Water industry regulator Ofwat has announced that the 'costs principle', widely cited as creating an inefficient barrier to competition, is to be replaced.
The costs principle is used to determine the charges paid by licensed water suppliers to the water companies for a supply of water to serve their customers is to be replaced.
Currently the charges payable are fixed in accordance with the principle – which allows the water company to recover any relevant expenses reasonably incurred, together with the appropriate amount in respect of qualifying expenses and a reasonable return, from the licensee.
The amount is limited to the extent that the sums exceed any financial benefits which the water company receives as a result of the supplier supplying water to the premises of relevant customers.
The approach previously taken under the costs principle was a ‘retail-minus’ approach. To calculate an access price the water company started with the retail price to customers, subtracted any retail costs that were deemed avoidable, reducible or recoverable in some other way and then added back on any expenses of dealing with the licensee, as opposed to the customer.
Widely cited as creating an inefficient barrier to competition, the costs principle will eventually be removed from legislation under new provisions in the Water Act 2014 and replaced with a new charging regime. The regime will be based on Ofwat charging rules developed in the light of Government charging guidance - the Government has already published a set of charging principles setting the direction for the new regime.
From February 2015, when new charges are published for the provision of wholesale water and wastewater services by the water companies, Ofwat will put transparent wholesale charges in place.
The regulator intends to set access prices in line with a bottom-up wholesale charging approach in any determinations relating to non-household retail access to wholesale services referred to Ofwat from now on.
Ofwat now expects the water companies in England and Wales to consider moving away from a retail-minus approach when approached by water supply licensees for bundled access prices.
Enpure Ltd and Clean TeQ Water Ltd have announced a collaboration agreement to bring Clean TeQ Water's Moving Bed Ion Exchange-based nutrient removal technologies to water utilities across the UK.
Near-real-time microbial monitoring of wastewater discharge and bathing waters is now possible thanks to the BactoSense ID solution created by Swiss-based bNovate Technologies.
ABB has launched AquaMaster+™, a digital platform for smart water network management, designed to help water utilities monitor, analyze and manage their water networks, preventing pipeline water losses and optimizing operations.
Craig Nienaber, Business Development Manager for Safe Access Solutions (SAS) at HUBER Technology, explores why the company is seeing a growing level of interest in its safe access solutions for critical infrastructure providers, including their application in wastewater treatment assets.
Southern Water has released film and images showing what it’s like to walk inside Hampshire’s expanded Yew Hill underground reservoir for the very last time, before it gets filled with water.
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.