Blueprint for Water – Submission to the CMA on Water Company Re-determinations

The principle of redetermination

As the Water Industry economic regulator, a key part of Ofwat’s role is to ensure that companies are investing funds efficiently. Efficiency challenges are right and just. But the Final Determination decisions issued by Ofwat place at risk a number of schemes which would ease pressure on the environment and in some cases deliver significant environmental benefit in line with sustainability principles and customer desires. We question whether in this instance, Ofwat has got the balance quite right. The unprecedented level of challenge to the industry regulator that this redetermination represents can also be taken as a sign. That four companies have taken the major step of challenging their final settlements is testament to the serious concerns held not just by those companies involved, but across the industry, that the line taken by Ofwat in curtailing long term investment is so significant as to be damaging to the long term resilience of the industry. Throughout our submission we highlight examples shared with us by the water industry to illustrate particular points or principles. Without the detailed knowledge of these schemes it is not our place to provide support for either Ofwat or the water companies’ positions on individual points of disagreement, but we use these examples to highlight what we consider to be potential flaws in Ofwat’s decision making process.

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