Defra says not now on retail competition and pledges national policy statement

DEFRA published its long-awaited Strategic Policy Statement for Ofwat last Tuesday – perhaps the most important policy document of recent years – setting out the government's strategic priorities and objectives for Ofwat. This will have particular bearing on the regulator's approach to PR19.

There were two overriding (and to a degree overlapping) priorities: securing lonterm resilience and protecting customers.

Among key announcements contained in the statement were:

  • There is to be no immediate decision on a household retail market. DEFRA will decide by the end of the Parliament or just after, but in the meantime will conduct further work, both to validate the likelihood of realising the £2.9bn of benefit Ofwat pointed to, and to better understand and mitigate any impacts on vulnerable customers.

  • The department formally confirmed it would develop a National Policy Statement that sets out the need for nationally significant water supply infrastructure projects, “with the aim of accelerating the process of providing development consent”.

  • A natural capital approach to the environment is to be pursued: “Ofwat should encourage the sustainable use of natural capital by water companies – that is, our natural assets such as rivers and groundwater – by encouraging water companies to have appropriate regard to the wider costs and benefits to the economy, society and the environment."

  • Protection for vulnerable customers to be beefed up.

Full analysis is available to subscriber to the THE WATER REPORT in its March issue – out shortly