Ofwat has published the final methodology for the upcoming Price Review (PR24). Ofwat has said that the need for substantial improvement in the sector is clear, and PR24, which will cover the period 2025-2030, will drive water companies to step up and deliver improvements for customers and the environment.

The final methodology sets out the framework which water companies will follow, leading to final decisions on each company’s future plans, and customers’ bills, in December 2024.

The methodology set out will see water companies need to meet new environmental commitments and improve service to customers.

David Black, Chief Executive, emphasises that companies need to act now to deliver improvements ahead of the next price review taking effect:

“Companies have fallen short of the expectations of customers and communities – they need to seize the opportunity to transform their performance at PR24. Turning around performance on the environment and improving resilience will require innovation, new approaches to managing water and investment.”

The key elements of the PR24 framework include:

• New environmental commitments for companies including on the use of storm overflows, improving biodiversity, improving bathing water quality and reducing greenhouse gas emissions
• Steps to drive companies to deliver excellent customer service, and to maintain and improve the health of their assets, so that customers have consistently good service, every day
• Clear expectations for companies to address the long-term challenge of ensuring we have sufficient water resources, including through steps to reduce leakage and water consumption and increase water supply, with a new fund of up to £100 million to stimulate new approaches to water efficiency

During the next phase of the price review process, companies will develop their business plans and long-term delivery strategies which will set out the expected level of investment needed to deliver the changes required. Companies will be expected to carefully consider the affordability of their plans, looking to make efficiencies when delivering investment projects and balancing the interests of customers, both current and future.

Further information from Ofwat can be read here.