Ofwat has published its initial comments on the Competition and Markets Authority’s final determinations in the appeals by four water companies against Ofwat’s final determinations in the 2017 Price Review on their AMP7 Business Plans.

Ofwat has published its initial comments on the Competition and Markets Authority’s final determinations in the appeals by four water companies against Ofwat’s final determinations in the 2017 Price Review on their AMP7 Business Plans.

The regulator said it is yet to review the detail of the CMA’s determinations, but it was “clear that the CMA has listened to representations from Ofwat and consumer groups. It has significantly reduced the returns allowed for investors, compared to its proposals last year.”

Ofwat said the CMA package would help drive Anglian Water, Bristol Water, Northumbrian Water and Yorkshire Water to improve their efficiency and deliver better outcomes.

The water regulator said that sizeable investment is required in the water industry over coming years and it was vital that the sector remained “attractive to investors across the globe.” However, it was also important that investor returns are properly earned and reflect what companies deliver for customers and the environment to maintain public trust,.    

With the CMA review complete, the regulator said both the water companies and Ofwat must focus their efforts on building a water sector fit for the future – one that is more resilient, environmentally sustainable and that provides customers with the service they deserve at a price they can afford.

Rachel Fletcher, Chief Executive of Ofwat, commented:

“We are challenging all water companies to transform their performance and deliver more for customers and the environment. In 2019 we backed a huge £50 billion five-year spending package for companies to do just that.

“Most companies accepted the challenge and, over the last year, we have seen tangible improvements, including on priorities like reducing leakage. However, four companies appealed to the CMA to intervene.

“I am grateful to the CMA for its engagement with us and the considerable analysis it has conducted. Overall, the CMA has supported the ambition we have for the industry. Its decisions require the four companies to make a step change in productivity and performance.

“Crucially, the CMA has backed the principle we have been advocating, that investors must work hard for their returns, bringing customers better, more resilient services and a healthier environment for generations to come.

“In the coming years much work is needed to deliver net zero, improve the natural world, provide resilient water services in the face of climate change, and keep up with customers’ changing expectations. Ofwat will continue to hold companies to account for delivering against these goals, while enabling them to innovate and attract the investment they need.”

Over the 2020-25 investment period Ofwat’s final determination gave Anglian Water £5.6 billion, Bristol Water £462 million, Northumbrian Water £2.9 billion and Yorkshire Water £4.4 billion over the next five years.