On 2 December 2013, each water and sewerage company and water only company in England and Wales submitted five-year business plans to us. These plans set out how much companies are proposing to charge their customers for the period 2015-20 and what level of service they will deliver for these prices. All companies have worked hard to take ownership of their plans. Overall, we have been able to identify a range of exceptional practices across the different elements of companies’ business plans.
We have assessed business plans across key elements. In December, we explained that companies’ proposed packages for dealing with risk and setting rewards and penalties were not in alignment with market evidence. As a result, we are providing companies with a further opportunity to secure the best possible outcome for customers. Companies that have delivered well against our tests for outcomes, costs and affordability, and which have demonstrated robust Board assurance are ‘pre-qualified for enhanced status’.
South West Water
While the business plans of other companies demonstrated areas of strength, against our very high bar for pre-qualifying for enhanced status only these two companies delivered consistently.
Boards of these pre-qualifying companies can choose to accept our risk and reward guidanceand in doing so gain enhanced status. They must do so – and submit revised business planning tables – by Monday 17 March 2014. If a pre-qualifying company chooses not to accept our published guidance, it will follow the same process as companies that have not pre-qualified.
We will publish draft determinations for enhanced companies on 30 April 2014. We will publish final determinations for all companies on 12 December 2014.
Companies that have not pre-qualified
Any water company not listed above has not pre-qualified for enhanced status. We will publish more information about their risk-based review results, and how they will need to improve their business plans to deliver the best outcomes for customers on 4 April 2014.
Companies must submit adjusted business plans by 27 June 2014, and will receive draft determinations on 29 August 2014.
If a company is able to submit its adjusted business plans early – by 2 May 2014 – then we may be able to publish its draft determinations by 25 June 2014.
We will publish final determinations for all companies on 12 December 2014.
Setting price controls for 2015-20 – pre-qualification decisions Updated on 10 March 2014
Appendix 1: Our approach to the risk-based review
Appendix 2: Overview of our assessment of companies’ business plans
Appendix 3: Decisions and process for pre-qualified companies
Appendix 4: Benefits for enhanced companies
Appendix 5: Service incentive mechanism (SIM) for 2010-15 and 2015-20
Appendix 6: Process for all other companies
- Setting price controls for 2015-20 – delivery plan
- Setting price limits for 2015-20: Risk and reward guidance
- Revised data table requirements for pre-qualifying companies
- PN 02/14 Ofwat announces results of pre-qualification tests
- Pre-qualification decisions – conference call speech by Sonia Brown – updated on 17 March with questions and answers