Water companies face 20 year targets

Water companies could be set regulatory targets around crucial areas of delivery such as customer service as far out as 2040, according to a consultation published last week.

The consultation from regulator Ofwat asks whether setting long term outcome delivery incentive (ODI) targets from 2020, when the next regulatory cycle begins, would lead to better service delivery and more resilient water services.

The consultation, which arises from the resilience duty placed on Ofwat in the 2014 Water Act, defines resilience as: “the ability to cope with, and recover from, disruption, trends and variability in order to maintain services for people and protect the natural environment, now and in the future.”

This definition has been adopted from the work of an independent taskforce formed by Ofwat and chaired by Waterwise managing director Jacob Tompkins to investigate long term resilience in the UK water sector.

The consultation sets out ten principles for the sector to follow with regard to resilience. They are: a clear understanding of risk to services; action based on analysis of the risks; service providers ensuring resilience; customer views at the heart; resilience at the heart of the business; resilience as efficiency; partnership; the sector reporting transparently on its progress; a whole-life, ‘total costs’ approach; approaches delivering multiple benefits.

The consultation also highlighted the importance of financial and corporate resilience, and stated that Ofwat is considering introducing minimum standards for the information required from companies so it can assess whether its expectations on resilience are being met.

Ofwat director Nicci Russell said: “This consultation is about us providing the framework that allows the service providers to focus on the longer term and to make wiser choices that increase resilience.”

The consultation closes on 28 August and will feed into the PR19 price review process.

Read the full consultation here.