Ofwat consults on separate price control for Portsmouth's planned reservoir

Ofwat is consulting on changes to Portsmouth Water’s licence to accommodate a separate price control for the Havant Thicket winter storage reservoir. This new development will provide a cross border supply to Southern Water.

The regulator has decided a separate control is the most appropriate route (over direct procurement of dealing with the development as part of Portsmouth’s wholesale control) to limit the revenue that Portsmouth Water can recover from its customers in relation to the construction and operation of the reservoir, and to set out the treatment of associated revenues from the bulk supply charges levied on Southern Water.

The proposed modifications, out for consultation until 12 November, concern Condition B (Charges) and Condition E (Undue Preference/Discrimination in Charges).

Ofwat commented: “We strongly support the proposed development of the Havant Thicket reservoir by Portsmouth Water to support water transfers to Southern Water. The ambitious approach embraces our challenge to the sector for greater regional collaboration in delivering secure water resources.”

It also noted it is considering representations made to Portsmouth’s draft PR19 determination including suggestions for mid-period adjustments to the price control (a gated cost adjustment process linked to planning and procurement outcomes; a reset of the weighted average cost of capital for 2025-2030; indexation of the cost of new debt; and revenue reconciliation adjustments). These will be dealt with in the final determinations, but won’t affect the licence amendments.

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