Ofwat has published an AI adoption plan for the water sector during the transition to the new regulators, saying given the pace of development and adoption of AI systems and the potential risks and benefits for the water industry in England and Wales, "we consider that this work should not wait until the new regulators are established.”
The document sets out Ofwat’s initial regulatory approach to Artificial Intelligence (AI) adoption with the ambition to build a foundation that will scale into the future regulators.
In January 2025, the Government set out its AI Opportunities Action plan to boost economic growth, provide jobs and improve people's everyday lives in the UK. The water sector regulator says the Government’s assessment of progress in January 2026 “reinforces expectations on regulators to enable safe, trusted and scalable AI development through proportionate regulation, guidance, innovation and assurance.”
Ofwat has adopted the following definition of AI.
“Artificial intelligence (AI) describes computer systems that can examine large amounts of information, recognise patterns within it, and use those patterns to produce outputs such as predictions, summaries, recommendations, or generated content. Rather than relying only on fixed instructions written by a person, these systems are built using methods that allow them to learn from data and refine their results over time.”
The adoption plan also the beginning of a more formal process for Ofwat to work more closely with water companies, other regulators and the wider sector to build a regulatory framework for AI use in the water sector.
Ofwat comments:
“The water sector is in a significant period of change, and Ofwat is mindful that we need to establish a position to help guide, but also adapt quickly, as more collaboration is undertaken with other water regulators and the new regulators are formed.
“This document therefore does not set out a complete long-term regulatory framework for AI, but instead looks to set strong foundations that the new water regulators can build upon.”
Actions the regulator intends to take during transition cover five main areas:
- Develop a better understanding of AI adoption across the water sector to inform Ofwat guidance
- Develop AI guidance
- Enable more innovation
- Develop monitoring and reporting approaches
- Build Ofwat internal capabilities
According to Ofwat, the aim of plan is to provide clarity now, in order to support responsible innovation, reduce unnecessary burden, and contribute to delivering productivity and economic growth. This is intended to help prepare the new water regulators to be well placed to drive AI adoption and value when they are created.
The regulator says the plan represents “Ofwat's best intentions for this programme of work before the new regulators are operational.”
However, “it is subject to competing demands of transition and reform work placed on us by Government and the limitation of the resource available to us in the short term,” Ofwat cautions.
The paper says Ofwat intends to take an open, practical and iterative approach to working with the water sector and plans to engage early and regularly with the water sector and wider stakeholders.
Click here to download Ofwat AI adoption plan for the water sector during transition
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