Ross uncompromising on resilience

Ofwat chief executive Cathryn Ross last week, at the launch of a report from the regulator on resilience, gave short shrift to any suggestion that the regulator’s approach on the issue is too ambitious, or that its view on the cost of equity at PR19 would compromise companies’ resilience efforts.

Speaking at the end of a event on Thursday to both launch the report, Resilience in the round, and to discuss key aspects of it with industry chief executives and many other stakeholders, Ross (pictured) first responded publicly to private comments made by some CEOs that Ofwat’s ambitions are too broad. She said ensuring resilience in the round – which the regulator defines as corporate, financial and operational resilience – was “no more or less than a water company’s job”.

She went on to say she was “not desperately sympathetic” to noises from the industry that resilience will have to be compromised if Ofwat pursues the line it signalled in its draft PR19 methodology on cost of equity. Resilience would not be best served, Ross observed, by ratcheting up the cost of capital.

Ofwat’s report does not define what companies need to do to be considered resilient at PR19 and beyond; rather it “provides water companies and others with food for thought on what resilience in the round might look like in practice” – including through case studies from within and beyond the sector. It considers a wide range of aspects including environmental resilience, involving customers, planning, monitoring and board responsibility and emphasises the interrelationships and interdependencies that underpin water and wastewater service delivery.

According to Resilience in the round: “Water and wastewater services are made up of a complex set of operational, corporate, and financial systems. They are also linked with a wide range of other systems. These include the broader natural environment, social systems, the economy and agriculture. These macro systems also operate in association with infrastructure systems such as communications and energy networks and highways drainage. Impacts on any of these related systems can impact water and wastewater service delivery.”

Thursday’s event featured presentations on cyber security, corporate, financial and environmental resilience as well as experiences from the food and drink and aviation industries to illustrate the complex and wide ranging challenges water companies face.