Ahead of the announcement of Ofwat’s PR24 Final Determinations for the water companies on 19^th December, the Competition and Markets Authority yesterday published new rules and guidance on the redeterminations process.

The CMA has adopted new rules and guidance specific to water references made under section 12 of the Water Industry Act 1991 - the new rules replace the current rules for water references (CMA17). The Act consolidates the post-privatisation provisions for the water industry in England and Wales – it also allows for an appointed company to dispute a price control determination.

The CMA consulted on the drafts of the new rules and guidance earlier this year from 1 August 2024 to 12 September 2024. The CMA said respondents to the consultation, who included Ofwat, appointed water companies, and other relevant organisations, had welcomed the development of the new rules and guidance.

Following the consultation, revisions were made to the new rules and guidance, including clarification that they are intended to apply to all types of water references.

Image source CMA Key stages in CMA’s Process for Water Redetermination References

The Guide sets out key stages in the procedure that the CMA will typically use when conducting references brought under section 12 of the Water Industry Act 1991 as follows:

• Section 2 sets out the background to redetermination references.
• Section 3 sets out and describes the CMA’s role in the overall process and the various stages of such process.
• Section 4 discusses the key documents used in the CMA’s consideration of the redetermination reference.
• Section 5 discusses hearings and meetings.
• Section 6 discusses transparency and confidentiality.
• Section 7 discusses recovery of the disputing company’s and CMA’s costs

The overriding objective of the Rules is "to enable the CMA to dispose of redetermination references fairly, efficiently and at proportionate cost, having regard to the interests of the main parties and third parties and the statutory time frames." Those involved in redetermination references are required to assist the CMA in meeting the overriding objective.

Where the CMA has received a redetermination reference, it will appoint members of the CMA panel to form a group, a CMA staff team and any necessary external contractors to carry out the redetermination reference.

The Rules recognise the possibility for multiple disputing companies to be part of the redetermination reference process and make provision for the process to be adapted by the appointed CMAgroup accordingly. In particular, the Rules provide the flexibility for the group to determine the appropriate method of conducting the redetermination reference process including by accommodating multiple disputing companies through joint submissions or joint hearings, which provides an opportunity for such parties to be heard.

The group may also consider the appropriate mix of joint and individual hearings and submissions in a redetermination reference in order to further the overriding objective.

Click here to download the Water References: Competition and Markets Authority Rules CMA204

Click here to download the Water References: Competition and Markets Authority Guide CMA205