PwC indepth analysis on 'raising the bar' - Ofwat PR19 Draft Methodology

19 July 2017

The water industry has now had an opportunity to consider Ofwat’s draft methodology for the next water industry price review (PR19).  While the ask of water and sewerage firms is clearer, many companies will find it a much more challenging price control process than before - even Ofwat has acknowledged how hard it will be for companies to meet its high standards.

When the methodology was published, our blog – Ofwat raises the bar with its draft methodology – examined the main themes of the publication.

Recognising the complexity of the challenge ahead, we have tried to take some pain out of the analysis process, creating a high level summary of the key areas of the methodology along with brief commentary and analysis. We have also included tables that present Ofwat’s approach scored on two criteria: 

  • Change:  The extent of change between Ofwat’s proposed methodology for PR19, compared to the PR14 methodology; and
  • Challenge: The extent to which Ofwat’s approach might present a challenge to companies (for example, because the bar is materially higher or the approach introduces greater risk or complexity).

For those with experience and an understanding of the PR14 price control, the “change” column is particularly important. And for those planning their approach to PR19, the “challenge” column gives some guidance on priority areas that will help them tackle those areas we consider the hardest to achieve.

Ofwat PR19_PwC

Download Ofwat PR19 Methodology_PwC Summary 

 

 

 

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