Ofwat announces results of pre-qualification tests

Posted: Monday 31st March 2014

Ofwat has announced the results of its pre-qualification tests for water and wastewater companies as part of its 2014 price review. South West Water and Affinity Water have pre-qualified for ‘enhanced’ status based on the high quality of their business plans.

Both companies are now invited to accept Ofwat’s guidance on risk and reward, including the cost of capital, which was published on 27 January 2014. If South West Water and Affinity Water accept the guidance and undertake a number of other limited actions, they will gain the advantages of enhanced status - including a fast-track through the price review process – benefiting both the companies and their customers.

The results of the pre-qualification tests for all water and wastewater companies show areas of excellence across the board, with active engagement with customers and clear board ownership evident in companies’ business plans.

Ofwat’s Chief Executive, Cathryn Ross said:

“The challenge Ofwat put to all water and wastewater companies was to understand their customers’ needs and wants and reflect these in their business plans. Companies have risen to this challenge with a real change of approach. They have worked hard to listen to their customers and to use what they have heard to shape and inform their plans.”

Ofwat’s Chief Regulation Officer, Sonia Brown added:

“The plans submitted by South West Water and Affinity Water stand out. These companies have achieved plans of particularly high quality, with a consistent focus on listening and responding to what their customers want.

“We look forward to continuing a constructive dialogue with all companies, so that they can demonstrate that their plans deliver the best possible outcome for customers.”

Ofwat is also confirming the next steps in the price review process, which have been adjusted to take account of the results of the pre-qualification tests and ensure an efficient process going forward. This includes an opportunity for companies that have not pre-qualified to accelerate their progress through the Price Review and request an earlier draft determination by submitting new evidence to Ofwat by the beginning of May 2014. If this new evidence meets the required standard, Ofwat will issue draft determinations for these companies in June 2014.

Draft determinations for all other companies will be issued in August 2014.

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