Utility Regulator stands by PC15 despite NI Water budget cuts

Northern Ireland’s Utility Regulator has ruled that its PC15 (April 2015 to March 2021) final determination targets remain valid and that Northern Ireland Water should use them for planning and performance reporting for the remainder of the period.

That was the conclusion of the regulator’s mid term review of PC15, published mid February. The “challenging but achievable” decision came despite NI Water’s budgets from public expenditure for the first two years of the control being reduced “below the nominal levels we considered necessary to deliver the PC15 price control,” Utility Regulator said. “However, NI Water has benefitted from lower levels of inflation than was expected. As a result its real operational expenditure remains in line with the post-efficiency levels determined for PC15 which should be sufficient to maintain service.”

The regulator noted there had been a real reduction in capex in the first two years of PC15 and the delivery of some capital outputs have been delayed as a result. “However, based on reasonable forward planning scenarios for capital investment, the company should have sufficient capital budget to deliver all of its defined PC15 outputs within the six year PC15 period. But it is unlikely to allow investment in additional necessary quality improvements, which may need to be deferred to the PC21 period.”

The regulator told the company to deliver its priority requirements “notwithstanding the variations to annual budgets which may occur”. It added: “This includes all the critical development work funded in the PC15 final determination, which the company is required to complete in time to inform its PC21 business plan submission.”