CCW scores PR24 as six out of ten

PR24 scored six out of ten from a customer perspective, the Consumer Council for Water (CCW) has said in a lessons learned from the price review report.

It said: “On the plus side, if the water companies’ commitments set in their Ofwat price determinations are delivered by 2030, it will lead to tangible improvements in service delivery and for the environment, broadly reflecting evidence of where customers want and accept improvements.” However, the rating is not higher because:

• Affordability pressures have increased and some companies’ support for those struggling to pay is not going far enough. CCW maintained that a single social tariff would end water poverty.

• CCW has concerns about whether the water companies can actually deliver unprecedented commitments over the next five years.

• It’s unclear to CCW how far customers drove decisions in this price review. “Apart from a brief mention in the quality assessment summaries in its price determinations, CCW can find little explanation of how much Ofwat assessed the quality and extent of the companies’ customer engagement and challenge to the business plans, or how that may have influenced Ofwat’s decisions.”

• The weighted average cost of capital should have been lower, according to independent analysis commissioned by CCW.

The consumer watchdog reflected overall: “This is particularly disappointing considering the requirements Ofwat placed on companies in relation to transparency about the use of evidence from customer engagement in its decision making. Ofwat has not followed its own guidance in its draft determinations.”

The report set out a series of 18 recommendations for improving future price reviews. These included raising the bar on consumer research and engaging more with business customers; ensuring company incentives are more strongly linked to billpayers' priorities; and making nature-based solutions the default first option.

CCW noted the wider context of change in the sector and said its recommendations “are therefore a starting point for what must be ongoing conversations with governments, regulators, water companies and other stakeholders on improving the price-setting process”.