Ofwat has launched a new consultation on its proposed forward programme of work for 2021-22.
Ofwat has launched a new consultation on its proposed forward programme of work for 2021-22.
The consultation document sets out the work the water sector regulator is planning to do over the financial year 2021-22 to deliver on the three central goals in its strategy of:
- Transforming company performance.
- Driving companies to meet longterm challenges.
- For water companies to demonstrate a wider public purpose
On transforming company performance, while the paper acknowledges progress made by the water companies, it says Ofwat has also seen examples of very poor performance, particularly in terms of a number of environmental outcomes, and that the regulator remains concerned about the operational and financial resilience of some companies.
Commenting on long-term challenges, Ofwat says:
“We recognise the need to attract the right kind of investment for the long term, looking beyond traditional hard infrastructure solutions, and with an appropriate level of return to maximise the opportunities to deliver for customers and the environment up to and beyond the next price review period.”
The regulator clearly expects to see more progress made on greater public value, commenting:
“While there are many examples of the positive recognition and awareness of the sector’s wider public purpose, for example through companies’ responses to Covid-19, we are yet to see this translate into all aspects of company culture and day-to-day operational and financial decision-making.”
Ofwat’s plans for April to June 2021 include:
- reviewing the Outline Business Case for the first Direct Procurement for Customers project to assess its suitability for DPC
- consulting on its provisional decisions on company proposals for a green recovery
- consulting on initial thinking as to how it regulates multi-party, multi-sector, largescale water resources infrastructure solutions
- finalising the voluntary operational emissions reporting requirements for net zero
- publishing the results of its review of the bioresources market
In preparation for the next price review at PR24, in the first three months of 2021-22 the regulator will also consult on draft findings from its review of PR14 and publish a consultation on a high level framework for key PR24 areas, including its initial views on the adoption of nature-based solutions.
In addition to setting out its draft forward programme for 2021-22, Ofwat is also working on a multi-year plan to the end of AMP7 in March 2025. In the earlier years of the price review cycle, Ofwat says it also needs to focus on the following:
- Next Water Industry National Environment Programme (WINEP in England; NEP in Wales):
- Net zero: continuing to develop a richer understanding of company progress and performance on reducing greenhouse gas emissions
- Strategic water resources schemes: keeping up the momentum on the shape and delivery of schemes that develop strategic solutions on water resource management for the long term.
- Company performance: continuing to improve and keep up-to-date its understanding of company performance
The regulator is also aiming to have widened opportunities for investors: through the development of new approaches to strategic development of infrastructure in the context of the RAPID and DPC schemes, including through the development of nature based solutions.
The paper says Ofwat’s strategy reflects its commitment to drive improvements in outcomes for consumers and society and that Ofwat “will ensure that regulatory burdens are kept to a minimum while ensuring that this goal is met.”
Deadline to submit responses to the consultation is Thursday,18 February 2021 - click here to download Ofwat’s forward programme 2021-22 – draft for consultation
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