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The Thames Tideway Tunnel (TTT) project is set to be granted a separate, but time-limited, price control by Ofwat.
The regulator is consulting on plans to amend Thames Water’s licence conditions to introduce a separate price control and price limit for its activities in the delivery of the TTT in 2015-20.
Given the “size and complexity of the project”, the UK Government has specified the project should be delivered by a third party Infrastructure Provider (IP).
In the consultation, Ofwat stated: “We consider it is important that there is a clear boundary not only between Thames Water’s and the IP’s activities in the project, but also between Thames Water’s activities in the project and the rest of its activities.”
The Consumer Council for Water (CCWater) stated that it supports a separate control to ensure that costs are “efficient and minimised”, and that the value of Thames Water’s investment is clear to customers.
An alternative option Ofwat considered, setting a sub-control (non-binding control) within the wholesale sewerage price control, but the regulator said this would achieve “some, but not all, of the benefits” of a separate price control and would have “other disadvantages”.
The regulator also stated that he separate price control would need to be enduring “at least through to the end of the construction phase of the project” and this is expected to run into the next price control period (2020-25).
However, Ofwat stated that it “cannot be definitive” as to the period the separate price control would be needed, and proposed that the licence changes are introduced on a “time limited basis” until 2020.
It added that it would consider whether the separate price control should be extended beyond 2020.
The consultation on the proposed TTT price control closes on 19 November 2014.
The move comes a day ahead of the deadline for legal challenges against the approval of the planning consent order for the super sewer project.
There could be two objections to the project, one from Hammersmith and Fulham council, and the other from Southwark Council, but the legal challenges have to be submitted by Friday (24 October).
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