Anglian urges competition watchdog "don’t kick problems down the road"
Anglian Water has asserted that the need for water firms to be able to withstand unexpected shocks "has never been clearer" as it submitted its Statement of Case to the Competition and Markets Authority (CMA), following its referral of its PR19 Final Determination (FD).
The company’s business plan for 2020-25 proposed investment of £6.46bn alongside bill reductions of around 1%, on top of a price drop of 10% in the last five years. Ofwat’s FD allowed expenditure of £5.71bn, with bills coming down by c.10%. Anglian said: “Ofwat’s FD underfunds Anglian’s plan for base expenditure; for enhancement expenditure; and for growth. The shortfall is just under £750m. This underfunding undermines its ability to:
· properly finance its functions
· maintain and enhance services to customers
· maintain the health of network assets
· ensure the region is resilient to increased risks of drought and flooding
· support sustainable housing, population and economic growth
· continue to drive down leakage and maintain its frontier position
· ensure that future customers do not pay more than they should because opportunities to address these challenges were not taken as part of PR19.”
The company also highlighted the following aspects as it submitted its statement to the CMA:
• Its solid track record – “Anglian is a respected, sector-leading company: for almost two decades the company has been upper quartile (and often first) on leakage, service, and performance.”
• Its stated purpose – “Anglian was the first in its sector to change its Articles of Association to embed public interest within the business. Anglian’s purpose is to bring environmental and social prosperity to the region it serves through its commitment to love every drop.”
• The unique challenges it faces, serving the driest and one of the fastest growing parts in the country, with slow moving rivers running through intensive agricultural landscapes. “Combined with climate change, these place particularly acute pressure on the business.”
• The case for urgent investment in the face of the climate crisis. “Anglian’s plan, framed by its Strategic Direction Statement, supported this. For a bill reduction of around 1%, the company proposed a step change in resilience and environmental enhancement, with a Water Resources Management Plan that is eight times larger than PR14, and a Water Industry National Environment Programme which has double the number of obligations compared to the last review.”
Customer support – The plan was backed by Anglian’s customers, and its independent Customer Engagement Forum. Ofwat gave the company an A rating in the Initial Assessment of Plans for customer engagement.
Anglian chief executive, Peter Simpson (pictured), said: “It has never been clearer that a resilient water industry able to absorb shocks and stresses is crucial to the UK economy. That resilience can only be adequately delivered when we plan, invest, and don’t kick problems down the road – particularly when we know that the future is ever more uncertain and volatile.”