Ofwat has published guidance on making submissions to the Regulators Alliance for Progressing Infrastructure Development (RAPID) under the gated process for strategic regional water resource solutions proposed by water companies.

The guidance covers submissions received in 2021 and their assessment –for the standard gate one (July 2021) and the accelerated gate two (September 2021).

At PR19 the regulator announced a £469 million ring-fenced development fund for companies to investigate and develop strategic water resource solutions. The funding provides companies with the ability and certainty to accelerate the development of solutions to be ‘construction ready’ for the 2025-2030 period.

Delivery of the solutions is subject to a formal gated process where decisions are made on delivery penalties and solution funding progression.

The purpose of the gated process is to ensure at each gate that:

• companies are progressing strategic water resource solutions that have been allocated funding at PR19;
• costs incurred in doing so are efficient; and
• solutions merit continued investigation and development during the period 2020 to 2025.

Solution owners are required to make a submission to RAPID (Ofwat, the Environment Agency & Drinking Water Inspectorate) - that documents the progress made on the gate activities in order to be construction ready for the 2025-2030 AMP8 period.

RAPID will undertake the assessment of submissions and make recommendations to Ofwat for each of the solutions assessed.

The timing of submissions for standard gates is aligned with Water Resource Management Plans RMPs and regional plan timetables. The accelerated gate timings are for solutions that are most likely to provide Southern Water with additional supplies by end 2027.

According to Ofwat, the gated process is intended to ensure that strategic water resource solutions progress at pace and make an efficient use of the development funding; it is not intended to create additional requirements. To maintain the focus on acceleration and efficiency the regulator said it is “open to flexibility” in the timing of assessments and decisions.

The guidance also explains that new proposed strategic solutions which have the potential to play a significant role in long-term resilience and can benefit more than one company or sector ( identified via the regional plan and the WRMP process) can enter the structured funding process.

Ofwat says in the guidance:

“We welcome proposals for any new strategic solutions that will help to increase the resilience of our water supply… Where a new solution impacts on another company’s water resource position or options or on another sector, we expect the solution to be submitted as a joint proposal.”

Solution owners will be allowed to submit evidence to justify inclusion of new solutions in the process at each gate, up to gate three (October 2023). New solutions can be identified by companies which already have a solution in the portfolio but also by those that are currently not funded through the programme.

“The earlier the solutions enter the RAPID programme, the easier it will be for a new solution to be incorporated and more benefits gained from its acceleration,” the guidance says.

Key information Ofwat is looking for in Gate one submissions includes:

• Assessment of key risks to the solution’s planned progress to completion
• Initial comparison of costs and benefits of different options considered within a solution
• Board level assurance that it is satisfied that progress on solution is commensurate with the solution being "construction-ready" for 2025-2030

Key information in Gate two submissions includes:

• A description of the key assets to be constructed as part of the solution and its interaction with other proposed water resource solutions.
• How the solution contributes to environmental net gain
• The carbon impact of the solution and initial outline of how the solution will take into account the carbon commitments
• Outline solution’s wider benefits including resilience benefits and those for other sectors (e.g. benefits from reduced flood risk)
• Resilience criteria that will be used to assess the solution
• Overall costs of the solution, construction and operation for each option
• Detail of capital expenditure
• Detail of operating expenditure - including an indication of design life of the asset and any significant maintenance liabilities during operational life, taking utilisation into account
• A project-level plan that sets out the key solution-specific milestones to delivery and includes key activities and outputs
• Preferred planning route for the solution, including the key planning steps and risks
• Updated stakeholder engagement (including regional) to identify any issues that need further investigation e.g. if opposition from a particular group is likely to be encountered

Click here to download the Guidance

Click here to download the Gate one submission template

Click here to download the Gate two submission template