Ofwat has set out additional guidance for water companies on its expectations for how they should propose price control deliverables at the upcoming 2024 price review for the 2025-30 investment period.
The water sector regulator is introducing price control deliverables in PR24 to set out the key outcomes or outputs from enhancement and related expenditure, so that stakeholders and customers know what to expect from the funding provided.
The water companies receive enhancement expenditure allowances through the price review process to deliver permanent increases or step changes in the current level of service to a new ‘base’ level and/or the provision to new customers of the current service. The price control deliverables will set out:
- the outcomes or outputs expected to be delivered from enhancement and related expenditure;
- the expected timing of delivery of these outcomes or outputs;
- the payments to customers if these outcomes or outputs are not delivered on time
Enhancement funding can be for environmental improvements required to meet new statutory obligations, improving service quality and resilience, and providing new solutions for water provision in drought conditions.
In the event of non-delivery if outcomes or outputs are not delivered, price control deliverables allow funding to be returned to customers.
Ofwat is telling the water companies to use this new guidance, in conjunction with the guidance set out in PR24 final methodology, to develop proposals for price control deliverables for inclusion in their business plans.
The guidance states:
“We will continue to refine our approach to price control deliverables through the draft and final determination process.”
Click here to download the guidance
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