Draft 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 draft determinations for 2025 to 2030. These include:  

  • past delivery models 
  • cost assessment models
  • financial models 
  • risk and return models 
  • outcomes models 
  • key datasets 
  • PR24 reconciliation models

We have updated our 2024 price review PR24 models map to help show how all the models work together. 

Past delivery models

At PR19, we set a series of incentive and reconciliation mechanisms to cover variations in performance for 2020-25. Our draft determination includes the adjustments to revenue and RCV from reconciling companies’ actual and forecast expenditure and performance over this period, against the allowances and commitments we set in their PR19 final determinations.  

We use a past delivery modelling suite to calculate these adjustments and set out below the models we have used and reconciled as part of our draft determination. 

Company specific models

Company

Outcome delivery incentives (ODI) performance models 23/24 

Outcome delivery incentives (ODI) performance models 24/25

Wholesale Revenue Forecasting Incentive (RFI) Mechanism

Residential retail revenue

Developer services revenue adjustment mechanism 

Cost of new debt reconciliation model

Cost sharing reconciliation 

Land sales

RPI-CPIH wedge model

Regulatory capital value (RCV) adjustment model 

Revenue adjustments model

Water industry national environment programme (WINEP) reconciliation

Affinity Water Outcome delivery incentives model 23/24 – Affinity Water Outcome delivery incentives model 24/25 – Affinity Water Wholesale Revenue Forecasting Incentive Mechanism model – Affinity Water Residential Retail Revenue model – Affinity Water Developer services revenue adjustment mechanism model – Affinity Water Cost of new debt reconciliation model – Affinity Water Cost sharing reconciliation model – Affinity Water Land sales – Affinity Water RPI-CPIH wedge model – Affinity Water RCV adjustments model – Affinity Water Revenue adjustments model – Affinity Water WINEP recon model – Affinity
Anglian Water Outcome delivery incentives model 23/24 – Anglian Water Outcome delivery incentives model 24/25 – Anglian Water Wholesale Revenue Forecasting Incentive Mechanism model – Anglian Water Residential Retail Revenue model – Anglian Water Developer services revenue adjustment mechanism model – Anglian Water Cost of new debt reconciliation model – Anglian Water Cost sharing reconciliation model – Anglian Water Land sales – Anglian Water RPI-CPIH wedge model – Anglian Water RCV adjustments model – Anglian Water Revenue adjustments model – Anglian Water WINEP recon model – Anglian Water
Bristol Water Outcome delivery incentives model 23/24 – Bristol Water Outcome delivery incentives model 24/25 – Bristol Water Wholesale Revenue Forecasting Incentive Mechanism model – Bristol Water Residential Retail Revenue model – Bristol Water Developer services revenue adjustment mechanism model – Bristol Water Cost of new debt reconciliation model – Bristol Water Cost sharing reconciliation model – Bristol Water Land sales – Bristol Water RPI-CPIH wedge model – Bristol Water RCV adjustments model – Bristol Water Revenue adjustments model – Bristol Water WINEP recon model – Bristol Water
Dŵr Cymru Outcome delivery incentives model 23/24 -Dŵr Cymru Outcome delivery incentives model 24/25 -Dŵr Cymru Wholesale Revenue Forecasting Incentive Mechanism model – Dŵr Cymru Residential Retail Revenue model – Dŵr Cymru Developer services revenue adjustment mechanism model – Dŵr Cymru Cost of new debt reconciliation model – Dŵr Cymru Cost sharing reconciliation model – Dŵr Cymru Land sales – Dwr Cymru RPI-CPIH wedge model – Dwr Cymru RCV adjustments model – Dwr Cymru Revenue adjustments model – Dwr Cymru WINEP recon model – Dŵr Cymru NEP

WINEP recon model – Dŵr Cymru WINEP

Hafren Dyfrdwy Outcome delivery incentives model 23/24 – Hafren Dyfrdwy Outcome delivery incentives model 24/25 – Hafren Dyfrdwy Wholesale Revenue Forecasting Incentive Mechanism model – Hafren Dyfrdwy Residential Retail Revenue model – Hafren Dyfrdwy Developer services revenue adjustment mechanism model – Hafren Dyfrdwy Cost of new debt reconciliation model – Hafren Dyfrdwy Cost sharing reconciliation model – Hafren Dyfrdwy Land sales – Hafren Dyfrdwy RPI-CPIH wedge model – Hafren Dyfrdwy RCV adjustments model – Hafren Dyfrdwy Revenue adjustments model – Hafren Dyfrdwy WINEP recon model – Hafren Dyfrdwy
Northumbrian Water Outcome delivery incentives model 23/24 – Northumbrian Water Outcome delivery incentives model 24/25 – Northumbrian Water Wholesale Revenue Forecasting Incentive Mechanism model – Northumbrian Water Residential Retail Revenue model – Northumbrian Water Developer services revenue adjustment mechanism model – Northumbrian Water Cost of new debt reconciliation model – Northumbrian Water Cost sharing reconciliation model – Northumbrian Water Land sales – Northumbrian Water RPI-CPIH wedge model – Northumbrian Water RCV adjustments model – Northumbrian Water Revenue adjustments model – Northumbrian Water WINEP recon model – Northumbrian Water
Portsmouth Water Outcome delivery incentives model 23/24 – Portsmouth Water Outcome delivery incentives model 24/25 – Portsmouth Water Wholesale Revenue Forecasting Incentive Mechanism model – Portsmouth Water Residential Retail Revenue model – Portsmouth Water Developer services revenue adjustment mechanism model – Portsmouth Water Cost of new debt reconciliation model – Portsmouth Water Cost sharing reconciliation model – Portsmouth Water Land sales – Portsmouth Water RPI-CPIH wedge model – Portsmouth Water RCV adjustments model – Portsmouth Water Revenue adjustments model – Portsmouth Water
SES Water Outcome delivery incentives model 23/24 – SES Water Outcome delivery incentives model 24/25 – SES Water Wholesale Revenue Forecasting Incentive Mechanism model – SES Water Residential Retail Revenue model – SES Water Developer services revenue adjustment mechanism model – SES Water Cost of new debt reconciliation model – SES Water Cost sharing reconciliation model – SES Water Land sales – SES Water RPI-CPIH wedge model – SES Water RCV adjustments model – SES Water Revenue adjustments model – SES Water
Severn Trent Water Outcome delivery incentives model 23/24 – Severn Trent Water Outcome delivery incentives model 24/25 – Severn Trent Water Wholesale Revenue Forecasting Incentive Mechanism model – Severn Trent Water Residential Retail Revenue model – Severn Trent Water Developer services revenue adjustment mechanism model – Severn Trent Water Cost of new debt reconciliation model – Severn Trent Water Cost sharing reconciliation model – Severn Trent Water Land sales – Severn Trent Water RPI-CPIH wedge model – Severn Trent Water RCV adjustments model – Severn Trent Water Revenue adjustments model – Severn Trent Water WINEP recon model – Severn Trent Water
South East Water Outcome delivery incentives model 23/24 – South East Water Outcome delivery incentives model 24/25 – South East Water Wholesale Revenue Forecasting Incentive Mechanism model – South East Water Residential Retail Revenue model – South East Water Developer services revenue adjustment mechanism model – South East Water Cost of new debt reconciliation model – South East Water Cost sharing reconciliation model – South East Water Land sales – South East Water RPI-CPIH wedge model – South East Water RCV adjustments model – South East Water Revenue adjustments model – South East Water
South Staffs Water Outcome delivery incentives model 23/24 – South Staffs Water Outcome delivery incentives model 24/25 – South Staffs Water Wholesale Revenue Forecasting Incentive Mechanism model – South Staffs Water Residential Retail Revenue model – South Staffs Water Developer services revenue adjustment mechanism model – South Staffs Water Cost of new debt reconciliation model – South Staffs Water Cost sharing reconciliation model – South Staffs Water Land sales – South Staffs Water RPI-CPIH wedge model – South Staffs Water RCV adjustments model – South Staffs Water Revenue adjustments model – South Staffs Water WINEP recon model – South Staffs Water
South West Water Outcome delivery incentives model 23/24 – South West Water Outcome delivery incentives model 24/25 – South West Water Wholesale Revenue Forecasting Incentive Mechanism model – South West Water Residential Retail Revenue model – South West Water Developer services revenue adjustment mechanism model – South West Water Cost of new debt reconciliation model – South West Water Cost sharing reconciliation model – South West Water Land sales – South West Water RPI-CPIH wedge model – South West Water RCV adjustments model – South West Water Revenue adjustments model – South West Water WINEP recon model – South West Water
Southern Water Outcome delivery incentives model 23/24 – Southern Water Outcome delivery incentives model 24/25 – Southern Water Wholesale Revenue Forecasting Incentive Mechanism model – Southern Water Residential Retail Revenue model – Southern Water Developer services revenue adjustment mechanism model – Southern Water Cost of new debt reconciliation model – Southern Water Cost sharing reconciliation model – Southern Water Land sales – Southern Water RPI-CPIH wedge model – Southern Water RCV adjustments model – Southern Water Revenue adjustments model – Southern Water WINEP recon model – Southern Water
Thames Water Outcome delivery incentives model 23/24 – Thames Water Outcome delivery incentives model 24/25 – Thames Water Wholesale Revenue Forecasting Incentive Mechanism model – Thames Water Residential Retail Revenue model – Thames Water Developer services revenue adjustment mechanism model – Thames Water Cost of new debt reconciliation model – Thames Water Cost sharing reconciliation model – Thames Water Land sales – Thames Water RPI-CPIH wedge model – Thames Water RCV adjustments model – Thames Water Revenue adjustments model – Thames Water WINEP recon model – Thames Water
United Utilities Outcome delivery incentives model 23/24 – United Utilities Outcome delivery incentives model 24/25 – United Utilities Wholesale Revenue Forecasting Incentive Mechanism model – United Utilities Residential Retail Revenue model – United Utilities Developer services revenue adjustment mechanism model – United Utilities Cost of new debt reconciliation model – United Utilities Cost sharing reconciliation model – United Utilities Land sales – United Utilities RPI-CPIH wedge model – United Utilities RCV adjustments model – United Utilities Revenue adjustments model – United Utilities WINEP recon model – United Utilities
Wessex Water Outcome delivery incentives model 23/24 – Wessex Water Outcome delivery incentives model 24/25 – Wessex Water Wholesale Revenue Forecasting Incentive Mechanism model – Wessex Water Residential Retail Revenue model – Wessex Water Developer services revenue adjustment mechanism model – Wessex Water Cost of new debt reconciliation model – Wessex Water Cost sharing reconciliation model – Wessex Water Land sales – Wessex Water RPI-CPIH wedge model – Wessex Water RCV adjustments model – Wessex Water Revenue adjustments model – Wessex Water WINEP recon model – Wessex Water
Yorkshire Water Outcome delivery incentives model 23/24 – Yorkshire Water Outcome delivery incentives model 24/25 – Yorkshire Water Wholesale Revenue Forecasting Incentive Mechanism model – Yorkshire Water Residential Retail Revenue model – Yorkshire Water Developer services revenue adjustment mechanism model – Yorkshire Water Cost of new debt reconciliation model – Yorkshire Water Cost sharing reconciliation model – Yorkshire Water Land sales – Yorkshire Water RPI-CPIH wedge model – Yorkshire Water RCV adjustments model – Yorkshire Water Revenue adjustments model – Yorkshire Water WINEP recon model – Yorkshire Water

Company

Tax reconciliation model

Strategic regional water reconciliation model

 

Bioresources revenue

Green Recovery cost allowance adjustment 

Green recovery (TVM)

Other adjustments

Water trading incentives (Southern) 

South West Water merger mapping model (South West) 

Affinity Water Tax reconciliation – Affinity Water Strategic regional water reconciliation – Affinity Water
Anglian Water Strategic regional water reconciliation – Anglian Water Bioresources Reconciliation – Anglian Water
Bristol Water Tax reconciliation – Bristol Water Strategic regional water reconciliation – Bristol Water
Dŵr Cymru Bioresources Reconciliation – Dŵr Cymru
Hafren Dyfrdwy Tax reconciliation – Hafren Dyfrdwy Bioresources Reconciliation – Hafren Dyfrdwy
Northumbrian Water Tax reconciliation – Northumbrian Water Bioresources Reconciliation – Northumbrian Water
Portsmouth Water Tax reconciliation – Portsmouth Water Other adjustments – Portsmouth Water
SES Water Tax reconciliation – SES Water
Severn Trent Water Strategic regional water reconciliation – Severn Trent Water Bioresources Reconciliation – Severn Trent Water Green Recovery cost allowance adjustment model – Severn Trent Water Green recovery time value of money adjustment model – Severn Trent Water
South East Water Tax reconciliation – South East Water
South Staffs Water Tax reconciliation – South Staffs Water Strategic regional water reconciliation – South Staffs Water Green Recovery cost allowance adjustment model – South Staffs Water Green recovery time value of money adjustment model – South Staffs Water Other adjustments – South Staffs Water
South West Water Tax reconciliation – South West Water Strategic regional water reconciliation – South West Water Bioresources Reconciliation – South West Water Green Recovery cost allowance adjustment model – South West Water Green recovery time value of money adjustment model – South West Water Other adjustments – South West Water Merger mapping model – South West Water
Southern Water Strategic regional water reconciliation – Southern Water Bioresources Reconciliation – Southern Water Water trading incentive – Southern Water
Thames Water Strategic regional water reconciliation – Thames Water Bioresources Reconciliation – Thames Water Green Recovery cost allowance adjustment model – Thames Water Green recovery time value of money adjustment model – Thames Water
United Utilities Tax reconciliation – United Utilities Strategic regional water reconciliation – United Utilities Bioresources Reconciliation – United Utilities Green Recovery cost allowance adjustment model – United Utilities
Wessex Water Tax reconciliation – Wessex Water Strategic regional water reconciliation – Wessex Water Bioresources Reconciliation – Wessex Water
Yorkshire Water Tax reconciliation – Yorkshire Water Strategic regional water reconciliation – Yorkshire Water Bioresources Reconciliation – Yorkshire Water

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. 

1-3) We have a suite of three models for wholesale water, wholesale wastewater and residential retail plus one model for business retail. 

  • Feeder model 1 – are the master datasets including costs and costs drivers data provided by companies. 
  • Feeder model 2 – produce the forecast of costs drivers that are used in our econometric models to explain our modelled based costs. 
  • Feeder model 3  – bring together estimated regression coefficients and cost driver data (historical and forecast) to produce base costs allowances.
  • Business retail feeder model – this model calculates the efficient cost allowance for business retail. 

4) Base cost adjustment claims feeder models – these models include our assessment of companies’ cost adjustment claims. There is one model for each company that submitted cost adjustment claims in its business plan.  

5) Base cost sector-wide adjustment feeder models – these models include our assessment of sector wide cost adjustments for energy costs, mains renewals, meter renewals, phosphorus removal, and net zero.  

6) Unmodelled base costs feeder models – This is a suite of models that sets out our assessment and allowance for abstraction charges, business rates, pension deficit recovery costs, Traffic Management Act costs, developer services and third party costs, and base Industrial Emissions Directive costs.  

7) Other base cost excel files – the workbooks that include datasets for large sewage treatment works (STWs), the derivation of the weighted average sewage treatment works size (WATS) economies of scale at sewage treatment works variable and the urban MSOA rainfall derivation, as well as the model used to determine the company specific efficiency challenge that is used in the enhancement shallow dives and deep dive. 

8-10) Enhancement feeder models – the enhancement feeder models include our assessment of enhancement costs, feeder models for accelerated programme and transition expenditure, reallocations we have made between enhancement lines or to base costs, the model used to determine the company specific efficiency challenge, and a summary of expenditure in this price review period.  

11) Stata do files – We present the Stata do files used to estimate the coefficients of our econometric models.  

12) Separate controls – These models include our assessment of the costs we allow in separate wholesale controls for two companies, Thames Water and Portsmouth Water.  

13) Aggregator files: These are intermediary files and do not present assessment  

14) Price Control Deliverables feeder models These set out the outputs or outcomes that we expect companies to deliver mainly from enhancement and related expenditure. They also set out the payment rates that will apply where companies fail to deliver these outputs or outcomes by the end of the 2025-30 period. 

15) Asset condition information – these workbooks include analysis of asset condition data collected as part of the PR24 process. The analysis covers bioresources assets (collated via a data request) and water distribution mains (collated via business plan table CW20). 

1. Base cost feeder models – water

2. Base cost feeder models – wastewater 

3. Base cost feeder models – retail

4. Base cost adjustment claim feeder models

5. Base cost sector-wide cost adjustments feeder models 

6. Unmodelled base costs feeder models

Company

Developer services, diversions and third party services model

Affinity Water Developer services diversions and third party services model – Affinity Water
Anglian Water Developer services diversions and third party services model – Anglian Water
Dŵr Cymru Developer services diversions and third party services model – Dŵr Cymru
Hafren Dyfrdwy Developer services diversions and third party services model – Hafren Dyfrdwy
Northumbrian Water Developer services diversions and third party services model – Northumbrian Water
Portsmouth Water Developer services diversions and third party services model – Portsmouth Water
SES Water Developer services diversions and third party services model – SES Water
South East Water Developer services diversions and third party services model – South East Water
Southern Water Developer services diversions and third party services model – Southern Water
South Staffs Water Developer services diversions and third party services model – South Staffs Water
Severn Trent Water Developer services diversions and third party services model – Severn Trent Water
Thames Water Developer services diversions and third party services model – Thames Water
United Utilities Developer services diversions and third party services model – United Utilities
Wessex Water Developer services diversions and third party services model – Wessex Water
Yorkshire Water Developer services diversions and third party services model – Yorkshire Water

7. Base cost excel files – Other

8. Enhancement feeder models – Water

9. Enhancement feeder models – Wastewater  

10. Enhancement feeder models – Other

Company

Transition & accelerated expenditure programme model

Affinity Water Transition & accelerated expenditure programme model – Affinity Water
Anglian Water Transition & accelerated expenditure programme model – Anglian Water
Bristol Water Transition & accelerated expenditure programme model – Bristol Water
Northumbrian Water Transition & accelerated expenditure programme model- Northumbrian Water
Portsmouth Water Transition & accelerated expenditure programme model – Portsmouth Water
Southern Water Transition & accelerated expenditure programme model – Southern Water
Severn Trent Water Transition & accelerated expenditure programme model – Severn Trent Water
South West Water Transition & accelerated expenditure programme model – South West Water
United Utilities Transition & accelerated expenditure programme model – United Utilities
Wessex Water Transition & accelerated expenditure programme model – Wessex Water
Yorkshire Water Transition & accelerated expenditure programme model – Yorkshire Water

11. Stata do files

12. Separate controls

13. Aggregator files

14. Price control deliverable (PCD) feeder models

Price control deliverables

15. Asset condition information 

Financial models

The purpose of the financial modelling suite is to set price control limits for the 2024 price review and to test company financeability. It is also used to test return on Regulated Equity in different scenarios. 

 The suite consists of: 

Risk and return models

There are two risk and return models:

  • Allowed Return: The model calculates the allowed return for the PR24 period. It also calculates the interest rates for index linked debt in the financial model.
  • Cost of debt: The model calculates the cost of debt included in the PR24 draft determinations.  

Outcomes models

The outcomes models are split into several categories:  

  • The Performance Commitment Level (PCL) models set out how we set the PCLs for each common performance commitment (PC) for PR24;
  • The Outcome Delivery Incentive (ODI) models set out how we set ODI rates for each common PC for PR24;
  • The Risk models set out how we estimate financial risk from the outcomes package at PR24. This includes all PCs and Measures of Experience incentives;
  • The Bespoke PC models set out how we set PCLs and ODI rates for bespoke PCs at PR24.

Performance Commitment Levels (PCLs)

Outcome Delivery Incentives (ODIs) 

Risk

Model 2025-26 2026-27 2027-28 2028-29 2029-30
ODI risk – Monte Carlo simulated performance 2025-30 ODI risk – Monte Carlo simulated performance 2025-26 ODI risk – Monte Carlo simulated performance 2026-27 ODI risk – Monte Carlo simulated performance 2027-28 ODI risk – Monte Carlo simulated performance 2028-29 ODI risk – Monte Carlo simulated performance 2029-30
ODI risk – Monte Carlo RoRE payments 2025-30 ODI risk – Monte Carlo RoRE payments 2025-26 ODI risk – Monte Carlo RoRE payments 2026-27 ODI risk – Monte Carlo RoRE payments 2027-28 ODI risk – Monte Carlo RoRE payments 2028-29 ODI risk – Monte Carlo RoRE payments 2029-30

Bespoke Performance Commitments (PCs)

Key datasets

We are publishing two key datasets to help explain our draft determinations. Data in these datasets is drawn from our draft determination models. The key datasets are:

PR24 reconciliation

We have published models (‘PR24 reconciliation models’) that we will use when we next set price controls in 2029 for how we will take reconcile companies’ performance during 2030-35.  

  • DDCM model – we propose introducing a sector-wide Delayed Delivery Cashflow Mechanism (DDCM). The DDCM would claw back a proportion of revenue associated with unspent wholesale expenditure allowances through an adjustment to allowed revenues later in the period if companies are behind in their delivery. The DDCM model is an illustrative model that outlines how this mechanism will work.  
  • New tax reconciliation model – we have published a version of the PR24 financial model that includes an additional worksheet. This worksheet outlines the approach that we propose for the tax reconciliation that will be performed in 2029.