Licence changes mooted for six firms to enable direct procurement schemes

Ofwat is consulting until 6 April on its views on the licence amendments that will be required to implement schemes associated with direct procurement for customers – where a water company competitively tenders for financing and delivery of the project by appointing a third-party competitively appointed provider (CAP).

There are two proposed modifications.

A new licence condition to establish the processes by which the water company could undertake the procurement of a CAP. In particular, Ofwat proposed it would need to agree for the company to undertake a DPC procurement and obtain designated status; enter into a contract with the CAP and vary the contract; and revoke designated status;

Amendment of an existing licence condition (Condition B) to permit the water company to recover from customers, outside of price controls, the designated charges that the water company has to pay to the CAP for services. These services will normally include the design, build, financing, maintenance and operation of assets. The CAP charges for these services have not been included in price controls as these will be determined through a competitive tender.

Ofwat said it would use responses to inform a statutory consultation on the final form of the modifications later this year. Initially, the changes would apply only to water companies i where DPC schemes have been identified or where there exists the possibility of a DPC scheme being procured within the 2020-25 control period: Anglian Water, Welsh Water, United Utilities, Southern Water, Affinity Water and Bristol Water.