Ofwat business planning consultation forms
Companies will be required to consider impacts on bills for AMP7 and beyond when proposing to use any of the financeability levers available to them.
Some of these are company-specific, while others will be common across companies. They do this every five years and must balance the interests of customers with ensuring that companies can pay for and deliver the services they need to.
As such there have been some important tweaks to the various controls since July, most notably on the retail side.
Ofwat pr19 wacc
If companies do not propose financial ODIs, they must justify and provide supporting evidence to explain why this is not the case. January Publication of our Long Term Vision — tell us what matters most to you in the future. The consultation paper describes the approach that the regulator will take to make sure that the prices companies charge their customers are designed to deliver the best results for those customers. Competition is generally the best driver of that type of innovation and our decisions in setting price limits will support our aim of promoting competition in consumers' interests. Our Business Plan to Developing our Business Plan Our full business plan for to and supporting appendices are available in the side panel of this page. Companies need to do so within the framework discussed above. Larger customers will then be subject to a gross margin cap. Notes to Editors: 1. More clarity is provided on the average revenue control proposed in July. Despite real yields on year UK government bonds tracking below zero since September , Ofwat is the first UK economic regulator to explicitly adopt a negative real risk-free rate when estimating the cost of capital.
We also produced a Statement of Response to our draft Water Resources Management Plan consultation and updated it to reflect the feedback we received. If companies have higher financing costs than a notionally efficient company, then this would need to be offset by benefits to customers, i.
Therefore, there has been some movement since July, but the overall framework remains largely unchanged.
The non-household control for non-exiting companies will also be for five years. Companies need to do so within the framework discussed above.
Ofwat has increased its materiality thresholds for special cost factor claims. Ofwat has also published three further price review letters to accompany the consultation.
Yorkshire water ofwat
The companies commented that the financial incentives might not be strong enough for them to target fast-track and exceptional categories of business planning. The average revenue control proposed in July based on a revenue per tonne of dried solid has since been modified to protect customers. As most people cannot choose their water supplier, one of the economic regulator's duties is to set the price, investment and service package that customers receive. On cash flows, Ofwat will now set the cost allowance equal to its view, with reconciliation made at the end of the five-year period. We also produced a Statement of Response to our draft Water Resources Management Plan consultation and updated it to reflect the feedback we received. Therefore, relying too much on long-term historical data could result in an overstatement of the WACC. On bioresources, changes since July are as follows. The consultation paper describes the approach that the regulator will take to make sure that the prices companies charge their customers are designed to deliver the best results for those customers. In practice, allowed returns contained within price limits, and outturn returns once prices are set also depend on the incentives put into place e. The initial WACC estimate, in particular, points to a tightening of expected returns. Companies will be required to consider impacts on bills for AMP7 and beyond when proposing to use any of the financeability levers available to them. Other new proposals include a new form of incentive-based regulation for capital expenditure that allows companies to choose their own risk-reward trade off, and a requirement to use cost benefit analysis across all parts of the business to make sure that companies make the best choices for their consumers. This option provides more less cash during the period for efficient inefficient companies.
Ofwat has confirmed that it wants companies to consider financial ODIs as a default position. Our engagement programme, Talk on Water, has involved talking to nearly 3, people about their needs and priorities for their water service.
Thames water ofwat
But in the light of the challenges of the future we do propose to make some changes to the way we set price limits. Second, through exploring various indicators, the regulator checks whether the package as a whole is financeable. Responses to the consultation paper should be sent by 24 January by email to rhiannon. While PR19 will be tough it also offers incentives to earn additional rewards for companies those who put forward robust business plans, and who can demonstrate leading performance on cost efficiency and outcomes. The companies commented that the financial incentives might not be strong enough for them to target fast-track and exceptional categories of business planning. They do this every five years and must balance the interests of customers with ensuring that companies can pay for and deliver the services they need to. Notes to Editors: 1. Ofwat states that it has relied on both the historical and forward-looking data and that this is in line with its approach adopted in past decisions e. These changes are to encourage competition in the provision of water resources, the part of our business that abstracts water from rivers or the ground.
It exercises its powers in a way that it judges will protect the interests of consumers, promote value and safeguard future water and sewerage services by allowing efficient companies to carry out their functions properly, and finance them.
As such, there has been some movement, most notably in relation to the UQ challenge.
based on 90 review