The water industry in England and Wales is undergoing major reform with the regulator Ofwat changing the way business plans are assessed for the next Periodic Review in 2014 (PR14).
At PR09 any increase from previous price limits were subject to regulatory challenge using the Asset Management Assessment (AMA). Essentially double the increase requested was put ‘at risk’ and the proportion approved was decided by an assessment of adherence to the Capital Maintenance Planning Common Framework (CMPCF).
For PR14, Ofwat is challenging companies to demonstrate that maintenance expenditure is efficient across the board and will take into account both capital and operational expenditure. Whilst the exact nature of the challenge is yet to be finalised, the ability to demonstrate a business plan that is both efficient and represents a fair balance of risk between the water company and the customer is paramount.
WRc has recently started a new collaborative Portfolio project “Demonstrating Efficient Capital Maintenance Expenditure (CP480)”. The project is very well supported with 6 major UK water company participants and specialist input from Ofwat. The project will review the application of the CMPCF with particular focus on demonstrating sufficient input and analysis to CMPCF Stage A (historical analysis of expenditure and performance/serviceability benefits). The project outputs will be used for PR14 business plan development. The project will deliver outputs by Spring 2013, the same time as Ofwat is set to publish its methodology for PR14.
For further information contact Mark Kowalski on 01793 865080 or firstname.lastname@example.org