Future Water argues for wide ranging duties for OFWAT to support agile regulation
In our consultation response Future Water has argued for a wider range of duties to be part of the remit of OFWAT, supporting a more agile, future looking approach.
The increasing challenges that the water sector faces from climate change, ageing infrastructure, increasing population and workforce demographics, requires a more agile, innovative approach to regulation. The review by Defra of the Strategic Policy Statement (SPS) for OFWAT is welcome and offers an opportunity to have the forward-looking system that is essential for the future.
The SPS has set out the priorities areas as:
• Protecting and enhancing the environment
• A resilient water sector
• Serving and protecting customers
• Driving markets to deliver for customers
Future Water supports these priorities but argues that Defra should go further and recognise that a ‘systems approach’ is key to supporting the water sector because water is essential to agriculture, energy, people, the environment etc. Such an approach should be linked to establishing longer term Outcome Delivery Incentives (ODI’s) that are in place across two- or three-AMP periods, reflecting the nature of the challenges faced by the sector, which are not time limited! There also needs to be a different approach linked to innovation, one that supports and foster an IP (Intellectual Property) market, thereby encouraging new ideas from existing supply-chain players and supporting new entrants into the sector, this could be underpinned with a metric to measure innovation intensity.
Future Water’s CEO Paul Horton, added
“Agility and flexibility are crucial to how the sector is regulated going forward – this SPS is great start but needs to go further, there are some specific areas where we feel additional duties are requirement, for example:
• resilience risks in terms of workforce, as the number set to leave the sector by the end of 2025 is 45%, there should be a sector-wide approach to this challenge;
• recognition of the major Cyber Risk to operations going forward;
• risk registers should be developed with regard to the supply chain, thereby reflecting the whole sector;
• establishing a version of RAPID (or adapting RAPID) to fast-track critical wastewater and drainage projects which improve resilience to major weather impacts
These are just some of the additions which would help support a more flexible approach to regulating the sector”
Future Water’s full response can be found here