The UK Water Industry is preparing for its latest Price Review Period (PR24). With the UK’s Water Service Regulation Authority (OFWAT) recently releasing its final methodology. AMCL looks at what this means for Asset Management in the UK Water Industry.
The Price Review 2024 (PR24) final methodology from Ofwat, linked here, has been developed in consultation with the water sector, AMCL has digested the key challenges and opportunities for companies operating in the English and Welsh water sectors and summarised our perspectives based on our experiences from across the regulated infrastructure sectors. Preparing a review in the context of Asset Management which is available to download below.
The Ofwat methodology combined with our review provides useful insights into the regulator’s plans for setting price controls and summarises what the regulators expect from companies in the submissions for AMP8: 2025-2030. The PR24 methodology published in December 2022, offers guidance on potential approaches to policies, targeted performance commitments, and the alignment of the company interests with that of the customers.
With Ofwat’s gradually shifting focus onto long-term objectives, its approach is targeted at incentivizing companies to align their investment strategies to longer-term Asset Management thinking. This builds upon the already implemented strategic pricing control approaches to catchment sustainability for Water Resources and Drainage Management through the combined regulatory influence of RAPID.
New approaches to storm overflow with pollution management and Net Zero solutions are encouraged by companies to reduce the impact on the environment. Ofwat is incentivizing companies that can promote their environmental and social stewardship impacts by making funding available to support innovative strategies to help combat climate change and bring greater value to the wider community it is central to.
Despite recognition as a leading sector in the UK for customer and community interactions, Ofwat wants companies to continue to listen more intently to the voice of the customer. Pushing the boundaries to meet rising customer expectations by driving engagement through transparent engagement and communication.
As the challenges the UK water sector face continues to grow with the expectation ever-increasing to deliver more for less, companies will look to streamline their operations and focus on leveraging value by delivering innovative solutions. Providing a level playing field by stretching performance standards across the sector, and through the shared innovation fund, as inflationary pressures impact customers with increasing affordability concerns.
Contact Patryk Janowski
To discuss the implications of PR24 on your organization
Contact Matt McConville
Our Water Sector Specialist