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.

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.

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

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

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 Notes coming soon