Ofwat has today published its draft ‘blind year’ adjustments which reconcile the forecasts of 2019-20 company performance with actual 2019-20 performance data.
When Ofwat published its PR19 final determinations in December, they were based on company performance for the first four years of the previous five year cycle, and a forecast from companies themselves for performance for 2019-20. The regulator set out that it would make a later adjustment when forecast performance in 2019-20 could be replaced with actual performance. In coming to the proposed adjustment, the regulator reviewed company Annual Performance Reports and, where appropriate, sought clarity on company information.
Companies’ performance in 2019-20 compared to their forecast performance varies, with some doing better than expected and some not as well. Where companies perform better than expected, they may receive revenue payments, and where they perform worse than expected, they must return money to customers. The adjustments ensure that customers only pay for the service standards that they receive. In a small number of cases, Ofwat is proposing interventions to the adjustments suggested by companies to ensure that the blind year adjustments are appropriate.
Rachel Fletcher, Chief Executive of Ofwat, said
“Ofwat is committed to transforming companies’ performance for customers. The blind year reconciliation is an important step to hold companies to account and to maintain incentives on companies to continue to work hard to deliver for customers and the environment.
We look forward to continuing to work with water companies to transform performance over the coming five years to deliver more for customers, society and the environment.”
The draft proposals and supporting suite of models that were used to inform these decisions have been published on our website. Ofwat welcomes comments or written representations from all stakeholders which must be submitted to [email protected] by 19 October. Final adjustments will be published on our website by 13 November 2020 after representations have been considered.
Notes to Editors
The table below shows the total proposed adjustment, including proposed interventions, for all 17 water companies. Further detail can be seen in the draft proposals.
|Company||Proposed blind year adjustment|
|Revenue (£m)||RCV (£m)|
|Severn Trent Water||-15.8||14.2|
|South West Water||-8.9||12.9|
|South East Water||2.7||0.5|
|South Staffs Water||0.7||0.3|