Challenges for Water Companies as OFWAT announces Final Determinations for PR19

16 December 2019

Ofwat has revealed a spending package of £51bn for the next five years. A quarter of this, around £13bn, will be investment dedicated to providing resilient services and a better environment in the face of a growing population and climate change.

Customers will also see a reduction in average bills of about £50 before inflation. The regulator has secured this by demanding greater efficiency, passing through lower financing costs and promoting more innovation.

Ofwat has set new levels of service so water companies transform their performance over the next five years. In addition to reducing leakage by an average of 16% and water efficiency targets aimed at reducing customer use by 13% companies will also:

  • Increase customer service levels
  • Drive innovation at the cultural and operational level, supported by a £200m Innovation competition fund
  • Introduce direct procurement for development and delivery of large projects
  • Increase the reliability of critical aqueducts and water treatment works;
  • Reduce customers’ reliance on a single source of water supply;
  • Improve resilience where water mains cross roads and railways;
  • Protect against power failures at water and sewage treatment works; and
  • Protect water and sewage treatment works from extreme flooding.
  • There will also be an increased focus on developing nature based solutions
  • Improve existing networks (and interconnectivity between companies)
  • Increase the levels of meter installation

Rachel Fletcher, Ofwat Chief Executive, commented:

“Today we’re firing the starting gun on the transformation of the water industry backed by a major investment programme to deliver new, improved services for customers and the environment and resilience for generations to come. Now water companies need to crack on, turn this into a reality and transform their performance for everyone.

“They will be investing the equivalent of an extra £6 million each and every day to overhaul services, strengthen their infrastructure and improve our natural environment. And at the same time, customers’ bills will fall by an average of £50 before inflation.”

For more details about OFWAT’s Final determinations for the Water Companies in relation to PR19 visit www.ofwat.gov.uk