General election result will be PR24 delay

Rishi Sunak’s announcement of a 4^th July election against a backdrop of a Downing Street downpour was a gift to lazy journalists reaching for an easy metaphor.

But for the water sector, rain is certain to stop play (sorry).

We’ve been here before, of course. Ofwat’s final determinations on the water company business plans for the PR19 price control had to be delayed when Boris Johnson stole the date for his snap December election.

Since then public perceptions of both the Conservative party and the water sector have been on a downward trajectory. And here we go again. Ofwat will only say it is “considering pre-election protocols and guidance in relation to our time table for PR24” but there seems little doubt that the planned date of 12 June for the PR24 draft determinations is now untenable.

In 2019 the election was an impediment but caused only minor disruption. Had the election date meant more than a few days’ delay, it’s possible Ofwat would have gone ahead regardless. But fast forward five years and the water sector’s prominence in public discourse has shifted notably. There’s just no way the regulator can rule on such contentious issues in the midst of a general election campaign.

Sunak’s surprise announcement means a delay to the draft determinations of almost a month – maybe more. Given Ofwat has already signalled that the period between draft and final determinations will see more movement than in previous cycles, that’s an erosion of valuable time for water companies to react, unless final determinations are also pushed back.

This will be a major psychological blow for the water firms, who were already feeling the pressure from their investors for some long-term clarity. Even those who have low expectations for the draft determinations saw them as an opportunity to acknowledge the challenges of affordability, investibility and deliverability presented by their business plans and work with Ofwat towards a compromise later in the year.

Those conversations can of course continue in the background but publicly the industry now finds itself in limbo. Companies will be braced for six weeks of easy potshots from candidates for high office claiming their party will act tough on pollution of waterways. Sadly, they will not be asked to set out their manifesto for change in this regard but it will pile pressure on Ofwat to do it for them.

I am painfully aware that I’ve presented few positives here. So, here goes. While the delay is disappointing, we all knew there would be political upheaval at some point during the PR24 process. Now at least we can be certain the draft determinations will be presented to the government likely to see out AMP8. The chuntering of the election will be over and it will be time for boring, pragmatic decisions on how we resolve some of the trade-offs facing the water sector. The high profile the sector has very much not enjoyed over recent years may actually end up being a positive – the public will want solutions.

While it may be hard to see the positives in Sunak’s rain-sodden revelation there may still be a rainbow on the horizon (apologies, couldn’t help myself).