Ofwat ‘Executive summary Facing into the future We face an immediate challenge. Our water sector needs to tackle demands from climate change, customers’ increasing expectations for service and the treatment of the environment, and the pressures on people’s ability to pay. Climate change threatens resilience, both of our networks and our water supply. We’re already seeing drier summers, more frequent and intense rainfall, more variable river flows and biological changes in water bodies. In Wales, the projected reduction in summer rainfall by 2050 significantly exceeds the projected increase in winter rainfall. In England, it’s estimated that there is a 25% chance of the worst drought in recorded history within the next 30 years. At the same time, customers’ interests are evolving and their expectations are growing. Customers are increasingly concerned about damage to the environment from taking water from rivers and chalk streams, discharging waste through storm overflows, and carbon emissions. And companies need to go further to deliver great customer service. Meanwhile, the impact of Covid-19 has amplified concerns about affordability. One third of households in England and Wales already sometimes struggle to pay their household bills,3 and this figure may rise as the impact of the pandemic on jobs becomes clearer. And there is unlikely to be the same scope for bill reductions from falling underlying financing costs that we saw in PR14 and PR19. Companies and governments have set long-term targets on per capita consumption, drought resilience, leakage, carbon reduction, and water poverty. Further targets are likely to be set under new legislation envisaged by the Environment Bill. We need to work in new ways to meet these ambitions. This is the moment for fresh thinking and real change. Collaborating with others inside and outside the sector can deliver better, more sustainable outcomes. We expect companies to adopt more nature-based solutions and to unleash game-changing innovations to drive up their performance. They will need to embrace the opportunities from capturing, understanding and using data, and from engaging with markets. And balance complex trade-offs carefully over the long term.’ Click here to read more and download the report
Ofwat: “Our intention is that this paper will help us and the sector prepare for PR24.”
“The pace and scale of change is going to be quicker and greater than ever before. To meet the challenges this presents and embrace the opportunities, Ofwat is moving the conversation forward around four ambitious goals for PR24.”
The goals are:
- increasing focus on the long term – the price review needs to deliver the right long-term solutions for customers. Companies should place their business plans clearly in the context of their long-term ambitions, and Ofwat will explore how to give greater regulatory clarity about what will happen in future price reviews
- greater environmental and social value – water companies should be key players in their communities. We need to incentivise sustainable outcomes and behaviours that deliver the most value, whether it be collaborating with local partners or working innovatively with customers and communities.
- clearer understanding of customers and communities – we need a simpler, more targeted and more effective approach to capturing customers’ views. Ofwat plans to work with the sector to conduct collaborative customer research, to complement companies’ own work with their customers
- delivering improvements through efficiency and innovation – companies need to operate efficiently to create space to do more for their customers and the environment. The price review needs to drive improvements from innovative approaches and embracing open data.
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