On 2 December 2013, each water and sewerage company and water only company in England and Wales submitted five-year business plans to us. These plans set out how much companies are proposing to charge their customers for the period 2015-20 and what level of service they will deliver for these prices.
We have assessed business plans across key elements (our ‘risk-based review’). Below we have published the outcome of our risk-based review and further information about the next steps in the 2014 price review.
Enhanced companies
In March 2014, we pre-qualified South West and Affinity for ‘enhanced’ status based on the high quality of their business plans. Since then, both companies have accepted our guidance on risk and reward, including the cost of capital. They also committed to a limited number of changes to improve their plans. We are satisfied that with these changes their plans will deliver the best outcomes for customers.
We confirm these two companies have gained enhanced status. We will announce our draft determination on limits on prices for both companies at the end of April. The price limits will cover the period 2015 to 2020.
On 4 April we confirmed that Affinity Water was enhanced and that this was subject to it finalising one remaining action by 11 April. We now confirm that Affinity Water has completed this action. As an enhanced company we will publish Affinity Water’s draft determination on 30 April.
Non-enhanced companies
Sixteen other companies did not qualify for enhanced status. They will now need to improve their business plans to deliver the best outcomes for customers. We will announce our draft determinations on limits on prices for these companies in June or August. The timing will depend on the amount of work companies need to do to improve their plans.
We have published a range of information to help non-enhanced companies make improvements to their plans.
We also invited all companies to attend a series of workshops to help them in considering where their plans might be improved.
Information for all companies
Alongside the outcome of risk-based review, we are publishing further information for all companies. This information confirms our approach, or provides guidance to companies, on a number of aspects of price setting.
Documents and further information
- Setting price controls for 2015-20 – guidance for companies on producing default tariffs
- Service incentive mechanism (SIM) for 2015 onwards – conclusions
- Setting price controls for 2015-20 – risk-based review recommendations to Ofwat’s Board about companies’ business plans
- Setting price controls for 2015-20 – wholesale cost assessment
- Setting price controls for 2015-20 – further information on reconciling 2010-15 performance
- Revised data table requirements following Ofwat’s risk-based review
- Workshops for non-enhanced companies following the outcomes of our risk-based review
- Template for gap analysis for non-enhanced companies