Final determinations models

We use data models to calculate water companies’ price controls – and certain information we need to set those controls.

Below we’ve set out the models we have used to set the final determinations for all companies in England and Wales 2020 to 2025 . These include:

• past delivery models
• cost assessment models
• financial models
• risk and return models
• outcomes models
• bioresources models
• PR19 reconciliation models

We have updated our PR19 models map to help show how all the models work together.

Past delivery models

The purpose of the past delivery modelling suite is to perform the reconciliations of the 2014 price review incentive mechanisms operating for companies during 2015-20.

We will apply the reconciliation adjustments to companies’ 2020-25 price controls. We use the revenue and Regulatory Capital Value (RCV) adjustments produced by the reconciliation models as inputs for the PR19 financial model in the revenue adjustments feeder model and the RCV adjustments feeder model.

For each company we publish:

• a model for each reconciliation
• a revenue adjustments feeder model
• a RCV adjustments feeder model

We also publish a service incentive mechanism (SIM) model for the industry.

Company	Outcome delivery incentives	Land disposals	Wholesale Revenue Forecasting Incentive Mechanism	Total Expenditure reconciliation	Water trading	Residential retail revenue	Regulatory capital value adjustment model	Revenue adjustments model	Service incentive mechanism	Aggregation model	Enforcement adjustments model
Affinity Water	Outcome Delivery Incentives model – Affinity Water	Land Disposals model – Affinity Water	Wholesale Revenue Forecasting Incentive Mechanism model – Affinity Water	Total Expenditure reconciliation model – Affinity Water		Residential Retail Revenue model – Affinity Water	Regulatory capital value adjustment model – Affinity Water	Revenue adjustments model – Affinity Water
Anglian Water	Outcome Delivery Incentives model – Anglian Water	Land Disposals model – Anglian Water	Wholesale Revenue Forecasting Incentive Mechanism model – Anglian Water	Total Expenditure reconciliation model – Anglian Water		Residential Retail Revenue model – Anglian Water	Regulatory capital value adjustment model – Anglian Water	Revenue adjustments model – Anglian Water
Bristol Water	Outcome Delivery Incentives model – Bristol Water	Land Disposals model – Bristol Water	Wholesale Revenue Forecasting Incentive Mechanism model – Bristol Water	Total Expenditure reconciliation model – Bristol Water		Residential Retail Revenue model – Bristol Water	Regulatory capital value adjustment model – Bristol Water	Revenue adjustments model – Bristol Water
Hafren Dyfrdwy	Outcome Delivery Incentives model – Hafren Dyfrdwy	Land Disposals model – Hafren Dyfrdwy	Wholesale Revenue Forecasting Incentive Mechanism model – Hafren Dyfrdwy	Total Expenditure reconciliation model – Hafren Dyfrdwy		Residential Retail Revenue model – Hafren Dyfrdwy	Regulatory capital value adjustment model – Hafren Dyfrdwy	Revenue adjustments model – Hafren Dyfrdwy
Northumbrian Water	Outcome Delivery Incentives model – Northumbrian Water	Land Disposals model – Northumbrian Water	Wholesale Revenue Forecasting Incentive Mechanism model – Northumbrian Water	Total Expenditure reconciliation model – Northumbrian Water	Water Trading model – Northumbrian Water	Residential Retail Revenue model – Northumbrian Water	Regulatory capital value adjustment model – Northumbrian Water	Revenue adjustments model – Northumbrian Water
Portsmouth Water	Outcome Delivery Incentives model – Portsmouth Water	Land Disposals model – Portsmouth Water	Wholesale Revenue Forecasting Incentive Mechanism model – Portsmouth Water	Total Expenditure reconciliation model – Portsmouth Water	Water Trading model – Portsmouth Water	Residential Retail Revenue model – Portsmouth Water	Regulatory capital value adjustment model – Portsmouth Water	Revenue adjustments model – Portsmouth Water
SES Water	Outcome Delivery Incentives model – SES Water	Land Disposals model – SES Water	Wholesale Revenue Forecasting Incentive Mechanism model – SES Water	Total Expenditure reconciliation model – SES Water		Residential Retail Revenue model – SES Water	Regulatory capital value adjustment model – SES Water	Revenue adjustments model – SES Water
Severn Trent Water	Outcome Delivery Incentives model – Severn Trent Water	Land Disposals model – Severn Trent Water	Wholesale Revenue Forecasting Incentive Mechanism model – Severn Trent Water	Total Expenditure reconciliation model – Severn Trent Water		Residential Retail Revenue model – Severn Trent Water	Regulatory capital value adjustment model – Severn Trent Water	Revenue adjustments model – Severn Trent Water
South East Water	Outcome Delivery Incentives model – South East Water	Land Disposals model – South East Water	Wholesale Revenue Forecasting Incentive Mechanism model – South East Water	Total Expenditure reconciliation model – South East Water		Residential Retail Revenue model – South East Water	Regulatory capital value adjustment model – South East Water	Revenue adjustments model – South East Water
Southern Water	Outcome Delivery Incentives model – Southern Water	Land Disposals model – Southern Water	Wholesale Revenue Forecasting Incentive Mechanism model – Southern Water	Total Expenditure reconciliation model – Southern Water		Residential Retail Revenue model – Southern Water	Regulatory capital value adjustment model – Southern Water	Revenue adjustments model – Southern Water  Revenue adjustments model – post profiling 1 – Southern Water Revenue adjustments model – post profiling 2 -Southern Water Revenue adjustments model – post profiling 3 – Southern Water Revenue adjustments model – profiled adjustments aggregation – Southern Water			Enforcement adjustments model – Southern Water
South Staffs Water	Outcome Delivery Incentives model – South Staffs Water	Land Disposals model – South Staffs Water	Wholesale Revenue Forecasting Incentive Mechanism model – South Staffs Water	Total Expenditure reconciliation model – South Staffs Water		Residential Retail Revenue model – South Staffs Water	Regulatory capital value adjustment model – South Staffs Water	Revenue adjustments model – South Staffs Water
South West Water	Outcome Delivery Incentives model – South West Water Outcome Delivery Incentives model – Bournemouth Water	Land Disposals model – South West Water Land Disposals model – Bournemouth Water	Wholesale Revenue Forecasting Incentive Mechanism model – South West Water Wholesale Revenue Forecasting Incentive Mechanism model – Bournemouth Water	Total Expenditure reconciliation model – South West Water Total Expenditure reconciliation model – Bournemouth Water		Residential Retail Revenue model – South West Water Residential Retail Revenue model – Bournemouth Water	Regulatory capital value adjustment model – South West Water Regulatory capital value adjustment model – Bournemouth Water	Revenue adjustments model – South West Water Revenue adjustments model – Bournemouth Water		South West & Bournemouth aggregation model – South West Water
Thames Water	Outcome Delivery Incentives model – Thames Water	Land Disposals model – Thames Water	Wholesale Revenue Forecasting Incentive Mechanism model – Thames Water	Total Expenditure reconciliation model – Thames Water   Total Expenditure reconciliation model – Thames Tideway Tunnel	Water Trading model – Thames Water	Residential Retail Revenue model – Thames Water	Regulatory capital value adjustment model – Thames Water	Revenue adjustments model – Thames Water Revenue adjustments model – post profiling 1 – Thames Water Revenue adjustments model – post profiling 2 – Thames Water Revenue adjustments model – post profiling 3 – Thames Water Revenue adjustments model – profiled adjustments aggregation – Thames Water
Dŵr Cymru	Outcome Delivery Incentives model – Dŵr Cymru	Land Disposals model – Dŵr Cymru	Wholesale Revenue Forecasting Incentive Mechanism model – Dŵr Cymru	Total Expenditure reconciliation model – Dŵr Cymru		Residential Retail Revenue model – Dŵr Cymru	Regulatory capital value adjustment model – Dŵr Cymru	Revenue adjustments model – Dŵr Cymru
United Utilities	Outcome Delivery Incentives model – United Utilities Water	Land Disposals model – United Utilities Water	Wholesale Revenue Forecasting Incentive Mechanism model – United Utilities Water	Total Expenditure reconciliation model – United Utilities Water		Residential Retail Revenue model – United Utilities Water	Regulatory capital value adjustment model – United Utilities Water	Revenue adjustments model – United Utilities Water
Wessex Water	Outcome Delivery Incentives model – Wessex Water	Land Disposals model – Wessex Water	Wholesale Revenue Forecasting Incentive Mechanism model – Wessex Water	Total Expenditure reconciliation model – Wessex Water		Residential Retail Revenue model – Wessex Water	Regulatory capital value adjustment model – Wessex Water	Revenue adjustments model – Wessex Water
Yorkshire Water	Outcome Delivery Incentives model – Yorkshire Water	Land Disposals model – Yorkshire Water	Wholesale Revenue Forecasting Incentive Mechanism model – Yorkshire Water	Total Expenditure reconciliation model – Yorkshire Water		Residential Retail Revenue model – Yorkshire Water	Regulatory capital value adjustment model – Yorkshire Water	Revenue adjustments model – Yorkshire Water
Industry									Business retail SIM model Residential retail SIM model

Cost assessment models

The aim of cost assessment modelling suite is to assess business plan costs and to set efficient totex allowances.

We have published the following models.

1) We have a suite of four models for wholesale water, wholesale wastewater and residential retail.

• FM_RR1, FM_WW1 and FM_WWW1 are the master datasets including costs and costs drivers data provided by companies.
• FM_RR2, FM_WW2 and FM_WWW2 calculate the catch-up efficiency challenge.
• FM_RR3, FM_WW3 and FM_WWW3 calculate the forecast of costs drivers that are used in our econometric models to explain our modelled based costs.
• FM_RR4, FM_WW4 and FM_WWW4 calculate efficient base costs and efficient totex per price control by adding the different building blocks of our totex assessment.

2) We also present three Stata do files used to estimate the coefficients of our econometric models in the following areas.

• Wholesale water
• Wholesale wastewater
• Residential retail

3) We also present the following workbooks which include costs drivers that are obtained from external sources:

• Density indices: these models use local authority data on ONS population and density by local authority areas to construct company specific population density indicators.
• Households’ forecasts: This model calculates the number of projected ONS households per each company as well as the annual growth rates for the AMP7 period.

3) Totex reported by companies: This workbook estimates estimate the proportions we use to allocate wholesale modelled base costs allowances into each price control. The proportions are based on companies’ business plans that were submitted in April 2019.

4) Base adjustment model: this model makes further adjustments to company wholesale base cost allowances.

5) Unmodelled base costs feeder models: This is a suite of models that sets out our assessment and allowance for abstraction charges; business rates; third party cost; pension deficit recovery costs; traffic management act costs; other costs including third party services, other cash items, industrial emissions directorate costs and non-s185 diversion costs.

7) Enhancement feeder models: the enhancement feeder models include our assessment of enhancement costs.

8) Company specific efficiency challenge feeder model: this model is used to determine the company specific efficiency challenge that is used in the enhancement shallow dives and deep dives assessment.

9) Reallocations feeder model: this file provides information on how costs have been reallocated from one enhancement cost category to another enhancement cost category or to base costs. We show the reallocations starting with the data that each company submitted before its draft determination and not the data it submitted with its representations to the draft determination.

10) Enhancement opex implicit allowance feeder model: this model estimates the enhancement opex that needs to be removed from our efficient modelled base costs. The reason is that we assess enhancement costs at totex level.

11) Cost adjustment claims feeder models: these models include our assessment of companies’ cost adjustment claims. There is one model for each company.

12) Aggregator files: These are intermediary files and do not present assessment. These workbooks aggregate information from three of our building blocks of cost assessment: enhancement, unmodelled base costs and costs adjustment claims.

13) Company view of totex: in this model we calculate the totex for cost sharing using September 2018 and August 2019 companies’ submissions.

14) Cost sharing rates: this suite of models calculate the cost sharing rates. There is one model per each regulated company.

15) Business retail feeder model: this model calculates the efficient cost allowance for business retail.

16) Opex lease adjustments: this model calculates the adjustment to allowed operating expenditure (opex) to reflect operating leases which are reclassified as capital expenditure under new accounting regulations.

17) Separate price controls: this suite of models present our allowances for the following separate price controls: Havant Thicket for Portsmouth Water and Thames Tideway for Thames Water.

18) Opex/Capex split: This model is used to calculate the split of operating expenditure (opex) and capital expenditure (capex) to apply to our allowances. The model calculates company proportions of base and enhancement opex and capex using August 2019 representation data . The proportions are applied to our base and enhancement allowances and then specific items are added back. This gives the total £ million allocated to opex and capex and revised proportions are calculated to feed into the cost sharing model.

19) Grants and contributions: this suite of models calculates the grants and contributions for input to the financial model

20) A flow diagram to explain our cost assessment feeder models system

1. Wholesale water, wholesale wastewater and residential retail models

Wholesale water models

Feeder model 1: Wholesale water – Master data

Feeder model 2: Wholesale water – Water Catch up adjustment

Feeder model 3: Wholesale water: Forecast of water cost drivers

Feeder model 4: Wholesale water – Water resources and water N+ cost allowances

Wholesale wastewater models

Feeder model 1: Wholesale wastewater – Master data

Feeder model 2: Wholesale wastewater – Wastewater Catch up adjustment

Feeder model 3: Wholesale wastewater: Forecast of wastewater cost drivers

Feeder model 4: Wholesale wastewater – Bioresources and wastewater N+ cost allowances

Residential retail models

Feeder model 1: Retail – Master data

Feeder model 2: Retail – Catch up adjustment

Feeder model 3: Retail – Forecast of retail cost drivers

Feeder model 4: Retail cost allowances

2. Stata do files

Stata do files: Retail

Stata do files: Wholesale water

Stata do files: Wholesale wastewater

3. Cost Driver workbooks

Household forecast ONS data

Weighted average density index – forecast

Weighted average density index – historical

4. Totex reported by companies

Totex reported by companies

5. Base adjustment model

Base adjustment model

6. Unmodelled base costs feeder models

Unmodelled costs feeder model: Abstraction

Unmodelled costs feeder model: Business Rates

Unmodelled costs feeder model: Other Costs

Unmodelled costs feeder model: Pension deficit repair costs

Unmodelled costs feeder model: Traffic management act

7. Enhancement feeder models

Water

Wholesale Water Enhancement feeder model: Drinking water protection

Wholesale Water Enhancement feeder model: Ecological improvements

Wholesale Water Enhancement feeder model: Eels regulations

Wholesale Water Enhancement feeder model: Freeform

Wholesale Water Enhancement feeder model: Improvement to river flows

Wholesale Water Enhancement feeder model: Invasive species

Wholesale Water Enhancement feeder model: Investigations

Wholesale Water Enhancement feeder model: Lead standards

Wholesale Water Enhancement feeder model: Metering

Wholesale Water Enhancement feeder model: Raw water deterioration

Wholesale Water Enhancement feeder model: Resilience

Wholesale Water Enhancement feeder model: Supply demand balance

Wholesale Water Enhancement feeder model: Security

Wholesale Water Enhancement feeder model: Strategic regional

Wholesale Water Enhancement feeder model: Taste, odour, colour

Wholesale Water Enhancement feeder model: Water framework directive

Wastewater

Wholesale Wastewater Enhancement feeder model: Chemicals investigations

Wholesale Wastewater Enhancement feeder model: Chemicals removal

Wholesale Wastewater Enhancement feeder model: Conservation drivers

Wholesale Wastewater Enhancement feeder model: Discharge relocation

Wholesale Wastewater Enhancement feeder model: Eels regulations

Wholesale Wastewater Enhancement feeder model: Event duration monitoring

Wholesale Wastewater Enhancement feeder model: First time sewerage

Wholesale Wastewater Enhancement feeder model: Flow monitoring

Wholesale Wastewater Enhancement feeder model: Flow to full schemes

Wholesale Wastewater Enhancement feeder model: Freeform

Wholesale Wastewater Enhancement feeder model: Groundwater schemes

Wholesale Wastewater Enhancement feeder model: Investigations

Wholesale Wastewater Enhancement feeder model: Monitoring flows at combined sewer over flow events

Wholesale Wastewater Enhancement feeder model: N-removal

Wholesale Wastewater Enhancement feeder model: Odour

Wholesale Wastewater Enhancement feeder model: P-removal technology investigations

Wholesale Wastewater Enhancement feeder model: P-removal

Wholesale Wastewater Enhancement feeder model: Resilience

Wholesale Wastewater Enhancement feeder model: Sanitary parameters

Wholesale Wastewater Enhancement feeder model: Security

Wholesale Wastewater Enhancement feeder model: Sludge

Wholesale Wastewater Enhancement feeder model: Spill frequency

Wholesale Wastewater Enhancement feeder model: Storm tank capacity

Wholesale Wastewater Enhancement feeder model: Ultraviolet disinfection

8. Company specific efficiency challenge feeder model

Company efficiency factor model

9. Reallocations feeder model

Feeder model: Enhancement Reallocations

10. Enhancement opex implicit allowance feeder model

Enhancement opex implicit allowance model

11. Cost adjustment claims feeder models

Company	Cost adjustment claims feeder models
Affinity Water	Cost adjustment claim feeder model Affinity Water
Anglian Water	Cost adjustment claim feeder model Anglian Water
Bristol Water	Cost adjustment claim feeder model Bristol Water
Hafren Dyfrdwy	Cost adjustment claim feeder model Hafren Dyfrdwy
Northumbrian Water	Cost adjustment claim feeder model Northumbrian Water
Portsmouth Water	Cost adjustment claim feeder model Portsmouth Water
SES Water	Cost adjustment claim feeder model SES Water
Severn Trent Water	Cost adjustment claim feeder model Severn Trent Water
South East Water	Cost adjustment claim feeder model South East Water
Southern Water	Cost adjustment claim feeder model Southern Water
South Staffs Water	Cost adjustment claim feeder model South Staffs Water
South West Water	Cost adjustment claim feeder model South West Water
Thames Water	Cost adjustment claim feeder model Thames Water
Dŵr Cymru	Cost adjustment claim feeder model Dŵr Cymru
United Utilities	Cost adjustment claim feeder model United Utilities
Wessex Water	Cost adjustment claim feeder model Wessex Water
Yorkshire Water	Cost adjustment claim feeder model Yorkshire Water

12. Aggregator files

Feeder model: Enhancement aggregator

Feeder model: Cost Adjustment Claims aggregator

Feeder model: Unmodelled costs aggregator

13. Company view of totex

Company view of totex

14. Cost sharing rates

Company	Cost sharing models
Affinity Water	Cost sharing model Affinity Water
Anglian Water	Cost sharing model Anglian Water
Bristol Water	Cost sharing model Bristol Water
Hafren Dyfrdwy	Cost sharing model Hafren Dyfrdwy
Northumbrian Water	Cost sharing model Northumbrian Water
Portsmouth Water	Cost sharing model Portsmouth Water
SES Water	Cost sharing model SES Water
Severn Trent Water	Cost sharing model Severn Trent Water
South East Water	Cost sharing model South East Water
Southern Water	Cost sharing model Southern Water
South Staffs Water	Cost sharing model South Staffs Water
South West Water	Cost sharing model South West Water
Thames Water	Cost sharing model Thames Water
Dŵr Cymru	Cost sharing model Dŵr Cymru
United Utilities	Cost sharing model United Utilities
Wessex Water	Cost sharing model Wessex Water
Yorkshire Water	Cost sharing model Yorkshire Water

15. Business retail feeder model

Feeder Model: Business Retail

16. Opex lease adjustments

Opex lease adjustments model

17. Separate controls

Cost adjustment claim feeder model Havant Thicket (PRT) separate control

Cost adjustment claim feeder model Thames Tideway separate control

18. Opex/Capex split

Opex/Capex split model

19. Grants and contributions

Company	Grants and contributions models
Affinity Water	Grants and Contributions model – Affinity Water
Anglian Water	Grants and Contributions model – Anglian Water
Bristol Water	Grants and Contributions model – Bristol Water
Hafren Dyfrdwy	Grants and Contributions model – Hafren Dyfrdwy
Northumbrian Water	Grants and Contributions model – Northumbrian Water
Portsmouth Water	Grants and Contributions model – Portsmouth Water
SES Water	Grants and Contributions model – SES Water
Severn Trent Water	Grants and Contributions model – Severn Trent Water
South East Water	Grants and Contributions model – South East Water
Southern Water	Grants and Contributions model – Southern Water
South Staffs Water	Grants and Contributions model – South Staffs Water
South West Water	Grants and Contributions model – South West Water
Thames Water	Grants and Contributions model – Thames Water
Dŵr Cymru	Grants and Contributions model – Dŵr Cymru
United Utilities	Grants and Contributions model – United Utilities
Wessex Water	Grants and Contributions model – Wessex Water
Yorkshire Water	Grants and Contributions model – Yorkshire Water

20. Cost assessment feeder models flow diagram

Cost assessment feeder model flow diagram

Financial models

The purpose of the financial modelling suite is to set price control limits for the 2019 price review and to test company financeability. It is also used to test return on Regulated Equity in different scenarios.

The suite consists of:

• the main financial model
• a balance sheet feeder model
• a pension feeder model.

The purpose of both the balance sheet and pension feeder models are to extract data from the business plan tables and manipulate it to produce the appropriate inputs to be used the financial model. We publish a financial model, a balance sheet feeder model and a pension feeder model for each company.

We also publish an inflation model for the industry.

At draft determination we also published a cost sharing and a grants and contributions model. These can now be found in the cost assessment model suite.

Company	Financial models	Appointee Balance Sheet model	Pensions model	Inflation model
Affinity Water	Financial model – Affinity Water	Appointee Balance Sheet model – Affinity Water	Pensions model – Affinity Water
Anglian Water	Financial model – Anglian Water	Appointee Balance Sheet model- Anglian Water	Pensions model – Anglian Water
Bristol Water	Financial model – Bristol Water	Appointee Balance Sheet model – Bristol Water	Pensions model – Bristol Water
Hafren Dyfrdwy	Financial model – Hafren Dyfrdwy	Appointee Balance Sheet model – Hafren Dyfrdwy	Pensions model – Hafren Dyfrdwy
Northumbrian Water	Financial model – Northumbrian Water	Appointee Balance Sheet model – Northumbrian Water	Pensions model – Northumbrian Water
Portsmouth Water	Financial model – Portsmouth Water Financial model – Portsmouth Water with Havant	Appointee Balance Sheet model – Portsmouth Water	Pensions model – Portsmouth Water
SES Water	Financial model – SES Water	Appointee Balance Sheet model – SES Water	Pensions model – SES Water
Severn Trent Water	Financial model – Severn Trent Water	Appointee Balance Sheet model – Severn Trent Water	Pensions model – Severn Trent Water
South East Water	Financial model – South East Water	Appointee Balance Sheet model – South East Water	Pensions model – South East Water
Southern Water	Financial model – Southern Water	Appointee Balance Sheet model – Southern Water	Pensions model – Southern Water
South Staffs Water	Financial model – South Staffs Water	Appointee Balance Sheet model – South Staffs Water	Pensions model – South Staffs Water
South West Water	Financial model – South West Water	Appointee Balance Sheet model – South West Water	Pensions model – South West Water
Thames Water	Financial model – Thames Water	Appointee Balance Sheet model – Thames Water	Pensions model – Thames Water
Dŵr Cymru	Financial model – Dŵr Cymru	Appointee Balance Sheet model – Dŵr Cymru	Pensions model – Dŵr Cymru
United Utilities	Financial model – United Utilities	Appointee Balance Sheet model – United Utilities	Pensions model – United Utilities
Wessex Water	Financial model – Wessex Water	Appointee Balance Sheet model – Wessex Water	Pensions model – Wessex Water
Yorkshire Water	Financial model – Yorkshire Water	Appointee Balance Sheet model – Yorkshire Water	Pensions model – Yorkshire Water
Industry				Inflation model

Risk and return models

The purpose of the Pay As You Go (PAYG) models is to provide companies with the calculation of our technical adjustment to PAYG rates.

We apply the adjustment to align PAYG rates with the split of operating and capital expenditure in allowed totex to maintain the company’s approach to setting PAYG rates.

We also show any further adjustments we make to PAYG rates. For example, for financeability.

For each company we publish a model that sets out a reconciliation between the PAYG rates applied in our draft determinations for each wholesale control and the PAYG rates applied in our final determination. Where we intervene in Regulatory Capital Value (RCV) run off rates, we also set out a reconciliation of RCV run off rates between draft and final determinations.

The Cost of Capital model sets out how we have calculated our allowed return on capital, based on point estimates of parameters. It provides the inputs used by the PR19 Financial Model to generate the allowed revenue for financing costs in the wholesale controls.

Company	Pay as you go (PAYG) models	Cost of capital model
Affinity Water	Pay as you go (PAYG) model – Affinity Water
Anglian Water	Pay as you go (PAYG) model – Anglian Water
Bristol Water	Pay as you go (PAYG) model – Bristol Water
Hafren Dyfrdwy	Pay as you go (PAYG) model – Hafren Dyfrdwy
Northumbrian Water	Pay as you go (PAYG) model – Northumbrian Water
Portsmouth Water	Pay as you go (PAYG) model – Portsmouth Water
SES Water	Pay as you go (PAYG) model – SES Water
Severn Trent Water	Pay as you go (PAYG) model – Severn Trent Water
South East Water	Pay as you go (PAYG) model – South East Water
Southern Water	Pay as you go (PAYG) model – Southern Water
South Staffs Water	Pay as you go (PAYG) model – South Staffs Water
South West Water	Pay as you go (PAYG) model – South West Water
Thames Water	Pay as you go (PAYG) model – Thames Water
Dŵr Cymru	Pay as you go (PAYG) model – Dŵr Cymru
United Utilities	Pay as you go (PAYG) model – United Utilities
Wessex Water	Pay as you go (PAYG) model – Wessex Water
Yorkshire Water	Pay as you go (PAYG) model – Yorkshire Water
Industry		Weighted average cost of capital model

Outcomes models

Outcome Delivery Incentive (ODI) Rates customer facing and ODI Rates Non-customer facing

The purpose of the common ODI rate models are to calculate underperformance and outperformance rates.

• For customer facing performance commitments, the model sets out our triangulation of ODI rates, using industry values, equivalent ODI rates for 2015-20, and information from company’s customer research.
• For non-customer facing performance commitments, the model sets out our calculation of, and interventions based on, the reasonable range. The models also provide our calculation of Tier 1 ODI rates for unplanned outage and leakage.

ODI rates customer facing performance committments model

ODI rates non-customer facing performance committments model

Enhanced ODI Thresholds and Rates

The purpose of the enhanced ODI model is to calculate underperformance and outperformance enhanced ODI rates and enhanced thresholds.

The model covers the full set of performance commitments for which companies proposed enhanced ODIs – leakage, pollution, internal sewer flooding, per capita consumption and water supply interruptions.

It provides:

• our calculation of the benchmarking externality input used to set enhanced ODI rates
• the calculation of the frontier shift used to determine enhanced thresholds.

Enhanced ODI Thresholds and Rates

Bioresources models

We use the following spreadsheet models to calculate the bioresources revenue to remunerate fixed costs for companies.

The aim of those models is to illustrate the methodology we have used to classify companies’ revenues as either fixed or variable. The methodology ensures that where sludge production varies the incremental change in revenues that arises is aligned to incremental costs.

Getting the alignment between incremental revenues and incremental costs right is key to ensuring that the company is correctly remunerated, if there is a difference between the sludge companies actually produce and what they had forecast.

Company	Bioresources models
Anglian Water	Bioresources revenue to remunerate fixed costs – Anglian Water
Dŵr Cymru	Bioresources revenue to remunerate fixed costs – Dŵr Cymru
Northumbrian Water	Bioresources revenue to remunerate fixed costs – Northumbrian Water
Severn Trent Water	Bioresources revenue to remunerate fixed costs – Severn Trent Water
Southern Water	Bioresources revenue to remunerate fixed costs – Southern Water
South West Water	Bioresources revenue to remunerate fixed costs – South West Water
Thames Water	Bioresources revenue to remunerate fixed costs – Thames Water
United Utilities	Bioresources revenue to remunerate fixed costs – United Utilities
Wessex Water	Bioresources revenue to remunerate fixed costs – Wessex Water
Yorkshire Water	Bioresources revenue to remunerate fixed costs – Yorkshire Water

PR19 reconciliation models

We have published models (‘PR19 reconciliation models’) we will use when we next set price controls in 2024 for how we will take reconcile companies’ performance during 2020-25.