In April 2021 we consulted on proposed amendments to the conditions that attach to the project licence of Bazalgette Tunnel Limited (Tideway).
Subsequent to the above consultation, Tideway asked us to consider a further licence amendment, namely, to change how the Financing Cost Adjustment Mechanism (FCAM) operated. We have provisionally agreed to amend how the FCAM is calculated and applied in the future. We have, however, taken a decision in the round and in the context of our previous decisions on the impact of Covid-19. In particular we are no longer proposing to provide a different depreciation rate for Covid-19 expenditure.
It is proposed that the FCAM calculation should, in future, be based on the same inputs as are applied when calculating Tideway’s revenue charge for 2022/23 so that past customer benefits accrued are preserved.
This document focuses on the changes to the FCAM but also provides a recap and update on our position with respect to the impact of Covid-19 on the project.
The Water Industry (Specified Infrastructure Projects) (English Undertakers) Regulations 2013 (the SIP Regulations) apply, modified or otherwise, the Water Industry Act 1991 (the Act) to the regulation of infrastructure providers. Under section 17IA of the Act (as applied by the SIP Regulations), we are able to modify the conditions of an infrastructure provider’s licence if it agrees to the changes we are proposing to make. Tideway has provided its indicative consent to the changes proposed in this document.
This document constitutes a Notice under section 17IA (3) of the Act (as applied by the SIP Regulations). Accordingly, it sets out the proposed licence modifications and their effect and sets out our reasons for proposing these modifications. It also invites comment on these proposals.
Where to send submissions
If you wish to make representations on this proposal, please submit your representations by email to [email protected]
Representations must be received by Ofwat no later than 17.00 hours on 17 January 2022.