Ofwat chief executive David Black has provided a check list for water companies hoping to make the case for bill increases to fund a step-up in investment at PR24 amidst a cost-of-living crisis and falling public trust.

Speaking at a British Water event, Black identified a number of priorities

  • Focus on what matters to customers and communities, not arcane debates about cost of capital. “Customer expectations will continue to change so companies need to understand and anticipate what customers expect regarding service, resilience and the environment.”
  • Demonstrate that expenditure is value for money and communicate how it will benefit local communities.
  • Ensure business plans are deliverable. “With a large step up in investment, this will be much more challenging than before – especially as we consider the volume of other major infrastructure investment elsewhere in HS2, nuclear, renewables and the grid. It is vital that companies anticipate the challenge, work closely in partnership with supply chain and innovate to meet the challenge.”
  • Prioritise affordability. “Customers’ real incomes are falling and it is vital that companies understand the pressures on customers and think carefully about long-term impacts, phased investment approaches, and adaptive planning.” Moreover: “Companies have considerable experience with social tariffs, so it will be important to learn from this experience in the design and delivery of social tariffs as an increasing number of customers struggle to pay their bills.”
  • Ensure financial resilience – “We welcome the steps taken by a number of companies to raise further equity; it is clear with the scale of investment required that other companies would require new equity in coming years. Companies should anticipate and address these issues.”

Black called on supply chain companies to prepare for a higher level of activity, including a “significant increase in the number of major projects at PR24 such as large reservoirs, major transfers and water recycling schemes;” a large scale roll out of smart meters/smart networks; and a step up in nature-based solutions and sustainable drainage schemes.

Read the speech here

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