WIREDGOV

Ofwat yesterday announces 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 have pre-qualified for ‘enhanced’ status based on the high quality of their business plans.

Both companies are now 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.

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 is also confirming 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 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.

Notes to editors

• The Water Services Regulation Authority (Ofwat) is the economic regulator of water and sewerage companies in England and Wales. It exercises its powers in a way that it judges will protect the interests of consumers, promote value and safeguard future water and sewerage services by allowing efficient companies to carry out their functions properly, and finance them.
• Further details on the price review process can be found www.ofwat.gov.uk/pricereview
• Water companies submitted their business plans to Ofwat on 2 December 2013. On 18 December 2013, Ofwat announced that companies’ proposals on risk and reward were not in line with its expectations. As a result, on 27 January 2014, Ofwat issued guidance on risk and reward, including a weighted average cost of capital of 3.85%.
• 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.
• On 4 April 2014, Ofwat will publish the full results of its risk-based review.
• The draft determinations for South West Water and Affinity Water will be published on 30 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
• This release may be of interest to those following these companies: Affinity Water, Anglian Water Services Ltd, Bristol Water plc, Cambridge Water Company plc, Cholderton and District Water Company Ltd, Dee Valley Water plc, Dŵr Cymru Cyfyngedig (Welsh Water), Northumbrian Water Ltd, Portsmouth Water plc, Sembcorp Bournemouth Water Ltd, Severn Trent Water Ltd, Southern Water Services Ltd, South Staffordshire Water plc, South West Water Ltd, Sutton & East Surrey Water plc, Thames Water Utilities Ltd, United Utilities Ltd, Wessex Water Services Ltd, and Yorkshire Water Services Ltd.
• Media enquiries to Ofwat Press Office on:
  Benedict Fisher 0121 644 7642 / benedict.fisher@ofwat.gsi.gov.uk  
  Harbinder Babra 0121 644 7616 / harbinder.babra@ofwat.gsi.gov.uk