Ofwat's role
We are the economic regulator of the water industry in England and Wales and our duties include securing that companies can finance and fulfil their functions as specified in the Water Industry Act 1991.
One of the functions specified in the Act is that companies maintain and develop the security of water supplies.
We monitor the companies' performance but it is for them to manage their resources.
Who has responsibility for water resources in England and Wales?
The Environment Agency is the statutory body with a duty to manage water resources. The Environment Agency has produced national and regional water resource strategies which set out the pressures over the next 25 years. Water companies have a duty to maintain adequate supplies of water. They each have a 25-year water resource plan which complements the Agency's strategies and sets out a programme of measures to reconcile supply with anticipated demand.
The resource plans cover three areas:
- maintaining and developing the security of water supplies;
- keeping leakage to an economic level; and
- promoting the efficient use of water among customers (demand management).
For more information about the management of water resources in England and Wales please refer to the Environment Agency's website.
What is Ofwat's role?
Our role is to enable efficient water companies to finance the delivery of reliable water supplies to their customers. We set price limits every five years that reflect the investment each company needs to make to improve the security of its supply to its customers while keeping costs down.
We last set price limits in 2009. We assumed that around £2.7 billion of investment would be needed over the next five years to improve security of supply to existing and future customers. We monitor each company's progress in delivering improvements. This includes achieving an appropriate security of supply and reaching or maintaining a cost-effective level of leakage. We also monitor each company's use of water efficiency measures.
