WSSLs to get their first bill for watchdog services

Ofwat has issued an Information Notice to clarify the principles it will apply in determining how much each Water Supply and Sewerage Licence (WSSL) holder has to pay to fund the costs of CC Water and the CMA.

This largely confirmed the approach Ofwat set out in its March 2017 consultation, including its proposal that

licence fees will be based on a flat fee element and a variable element based on market share.

The regulator confirmed the variable fee element for 2017-18 will be calculated using the wholesale charges paid by WSSL licensees between 1 April and 30 September 2017. For subsequent years they will be based on the wholesale charges of the preceding financial year.

One change from March in the Information Notice (IN17/07) was the decision that, where a licence is granted during a financial year, no licence fee will be charged to that licensee until the next financial year. The regulator explained: “We consider it would not be appropriate to charge a licence fee mid- financial year where the relevant regulatory costs have already been allocated to other WSSL licensees.”

It added that if necessary, the first licence fee then payable by such licensees will reflect a share of any under-estimate of the regulatory costs for the previous year that it recovers in a subsequent year but will not be reduced (given the absence of an original payment) to reflect any over-estimate.

WSSL licensees should expect their first annual invoice this month. From next year (2018-19), annual invoices will be issued to WSSL licensees early in the financial year, bringing the arrangements into line with those for appointed water companies.

IN17/17 inculded Ofwat’s established approach for apportioning licence fees for appointed water companies.