Ofwat has this morning announced the results of its pre-qualification tests for water and wastewater companies as part of its 2014 price review - South West Water and Affinity Water were the only two companies to pre-qualify for ‘enhanced’ status.
Both companies have now been invited to accept Ofwat’s guidance on risk and reward, including the cost of capital, which was published on 27 January 2014.
If South West Water and Affinity Water accept the guidance and undertake a number of other limited actions, they will gain the advantages of enhanced status - including a fast-track through the price review process – benefiting both the companies and their customers.
As pre-qualified companies, South West Water and Affinity Water will need to accept Ofwat’s risk and reward guidance and undertake a number of other limited actions by 17 March 2014 to achieve enhanced status.
Ofwat will publish the full results of its risk-based review on 4 April 2014.
Ofwat said the results of the pre-qualification tests for all water and wastewater companies show areas of excellence across the board, with active engagement with customers and clear board ownership evident in companies’ business plans.
Ofwat’s Chief Executive, Cathryn Ross said:
“The challenge Ofwat put to all water and wastewater companies was to understand their customers’ needs and wants and reflect these in their business plans. Companies have risen to this challenge with a real change of approach. They have worked hard to listen to their customers and to use what they have heard to shape and inform their plans.”
Ofwat’s Chief Regulation Officer, Sonia Brown added:
“The plans submitted by South West Water and Affinity Water stand out. These companies have achieved plans of particularly high quality, with a consistent focus on listening and responding to what their customers want.
“We look forward to continuing a constructive dialogue with all companies, so that they can demonstrate that their plans deliver the best possible outcome for customers.”
Ofwat has also confirmed the next steps in the price review process, which have been adjusted to take account of the results of the pre-qualification tests and ensure an efficient process going forward.
This now includes an opportunity for companies that have not pre-qualified to accelerate their progress through the Price Review and request an earlier draft determination by submitting new evidence to Ofwat by the beginning of May 2014. If this new evidence meets the required standard, Ofwat will issue draft determinations for these companies in June 2014.
Draft determinations for all other companies will be issued in August 2014.
The draft determinations for South West Water and Affinity Water will be published on 29 April 2014. Draft determinations for companies which take up the opportunity to accelerate through the process and meet the evidential bar required will be published in June 2014. Draft determinations for all other companies will be published in August 2014
Ofwat commented:
“This is one stage in a longer process and we are making no decisions on prices at this time. We will continue to challenge companies’ business plans to ensure customer get the best deal.”
Click here to download Ofwat's Pre-Qualification Decisions for all companies
Click here to download the revised delivery plan
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