Initial assessment of business plans – cost assessment models

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

The aim of cost assessment modelling suite is to assess companies’ business plan costs and calculate an efficient total expenditure allowance.

We publish the following models.

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

2.Cost adjustment claim feeder models: these models include our assessment of companies’ cost adjustment claims. There is one model per company that submitted cost claims.

3. Unmodelled base costs and other costs feeder models: This is a suite of models that sets out our assessment and allowance for Abstraction charges, Business rates, Third party costs, Pension deficit recovery costs, Traffic management act costs.

4. Aggregator files: These are intermediary files and do not present assessment.

5.Reallocations aggregator: This file includes costs that we have reallocated from one enhancement line to another enhancement line or to base costs.

6. Thames Tideway separate control: Includes our assessment of costs submitted as part of the Thames tideway separate control for Thames Water.

7. 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.
• FM_WW2 and FM_WWW2 calculate the catch up efficiency challenge.
• FM_RR3, FM_WW3 and FM_WWW3 determine the forecast of our explanatory variables. We use them to set efficient costs from our econometric model.
• FM_RR4, FM_WW4 and FM_WWW4 calculate efficient base costs and efficient totex per price control. We do this by adding together our efficient modelled costs, any enhancement costs, cost adjustment claims, unmodelled base costs.  In retail we also calculate the forward looking catch up challenge.
• Three do files that calculate the coefficients for our econometric models.

Enhancement feeder models

Water

Wastewater

Cost adjustment claim feeder models

Unmodelled base costs and other costs feeder models

Aggregator files

Reallocations aggregator

Thames Tideway separate control

Wholesale water models

Wholesale wastewater

Residential retail

Supporting files for econometric modelling