeholder event to discuss next steps.
• Review a service area delivered by monopoly companies.
• Establish a roadmap and stakeholder working group to review, agree and implement modernised licences.
• Publish Ofwat’s five-year business plan, forward programme and annual report and accounts.

In 2017-18 when the new market for water and wastewater retail services opens for eligible non-household customers, Ofwat will consult on the methodology for the 2019 price review  and publish the final methodology. In 2018-19 the regulator will also consult on and publish revised board leadership, governance and transparency principles for regulated and holding companies.

Commenting on the Tideway Tunnel, the business plan says Ofwat  will ensure that Thames Water has the right incentives to manage the Tunnel and ensure its customers only finance efficient and effective costs.

Ofwat’s business plan is updated every year so that it always look five years ahead. However, the regulator said it may change significantly from year to year, as circumstances change and priorities evolve and work in 2016-17 to 2019-20 should be used as an indication only.

According to Ofwat, the original model of regulation has served customers well for more than 25 years. However, the regulator’s view is that companies can provide even better services if their plans are driven by customers, not just the demands of the regulator. Ofwat said it is now moving towards a new approach to regulation ‒ away from a model that was prescriptive, interventionist and based on a one size fits all approach to one that is framework based, targeted, proportionate and customer-focussed. 

Click here to download Ofwat's five year business plan