Competition and Markets Authority referrals

In December 2019 we published our final decisions on the outcomes water companies in England and Wales should deliver for customers and the environment, and the price that customers will pay, during 2020-25.

As part of the price setting process, each company had until 15 February 2020 to decide whether to appeal our decisions to the Competition and Markets Authority (CMA). Four companies out of 17 decided to appeal: Anglian Water, Bristol Water, Northumbrian Water and Yorkshire Water.

The appeal process normally takes six months. However, due to the impact of Covid-19, we agreed to the CMA’s request to extend this to 12 months (notice available in the link).

On 19 March 2020 we announced we had made our submission to the CMA. We set out our submission below.

The four companies then submitted and presented details of their grounds for review in April 2020.

Following this, on 4 May 2020, we set out our detailed submission to the CMA in response.

The CMA released and consulted on their Provisional Findings from their review for the four companies on 29 September 2020. We submitted our response to their consultation 27 October 2020.

Submission – 16 November 2020

Reference of the PR19 final determinations: Introduction to our response to provisional findings responses
Reference of the PR19 final determinations: Costs and outcomes – response to provisional findings responses
Reference of the PR19 final determinations: Risk and return – response to provisional findings responses

Supporting documents

Europe Economics – Comments on Water Company and Third Party Submissions
Europe Economics – Note responding to points from companies
Wright and Mason – Comments on ENA and Oxera

Submission – 27 October 2020

Main documents

Reference of the PR19 final determinations: Overview – response to CMA provisional findings
Reference of the PR19 final determinations: Risk and Return – response to CMA provisional findings – revised version published 3 November 2020
Reference of the PR19 final determinations: Costs and Outcomes – response to CMA provisional findings
Reference of the PR19 final determinations: Fundamental errors of approach – response to CMA provisional findings

Supporting documents

Europe Economics – Responses to the CMA’s Provisional Findings regarding WACC in the water appeals – October 2020
Europe Economics – Additional evidence relating to frontier shift – October 2020
PwC – Review of the relationship between financing allowances and water company performance  – October 2020
Brian Williamson – Aiming up on the WACC and prices: the welfare and incentive impacts for the water industry – October 2020

Wright and Mason – Comments prepared for Ofwat on the CMA’s provisional findings: cost of capital considerations – October 2020

Submission – 17 August 2020

Reference of the PR19 final determinations: Final submission to the CMA

Submission – 22 June 2020

Reference of the PR19 final determinations: Cross cutting issues – response to companies’ 27 May submissions to the CMA
Reference of the PR19 final determinations: Response to Anglian Water’s 27 May submission to the CMA
Reference of the PR19 final determinations: Response to Bristol Water’s 27 May submission to the CMA
Reference of the PR19 final determinations: Response to Northumbrian Water’s 27 May submission to the CMA
Reference of the PR19 final determinations: Response to Yorkshire Water’s 27 May submission to the CMA
Reference of the PR19 final determinations: Risk and return – response to companies’ 27 May submissions to the CMA
Europe Economics, ‘Further comments regarding beta’, June 2020
Europe Economics response to new points, 16 June 2020

Submission – 5 June 2020

Issues to consider in price control redeterminations
The cost of the base level of service
Underspending and efficiency

Submission – 4 May 2020

Main documents

Reference of the PR19 final determinations: Introduction, overall stretch on costs and outcomes – response to cross-cutting issues in companies’ statements of case
Reference of the PR19 final determinations: Response to Anglian Water’s statement of case
Reference of the PR19 final determinations: Response to Bristol Water’s statement of case
Reference of the PR19 final determinations: Response to Northumbrian Water’s statement of case
Reference of the PR19 final determinations: Response to Yorkshire Water’s statement of case
Reference of the PR19 final determinations: Cost efficiency – response to common issues in companies’ statements of case
Reference of the PR19 final determinations: Outcomes – response to common issues in companies’ statements of case
Reference of the PR19 final determinations: Risk and return – response to common issues in companies’ statements of case

Supporting documents

Europe Economics note responding to Oxera’s arguments on embodied technical shift – 30 April
Europe Economics report on impact of COVID-19 on RPEs and frontier shift – 27 April
PwC, Long-term financeability in the water sector – May 2020
Europe Economics, ‘Further Advice on the Allowed Return on Capital for the Water Sector at PR19 – Company-specific adjustments’ – May 2020
Europe Economics, ‘Further Advice on the Allowed Return on Capital for the Water Sector at PR19 – Betas and Gearing’ – May 2020

Submission – 19 March 2020

Overall

Reference of the PR19 final determinations: Overview
Reference of the PR19 final determinations: Key elements of the methodology appendix
Reference of the PR19 final determinations: Cross-cutting issues
Reference of the PR19 final determinations: Glossary

 

Anglian Water

Reference of the PR19 final determinations: Notice of reference for Anglian Water
Reference of the PR19 final determinations: Explanation of our final determination for Anglian Water
Anglian Water – Detailed calculation of the final determination revenue allowances
Anglian Water – Calculation of Pay As You Go rates
Anglian Water – Financial model comparison of April revised business plan and final determinations
Reference of the PR19 final determinations: Anglian Water – List of documents

 

Northumbrian Water

Reference of the PR19 final determinations: Notice of reference for Northumbrian Water
Reference of the PR19 final determinations: Explanation of our final determination for Northumbrian Water
Northumbrian Water – Detailed calculation of the final determination revenue allowances
Northumbrian Water – Calculation of Pay As You Go rates
Northumbrian Water – Financial model comparison of April revised business plan and final determinations
Reference of the PR19 final determinations: Northumbrian Water – List of documents

 

Yorkshire Water

Reference of the PR19 final determinations: Notice of reference for Yorkshire Water
Reference of the PR19 final determinations: Explanation of our final determination for Yorkshire Water
Yorkshire Water – Detailed calculation of the final determination revenue allowances
Yorkshire Water – Calculation of Pay As You Go rates
Yorkshire Water – Financial model comparison of April revised business plan and final determinations
Reference of the PR19 final determinations: Yorkshire Water – List of documents

 

Bristol Water

Reference of the PR19 final determinations: Notice of reference for Bristol Water
Reference of the PR19 final determinations: Explanation of our final determination for Bristol Water
Bristol Water – Detailed calculation of the final determination revenue allowances
Bristol Water – Calculation of Pay As You Go rates
Bristol Water – Financial model comparison of April revised business plan and final determinations
Reference of the PR19 final determinations: Bristol Water – List of documents