Approach to assessing base expenditure

Cost adjustment claims – June 2023

In our PR24 final methodology, we said we would have an early cost adjustment claim submission and publication in summer 2023. The aim is to provide companies with an opportunity to comment on other companies proposed cost adjustment claims alongside their PR24 business plans.

We publish water companies’ cost adjustment claims below, which were submitted to us on 9 June 2023.

We also publish a summary excel file, which summarises the details of each cost adjustment claim and includes references to the relevant evidence file(s).

Cost Adjustment Claims Summary

File Date of release
Symmetrical CACs summary June 2023
CACs Summary – August 2023 August 2023

Affinity Water Cost Adjustment Claims (CAC)

File Date of release
PR24 Cost Adjustment Claim Submission – Regional Wages June 2023
CAC calculations – 2022-23 prices June 2023
CAC Regional Wages Supporting File – May 2023 June 2023
EI report – population transience and retail costs June 2023

Anglian Water Cost Adjustment Claims (CAC)

File Date of release
CAC_1.1_APH June 2023
CAC_1.2 – APH June 2023
CAC_2.1 – Lack of large works June 2023
CAC_2.2 – Lack of large works June 2023
CAC_2.3 – Lack of large works June 2023
CAC_2.4 – Economies of scale in large works white paper June 2023
CAC_5.1 – Leakage June 2023
CAC_5.2 – Leakage regression results June 2023
CAC_6.1 – Boundary box replacements June 2023
CAC_6.2 – Meter penetration analysis June 2023
CAC_6.3 – Boundary Box Failure Analysis June 2023
CAC_3.1 Energy CAC August 2023
CAC_4.1 – Phosphorus removal August 2023

Hafren Dyfrdwy Cost Adjustment Claims

File Date of release
Cost Adjustment Claims June 2023 June 2023
Claims Calculations June 2023
Energy CAC August 2023

Portsmouth Water Cost Adjustment Claims

File Date of release
CAC early submission – CAC1 – lumpy maintenance June 2023
CAC early submission – CAC2 – replacement head office building June 2023

SES Water Cost Adjustment Claims

File Date of release
Early CAC_Pumping June 2023
Early CAC_Retail Scale June 2023
Early CAC_Softening June 2023

Severn Trent Water Cost Adjustment Claims

File Date of release
Cost Adjustment Claims June 2023
Network Complexity Calculations June 2023
Arup STW Growth Calculations June 2023
STW Growth If Modelled Calculations June 2023
CAC – Energy costs and Phosphorus consent August 2023

South East Water Cost Adjustment Claims

File Date of release
Oxera Review of PR24 cost adjustment claims June 2023

South Staffs Water Cost Adjustment Claims

File Date of release
SSC topography cost adjustment claim June 2023

South West Water and Bristol Water Cost Adjustment Claims

File Date of release
Cost adjustment claim initial submission June 2023
CAC liming methodology 1 updated June 2023
CAC liming methodology 2 updated June 2023

Southern Water Cost Adjustment Claims

File Date of release
Cost Adjustment Claim – Coastal Population June 2023
Cost Adjustment Claim – Meter Replacement June 2023
Cost Adjustment Claim – Regional Labour Costs June 2023
Cost Adjustment Claim – Wastewater Growth June 2023
Cost Adjustment Claim – Bioresources AAD (For submission) August 2023
Cost Adjustment Claim – Coastal Population – update August 2023

Thames Water Cost Adjustment Claims

File Date of release
Cost Adjustment Claim June 2023
CAC calculations – 2022-23 prices June 2023
CAC – Mains replacement August 2023

United Utilities Cost Adjustment Claims

File Date of release
CAC 001 – Reservoirs Dam Maintenance Cost Adjustment Claim June 2023
CAC_002 – Drainage Cost Adjustment Claim June 2023
CAC_003 – Ongoing Phosphorus Removal Opex August 2023
CAC_004 – Industrial Emissions Directive Compliance August 2023
CAC_005 – New Waste Permit Obligations August 2023

Wessex Water Cost Adjustment Claims

File Date of release
CAC3 Growth at Water Recycling Centres (WRCs) June 2023
CAC1 Increases to efficient costs over time August 2023
CAC2 Mains replacement costs August 2023
CAC4 Catchment and nature-based solutions August 2023
CAC5 Industrial Emissions Directive costs August 2023
CAC6 Energy costs – REDACTED August 2023

Yorkshire Water Cost Adjustment Claims

File Date of release
Combined sewers CAC June 2023
Phosphorus removal

August 2023

Cost assessment datasets and guidance

Wholesale water models

Version Date of release
PR24 Cost Assessment Master Dataset, Wholesale Water Base Costs v2 October 2022
PR24 Cost Assessment Master Dataset, Wholesale Water Base Costs v3 November 2022
PR24 Cost Assessment Master Dataset, Wholesale Water Base Costs v4 April 2023

Wholesale wastewater models

Version Date of release
PR24 Cost Assessment Master Dataset, Wholesale Wastewater Base Costs v2 October 2022
PR24 Cost Assessment Master Dataset, Wholesale Wastewater Base Costs v3 November 2022
PR24 Cost Assessment Master Dataset, Wholesale Wastewater Base Costs v4 April 2023

Residential retail models

Version Date of release
PR24 Cost Assessment Master Dataset, Residential Retail v2 October 2022
PR24 Cost Assessment Master Dataset, Residential Retail v3 November 2022
PR24 Cost Assessment Master Dataset, Residential Retail Base Costs v4 April 2023

Stata do files

File Version Date of release
PR24 water base cost PR24 water base cost v1 October 2022
PR24 water base cost v2 November 2022
PR24 water base cost v3 April 2023
PR24 wastewater base cost PR24 wastewater base cost v1 October 2022
PR24 wastewater base cost v2 November 2022
PR24 wastewater network plus base cost v3 April 2023
PR24 residential retail PR24 residential retail v1 October 2022
PR24 residential retail v2 November 2022
PR24 residential retail v3 April 2023
PR24 bioresources base cost PR24 bioresources base cost v1 November 2022
PR24 bioresources base cost v3 April 2023

NOTE: Any individual can open the above files, but in order to run the above files you will need a copy of Stata software. A license for this software is required and can be purchased from the official website of the software –  https://www.stata.com/

Supporting spreadsheets

File Version Date of release
Template and guidance for the submission of base econometric cost models ahead of the spring 2023 consultation Template and guidance for the submission of base econometric cost models ahead of the spring 2023 consultation November 2022
Residential retail external data mapping Residential retail external data mapping October 2022
Atypical expenditure adjustment calculations Atypical expenditure adjustment calculations October 2022
Residential retail revenue Residential retail revenue October 2022
Urban rainfall calculations Urban rainfall calculations October 2022
Weighted average density – updated Weighted average density – updated October 2022
Population density estimates using Middle Super Output Area population estimates Population density estimates using Middle Super Output Area population estimates v1 October 2022
Population density estimates using Middle Super Output Area population estimates v2 November 2022
Large STWs dataset (7B) and table 7D reconciliation Large STWs dataset (7B) and table 7D reconciliation October 2022
Large STWs dataset Large STWs dataset v1 October 2022
Large STWs dataset v3 November 2022
Economies of scale at sewage treatment works derivation Economies of scale at sewage treatment works variables derivation v1 April 2023

Historical performance datasets

Version Date of release
Historical performance trends for PR24 v1.0 10 February 2023
Historical performance trends for PR24 v1.1 14 February 2023
Historical performance trends for PR24 v2.0 4 April 2023

Supporting guidance

Guidance Date of release
Information Notice 23/07 Assessing the influence of enhancement expenditure on historical performance trends for PR24 14 July 2023
Information Notice 23/05 Further guidance on price control deliverables for PR24

Price control deliverable payment model (worked example)

4 July 2023

 

 

21 July 2023

Industrial Emissions Directive Letter from Ofwat to Companies 1 August 2023
Energy Cost Letter from Ofwat to Water Companies

Additional Information Request – Energy Cost

11 August 2023
Bioresources Asset Condition Assessment Guidance

Bioresources Asset Condition Assessment scoring

 

12 October 2023

Reservoir information request

Document Date of release
Reservoirs Data Request – August 2023 – Letter August 2023
Reservoirs Data Request – August 2023 – Spreadsheet

August 2023

Econometric base cost models for PR24

On 5th April 2023, we consulted on our proposed set of econometric models that we intend to use to help set efficient base expenditure allowances at PR24. It includes wholesale water, wastewater network plus, bioresources and residential retail models. This allows water companies to:

  • account for early efficiency information in their PR24 business plans;
  • focus more on long-term challenges; and
  • submit high quality cost adjustment claims in June 2023.

The consultation webpage is here. We invite responses to this consultation by 12th May 2023 to [email protected]. Please use the consultation responses template saved here.

We will review responses ahead of our PR24 draft determinations, and consider making changes to our proposed cost models where appropriate.

We also invite water companies to submit base cost adjustment claims to [email protected] based on our proposed econometric models by close of play on 9th June 2023. Please use the cost adjustment claim template that is saved here.

Econometric base cost models for PR24: April 2023 consultation

File Date of Release
PR24 Econometric Base Cost Models Consultation April 2023

Consultation response template

File Date of Release
Econometric base cost models for PR24: consultation response template April 2023

Cost adjustment claim template

File Date of Release
PR24 cost adjustment claim template April 2023

 

Ofwat supporting analytical files

File Date of Release
PR24 Cost Assessment Master Dataset, Wholesale Water Base Costs v4 April 2023
PR24 Cost Assessment Master Dataset, Wholesale Wastewater Base Costs v4 April 2023
PR24 Cost Assessment Master Dataset, Residential Retail Base Costs v4 April 2023
Economies of scale at sewage treatment works variables derivation v1 April 2023
Econometric base cost models for PR24: model estimation results and efficiency scores April 2023
Stata do file: PR24 water base cost v3 April 2023
Stata do file: PR24 wastewater network plus base cost v3 April 2023
Stata do file: PR24 bioresources base cost v3 April 2023
Stata do file: PR24 residential retail v3 April 2023

Independent CEPA modelling report

File Date of Release
CEPA PR24 wholesale base cost modelling report April 2023

 

Water company base cost model suggestions

File Date of Release
Affinity Water PR24 base cost modelling submission April 2023
Anglian Water PR24 base cost modelling submission April 2023
Northumbrian Water PR24 base cost modelling submission April 2023
SES Water PR24 base cost modelling submission April 2023
South East Water PR24 base cost modelling submission April 2023
Southern Water PR24 base cost modelling submission

Southern Water coastal variable derivation

April 2023

April 2023

South Staffs Water PR24 base cost modelling submission April 2023
Severn Trent Water PR24 base cost modelling submission April 2023
South West Water PR24 base cost modelling submission April 2023
Thames Water PR24 base cost modelling submission April 2023
United Utilities PR24 base cost modelling submission April 2023
Dŵr Cymru Welsh Water PR24 base cost modelling submission April 2023
Wessex Water PR24 base cost modelling submission April 2023
Yorkshire Water PR24 base cost modelling submission April 2023