Ofwat has set out its draft methodology for the upcoming Price Review (PR24) with a focus on securing better outcomes for customers and the environment.
PR24, which will cover the period 2025-2030, will drive water companies to step up to deliver in the face of urgent challenges on the environment and climate change. The review will push companies to find new and innovative ways of delivering affordable, reliable and resilient services for all.
Ofwat has highlighted four key ambitions for PR24:
Focus on the long term: The sector must address immediate and long-term challenges. Business plans for the next five years will be set in the context of a 25 year delivery strategy, and Ofwat will hold companies to account for the improvements that they need to deliver.
Deliver greater environmental and social value: A better environment for everybody will be delivered through immediate and sustained action to improve performance on river water quality, bigger steps towards net zero, and more nature-based solutions.
Reflect a clearer understanding of customers and communities: New open public meetings on companies’ plans, more robust research to understand and reflect customers’ views, and stronger partnership working will deliver better outcomes.
Drive improvements through efficiency and innovation: Companies need to step up with ambitious plans that will help set the benchmark for resilient, affordable services for all.
The consultation on the draft methodology provides stakeholders with an opportunity to help Ofwat shape the future of the sector and guide the business plans of companies.
Aileen Armstrong, Senior Director, Company Performance and Price Reviews, Ofwat said: “This price review matters for all of us and our environment.”
PR24 will set the price, service and incentive package for 2025-2030 in December 2024. Ofwat’s methodology is the framework that sets out the expectations for companies’ business plans, which must be submitted in October 2023, and how those business plans will be assessed. The consultation on the draft methodology will close on 7 September 2022, and the final methodology will be published in December 2022.
Further information from Ofwat can be found here.