Water industry regulator Ofwat has published a document setting out the guidance it will take into account in determining whether to select an infrastructure project as a ‘specified infrastructure project’.
The guidance provides an overview of the regulatory framework for specified infrastructure projects in England, together with the factors Ofwat will take into account before specifying an infrastructure project. It also sets outs the factors Ofwat will take into account before varying or revoking a notice specifying an infrastructure project.
The Water Industry (Specified Infrastructure Projects) (English Undertakers) Regulations 2013 which came into force in June 2013 give both the Secretary of State for Environment, Food and Rural Affairs or Ofwat the power, in certain circumstances, to specify an infrastructure project in the water sector in England and Wales.
The Regulations have introduced a new regulatory framework to sit alongside the existing framework for water and sewerage undertakers. It enables the financing and delivery of large and complex water and sewerage infrastructure projects to be delivered by specific ‘infrastructure providers’ that are competitively tendered by the incumbent water or sewerage undertaker.
The Secretary of State or Ofwat may specify an infrastructure project to be put out to tender only if they are of the opinion that the infrastructure project is of a size or complexity that threatens the incumbent undertaker’s ability to provide services for its customers and that specifying the infrastructure project is likely to result in better value for money than would otherwise be the case.
By separating the associated risks and costs of financing and delivering such projects within a distinct infrastructure provider, the new regulatory framework is intended to provide overall better value for money for the financing and delivery of a project while keeping water or sewerage bills for customers as low as possible.
The guidance sets out the type of evidence the regulator will take into account when considering whether to specify an infrastructure project, including:
- whether it is desirable to have competitively tendered finance for the infrastructure project;
- whether the undertaker is likely to be able to raise the financing for the infrastructure project and if so, the likely impact of financing the project on its ability to finance its other functions, its credit rating, existing finance facilities and the cost of debt and equity.
Other evidence Ofwat could also take into account includes whether the risks involved in the project are different from the risks normally associated with the undertaker’s capital investment programme and whether the management and mitigation of the risks involve competencies, resources, assets or specialist skills that the undertaker may not have.
Where the infrastructure project is being constructed for the benefit of customers of two or more undertakers or water supply licensees, the regulator could also look at the likely complexity and the inherent risks associated with the interface between the customers and undertakers. Where the project is likely to span multiple price review periods, Ofwat could also consider the associated likely complexity and inherent risks.
Draft guidance was published for consultation last year – Ofwat said the new guidance takes into account the comments received. Thames Water’s Tideway Tunnel is currently the only instance where the process has been used.
Ofwat received five written responses to the consultation - all five referenced the Thames Tideway Tunnel project. The regulator has pointed out that the guidance it consulted on, and has now subsequently finalised, is generic and applies to all future projects - not just the Thames Tideway Tunnel. Ofwat said it had therefore not responded to any specific comments on the Thames Tideway Tunnel raised in response to the consultation.
The respondents were:
- Anonymous response
- Thamesbank
- Thames Water Utilities Limited
- Blue Green Independent Expert Team
- Martin Blaiklock, Infrastructure & Energy Project Finance Consultant
Defra consulted on reasons to specify the Thames Tideway Tunnel between 4 December 2013 and 6 January 2014, and specified the project on 23 May 2014.
Click here to download the guidance
Click here to download the summary of responses
Barhale has completed work on two separate Rapid Action Taskforce Spills projects it is carrying out for Severn Trent.
Börger UK, which has firmly established itself as a leading pump brand since it was set up in Staffordshire in 2004, has moved into bigger, brand-new premises in Shrewsbury.
HUBER Technology UK & Ireland are inviting people to register for their March webinar where they will be providing information about HUBER water intake screens for municipal and industrial applications.
Sulzer has launched a new global Center of Excellence (CoE) for Water Treatment Solutions - the CoE consolidates Sulzer’s wastewater treatment expertise in a unified and global manner.
Hear how Scottish Water has completed its £235 million Ayrshire Glasgow Resilience Project - customers across Greater Glasgow, Ayrshire and East Renfrewshire will now benefit from a more secure and resilient water supply.
Hear how United Utilities is accelerating its investment to reduce spills from storm overflows across the Northwest.
Find out more about the remarkable career opportunities on offer at WSP - scroll down to watch the inspirational video.