PR24 working groups and workshops

We are keen to engage with stakeholders to help us improve our approach to delivering the right outcomes; our approach to assessing costs; and our approach to assessing allowed returns at PR24. We have established working groups to engage with companies and other stakeholders, where we can discuss how to address concerns as well as incorporate emerging issues and long-term ambitions into PR24.

On this page:

PR24 Working groups

Cost assessment working group

The role of this group is to engage with stakeholders to help us improve our approach to cost assessment at PR24 and beyond.

We made significant improvements to our cost assessment approach in PR19. We are therefore keen to build on this approach for PR24, taking account of the lessons learnt from PR19. However, we are also keen to hear views on new approaches, including any changes that might take more than one price review period to implement.

In April 2022 we issued an information notice, IN 22/02 Cost assessment data requests, setting out requests for data, to inform and support the development of cost assessment and related areas for PR24. These data requests have been discussed extensively with water companies and in many cases reflect direct requests from water companies to consider additional data in our cost assessment approach. A summary of the request and the supporting documentation is provided in the data requests section at the bottom of this page.

Cost assessment working group meetings and workshops

Each meeting centres around particular themes / topics, which we announce ahead of the meeting to allow members to identify whether or not to attend, and who they should send.

Meeting date Topics discussed Meeting slides Meeting notes
15 April 2021
  • Terms of reference for group
  • What problems are we trying to solve?
  • Base/enhancement cost boundary
  • Potential approaches to the water resources control
Meeting slides from 15 April 2021 available here Meeting notes from 15 April 2021 available here
26 May 2021
  • Removing potential capex bias
  • How do we reflect future maintenance needs in cost assessment?
Meeting slides from 26 May 2021 available here Meeting notes from 26 May 2021 available here
23 June 2021
  • Leakage and metering information
Meeting slides from 23 June 2021 available here Meeting notes from 23 June 2021 available here
15 July 2021
  • Cost assessment principles
  • Scope of modelled base costs
  • Base cost drivers and explanatory variables
Meeting slides from 15 July 2021 available here Meeting notes from 15 July 2021 available here
19 August 2021
  • Residential retail
Meeting slides from 19 August 2021 available here Meeting notes from 19 August 2021 available here
7 September 2021
  • Average pumping head and other wholesale base cost data issues
Meeting slides from 7 September 2021 available here Meeting notes from 7 September 2021 available here
14 September 2021
  • Cost and service link
Meeting slides from 14 September 2021 available here Meeting notes from 14 September 2021 available here
28 September 2021
  • Forward looking capital maintenance assessment
Meeting slides from 28 September 2021 available here Meeting notes from 28 September 2021 available here
12 October 2021
  • Assessing growth related costs
Meeting slides from 12 October 2021 available here Meeting notes from 12 October 2021 available here
11 November 2021
  • Cost adjustment claims
Meeting slides from 11 November 2021 available here Meeting notes from 11 November 2021 available here
21 January 2022
  • Bioresources
Meeting slides from 21 January 2022 available here Meeting notes from 21 January 2022 available here

Ofwat’s response to questions regarding the Bioresources information request

PR24 Bioresources worked examples

2 February 2022
  • Approach to enhancement cost assessment and data
Meeting slides from 2 February 2022 available here Meeting notes from 2 February 2022 available here
1 March 2022
  • Approach to enhancement cost data requirements
Meeting slides from 1 March 2022 available here Meeting notes from 1 March 2022 available here
7 April 2022
  • Assessing growth related costs (Arup presentation) and data collection
Meeting slides from 7 April 2022 available here Meeting notes from 7 April 2022 available here

Outcomes working group

Looking ahead to future price reviews, we are considering how we can build on lesson learnt so we can best meet the needs of customers, the environment and communities – not just over the next five years but over the longer term. The contribution from this group is helping Ofwat to propose our approach, which we will also consult on more widely.

Meeting date Topics discussed Meeting slides Meeting summary
21 January 2021 Customer outcomes from sewer collection Meeting slides from 21 January 2021 available here N/A
25 February 2021 Customer outcomes from water distribution Meeting slides from 25 February 2021 available here Meeting summary from 25 February 2021 available here
25 March 2021 Drinking water quality and the environment Meeting slides from 25 March 2021 available here Meeting summary from 25 March 2021 available here
15 April 2021 Topic discussed: Capacity and resilience over the long term Meeting slides from 15 April 2021 available here Meeting summary from 15 April 2021 available here
20 May 2021 Asset Health PCs Meeting slides from 20 May 2021 available here Meeting summary from 20 May 2021 available here
25 June 2021 PR24 and beyond: Creating tomorrow, together Meeting slides from 25 June 2021 available here Meeting summary from 25 June 2021 available here
15 July 2021 Environmental incentives Meeting slides from 15 July 2021 available here Meeting summary from 15 July 2021 available here
16 September 2021 Customer and Environment common PCs (part 1) – Customer, Biodiversity and Environmental compliance Meeting slides from 16 September 2021 available here Meeting summary from 16 September 2021 available here
14 October 2021 Customer and Environment common PCs (part 2) – Carbon and Sustainable Abstraction Meeting slides from 14 October 2021 available here Meeting summary from 14 October 2021 available here
10 November 2021 ODIs and Innovation Meeting slides from 10 November 2021 available here Meeting summary from 10 November available here
8 December 2021 PR24 and beyond: Performance commitments for future price reviews Meeting slides from 8 December 2021 available here Meeting summary from 8 December 2021 available here
13 January 2022 Options to determine ODI rates with no direct customer evidence Meeting slides from 13 January 2022 available here Meeting summary from 13 January 2022 available here
10 February 2022 Options to set underperformance collars and outperformance caps at PR24 Meeting slides from 10 February 2022 available here TBC
10 March 2022 Operational resilience and asset health PCs Meeting slides from 10 March 2022 available here Meeting summary from 10 March 2022 available here

Risk and return workshop

We used our risk and return workshop to outline some of the main points behind our thinking in the PR24 and beyond: Discussion paper on risk and return, and to hear the views of stakeholders on our emergent thinking as we develop the next price review for water companies in England and Wales.

Our ambition for PR24 remains to align the interests of water companies and investors with those of customers, so that the sector is attractive to investors, but companies can only earn high returns from great performance.

Workshop date Topics discussed Workshop slides Workshop summary
20 January 2022 Balance of risk and RoRE risk ranges

Return on equity

RCV and notional capital structure

Cost of debt

Financeability

Financial modelling

Workshop slides from 20 January 2022 available here Workshop summary from 20 January 2022 available here

MOSL led PR24 stakeholder workshop

We used this MOSL facilitated workshop to outline some of the key policy thinking across PR24 and for retailers and wholesalers to provide input into the PR24 process from the business retail market perspective.

Workshop date Topics discussed Workshop slides Workshop summary
13 December 2021 PR24 N/A Workshop summary from 13 December 2021 available here

Water resources workshop

We used our water resources workshop to present our emerging thinking on incentivising efficient investment and use of water resources in PR24 and to hear views from companies as we develop our PR24 approach.

Workshop date Topics discussed Workshop slides Workshop summary
29 March 2022 Investment risk in water resources

Direct Procurement for Customers

Water trading incentives

Workshop slides from 29 March 2022 available here Workshop summary from 29 March 2022 available here

Data requests

April 2022: IN 22/02 Cost assessment data requests

This information notice sets out requests for data in a number of areas, to inform and support the development of cost assessment and related areas for PR24. These data requests have been discussed extensively with water companies and in many cases reflects direct requests from water companies to consider additional data in our cost assessment approach. Through the collaborative working process these data requests have been refined to provide a balance between the minimum necessary to adequately inform improved understanding of these areas while minimising the additional regulatory reporting burden on companies.

The areas covered by the data request are set out in the table below in rows 1-7.

May 2022: Network reinforcement data request 

This document accompanies an information request that will collect additional network reinforcement data from incumbent water and wastewater companies, to support cost assessment of this expenditure at PR24. The data request has been discussed extensively with water companies and reflects a direct ask from water companies to consider additional data collection in our approach to growth expenditure and cost drivers. We are not intending to use the information for the purpose of setting reconciliation adjustments, due to endogeneity issues.

The areas covered by the data request are set out in the table below in row 8.

No Data request Purpose Deadline Template & guidance
1 Base modelling data To help inform the assessment of base costs at PR24. 15 July 2022 Base and residential retail data request
2 Residential retail bad debt data To help inform the assessment of residential retail costs at PR24. 15 July 2022 Base and residential retail data request
3 Water balance data To help inform development of PR24 performance commitments relating to reduction in demand. 15 August 2022 Enhancement and water balance data request
4 Enhancement modelling data To capture outturn cost and benefit data for enhancement activities currently underway 15 August 2022 Enhancement and water balance data request
5 Leakage reporting data To help inform our approach to assessing company proposals in water resource management plans and PR24 business plans. 15 August 2022 Leakage data request

Leakage information request – supporting guidance

6 Developer services site-specific information To help inform our approach to regulating developer services at PR24. 15 August 2022 Developer services site-specific data request

Developer services information request – supporting guidance

7 Growth expenditure data To help inform the assessment of growth costs at PR24. 15 August 2022 Growth expenditure data request
8 Network reinforcement data To help inform the assessment of network reinforcement costs at PR24. 29 August 2022 Network reinforcement data request data request

Published reports

Average Pumping Head data quality improvement report

Average Pumping Head: data quality improvement report

Average Pumping Head data quality improvement report – Letter to companies

Average Pumping Head (APH) Appendix C – Maturity Matrix