Following a lengthy period of consultation, reflection, and number crunching, Ofwat has published the methodology for its price review, PR24, which sets out expectations of water companies for the period 2025-2030 and beyond.
This publication marks an important milestone at a critical time for our natural environment, our societies and our businesses, whose resilience to an increasingly evident water supply and demand imbalance is being tested like never before.
While it’s clear to most that the water industry at large has not kept pace with the demands being placed upon it, Ofwat is now making its expectations crystal clear. With this PR24 framework, the regulator has laid down four key ambitions, requiring water companies to:
- Deliver greater environmental and social value by cutting harmful abstractions, driving towards net zero, and significantly reducing harm from storm overflows. It wants companies to deliver high levels of customer service and take steps to provide greater water resilience.
- Reflect a clearer understanding of customers and communities and how these vary across England and Wales. It requires water companies to engage with their customers and communities, and to develop plans that reflect local needs.
- Focus on the long-term by setting out 25-year delivery strategies detailing how their programme of works, proposed as part of PR24, are aligned to the longer-term need.
- Drive improvements through efficiency and innovation, especially in the areas of leakage management and reducing water consumption.
Having supported business customers for many years, we welcome Ofwat’s direction on these matters because we know that future-focused businesses are waking up to the importance of managing water, an operational and growth-critical resource, effectively and responsibly.
But we also know that Ofwat’s ambitions cannot be achieved soon enough. Long talked about, it really is time for regional water companies to achieve. There can be no more excuses, especially when trust in water companies is at an all-time low: 63% of industry professionals believe the water sector’s reputation is worse than ever, according to a recent survey by The Water Report.
In his foreword, it is clear that Ofwat Chief Executive, David Black, knows this.
“The sector needs to act now – in advance of PR24. Significant improvements are needed to drive down water demand, improve customer service and reduce pollution incidents. We are looking to companies to respond to urgent need for change and set out ambitious plans to improve outcomes for customers and the environment.”David Black, Ofwat Chief Executive
We couldn’t agree more.
Globally and locally, pressure continues to mount from all sides to ‘do the right thing’, always. Every day, British businesses walk a tightrope as they try to meet the expectations of many stakeholders. Furthermore, they are held to account every step of the way.
Water companies must now follow suit. They must do more, faster and with transparency. They must understand their customers better and work collaboratively with them to support their efforts. This is the only way that Ofwat’s ambitions will be achieved across the whole sector.
Given that this is the first fully fledged price review that can include business customer needs, it would have been good to see a nod towards rebalancing focus on business retail involvement. Further, it’s a pity that this process missed a golden opportunity to state a clear position or direction on advanced metering, a critical element in improving data quality, increasing efficiency and ultimately reducing consumption.
In the meantime, our team continues to work tirelessly with the business community to innovate, collaborate, educate on water efficiency and achieve best value for them. Self-Supply is a notable example of what leadership looks like in this regard.
You may also like to read our review of what’s working and what’s not in the water market and where we see the challenges and opportunities.