Ofwat has launched a new consultation on proposed changes to the reporting requirements for the Annual Performance Report s produced by the water companies for the 2016-17 reporting year.
Introducing the consultation, the regulator said the proposed changes draw upon feedback and learning from the initial implementation of 2015-16 reporting by companies, together with the outcome of a targeted review of costs and revenue allocation for sludge and water resources published last week.
Ofwat looks to the water companies to explain their performance and their leading indicators of risk via their individual Annual Performance Reports. The regulator also expects companies to publish some common content in the report – viewed as important as it allows customers and stakeholders to compare the performance of individual companies to the rest of the sector, and sets out the minimum Ofwat would expect companies to report on.
The changes proposed in the consultation document clarify the common content necessary to compare performance. According to Ofwat, they will also help improve the clarity and increase the consistency of reporting in relation to sludge and water resources. The outcome of the regulator’s targeted review of sludge and water resources published last week,which flagged up some inconsistencies in data reporting, has also resulted in some further clarification and additional guidance.
The changes are addressed in terms of the regulatory accounts and the Regulatory Accounting Guidelines (RAGs).
Commenting on the proposals, Ofwat said:
“We recognise that the development of reporting requirements is closely linked to our approach to the next price review in 2019 (PR19). In particular, given that we have proposed separate price controls for sludge and water resources, we have focused on these areas.”
Key questions the regulator is seeking responses to via the consultation include:
- RAG2 suggests that a common method for calculating returned sludge liquors should be implemented. Do you have any observations on the approach suggested and any suggestions for a common formula?
- In RAG2 we have set out how energy costs and savings from sludge processes should be treated – do you have any views on this approach?
- In RAG2 we have set out how imported potable bulk supplies should be treated – do you have any views on this approach?
- In RAG3 we have clarified our expectations for reporting transactions with associates and the non-appointed business. Do you have any comments on these?
The consultation also raises interesting questions relating to future reporting, including:
- Should the Annual Performance Report contain more transparency over metering assets and installation and maintenance costs from 2017?
- Ofwat is working with the sector to develop new charging rules covering activities such as connection charges, infrastructure charges and other contributions from third parties. Should the Annual Performance Report contain more detailed cost information on new connections and other costs associated with these charges?
Deadline for submission of responses is consultation is 22nd June 2016. Click here to download the consultation paper.
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