Water UK, the body that represents all UK water and wastewater service suppliers,has responded to Ofwat's consultation 'Setting water price limits for 2010-2015 - framework and approach' on the 2009 water price review (PR09) by questioning whether it is enough to meet the challenges now facing the industry.
Pamela Taylor, Chief Executive of Water UK, said:
"Ofwat is pointing in a welcome new direction in this important stage of the build-up to PR09. But these proposals fall short of the fresh approach needed to meet the challenges ahead."
Ofwat signalled the change to a longer-term framework last year when it asked companies to publish Strategic Direction Statements for 25 years ahead. Customers and stakeholders can now see long-term plans for their water services; and companies are being encouraged to "own" their business plans and make sure they fit the needs of customers.
Water UK has said this was a welcome step in response to long-standing worries that shoe-horning planning into rigid 5-year blocks was no longer viable. In its view one-size-fits-all regulation is not suited to the job, given that water companies in different parts of the country face different challenges in meeting customer expectations and climate change. however in its view good intentions aren't always enough.
Pamela Taylor continued:
"Ofwat's current proposals seem unlikely to produce the forward-looking approach and innovation the future demands.
"We have to prepare now for a less predictable world where the risks to reliable water services are growing. The PR09 framework must provide real incentives to a more innovative approach.
"Ofwat should move on from one-size-fits-all by taking full account of company Strategic Direction Statements. The visions in these statements are grounded in the needs of their particular customers and look to the next generation, as they should do.
"From now on, and starting with PR09, water price reviews should be milestones on planned journeys towards sustainability, not a series of destinations visited at five year intervals."
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