Ofwat is today setting out its early ambitions for the 2024 price review in a detailed and extensive 131 page discussion paper and inviting comment on its proposals – which include removing the requirement for each company to have a customer challenge group at PR24.

The paper outlines the water sector regulator’s initial views on the framework for PR24 and future price reviews and discusses Ofwat’s high-level ideas for maximising the potential of price reviews to help the water sector create value for customers, communities, and the environment. Introducing the paper, Ofwat said:

“Our intention is that this paper will help us and the sector prepare for PR24."

“The pace and scale of change is going to be quicker and greater than ever before. To meet the challenges this presents and embrace the opportunities, Ofwat is moving the conversation forward around four ambitious goals for PR24.”

The goals are:

• increasing focus on the long term – the price review needs to deliver the right long-term solutions for customers. Companies should place their business plans clearly in the context of their long-term ambitions, and Ofwat will explore how to give greater regulatory clarity about what will happen in future price reviews
• greater environmental and social value – water companies should be key players in their communities. We need to incentivise sustainable outcomes and behaviours that deliver the most value, whether it be collaborating with local partners or working innovatively with customers and communities.
• clearer understanding of customers and communities – we need a simpler, more targeted and more effective approach to capturing customers' views. Ofwat plans to work with the sector to conduct collaborative customer research, to complement companies’ own work with their customers
• delivering improvements through efficiency and innovation - companies need to operate efficiently to create space to do more for their customers and the environment. The price review needs to drive improvements from innovative approaches and embracing open data.

David Black, Interim Chief Executive at Ofwat said:

'We want the price review to drive the change needed to meet the demands from climate change, customers’ rising expectations, and affordability concerns. We think that the sector can deliver more for customers, society and the environment, but we all need to work differently to unleash this potential.

Collaborating with others inside and outside the sector can deliver better, more sustainable outcomes. We’re sharing ideas now to explore with others how the price review can make a difference for customers and the environment, into the future."

The paper says the water sector faces profound challenges and needs to work in new ways to deliver greater value for society and to reduce costs – and that “this is the moment for fresh thinking and real change.”

“Ofwat will continue to listen and work collaboratively with customers, companies, other regulators and those with a wider interest in the sector. The aim is to design a price review fit for the future.”

Deadline to comment on Ofwat's proposals is 22 July 2021 - click here to download the consultation paper PR24 and beyond - creating tomorrow together