Standard content for Members only
To continue reading this article, please login to your Utility Week account, Start 14 day trial or Become a member.
If your organisation already has a corporate membership and you haven’t activated it simply follow the register link below. Check here.
Ofwat claims that it shaves more than £1 billion off the public’s water bills each year.
The water regulator has valued its own worth to consumers and the public at £1.1 billion annually.
The organisation said the benefits from its activities are worth “at least £1.13 billion” each year, against an annual budget of around £30 million.
In particular, Ofwat said that it saves customers money through enforcement, developing new markets, and through price control assessments.
This, Ofwat calculates, brings benefits of around £39 per household to the approximate 28.4 million homes in England and Wales.
The value – revealed in an internal performance assessment by Ofwat – is derived from benefits of lower bills through improved performance and efficiencies compared to what water companies proposed.
The work of the regulator has come under fire from the industry and regulators committee in the House of Lords.
Following a damning report earlier this year called The effluent and the affluent, the committee has embarked on an inquiry into the independence and accountability of regulators.
The £1.1 billion was further broken down to the economic regulator’s quantifiable areas of work – price reviews, enforcement and developing markets.
It said the lion’s share of value relates to price controls. Scrutinising the total expenditure efficiency of business plans equates to £670 million each year, while Ofwat claims its set cost of capital saved around £290 million a year compared to company proposals at PR14.
It calculates benefits worth £340 million generated during the current asset management period (AMP7), or £70 million annually from stretching performance targets set at PR19.
Companies are rewarded and penalised for delivering against outcome delivery incentives set every five years. This week, Ofwat confirmed that £193 million would be returned to billpayers for underperformance in 2022/23.
Through fines levied at companies that breach their licence, Ofwat generated £254 million between 2018 and 2021 from two fines to Thames and a landmark case against Southern.
Another branch of Ofwat’s remit relates to markets and competition within markets connected to water and wastewater services. The report states that by encouraging competition within emerging markets such as bioresources, benefits of around £15 million each year have been generated for customers.
Please login or Register to leave a comment.