CMA confirms push back to February date for redeterminations and publishes latest submissions

The Competition and Markets Authority (CMA) has formally shifted back its target date for sending final determinations for Yorkshire Water, Anglian Water, Northumbrian Water and Bristol Water to Ofwat to mid February.

The CMA had targeted December delivery, which would have been in time for the water companies to apply its decisions to prices from April 2021. The updated timetable published on its website last week set out that it will now extend its analysis phase until mid January and provide determinations a month later.

Ofwat argued for an extension within the statutory deadline of 18 March in its response to the CMA’s Provisional Findings (PFs). Ofwat commented in its reply to companies’ responses to the PFs, also published last week, that “there remains a lot that the CMA needs to do and – even with the additional time that the CMA has now decided to take”. It advised the CMA to “focus on issues of central importance to customers” and not stray outside the scope of the redetermination as some companies had requested it do.

Elsewhere in its reply, Ofwat said it found aspects of the company responses “very surprising” in putting forward new claims on allowed returns, cost allowances and the use of 2019-20 data – the sum of which, it said, would lead to higher bills than if Ofwat had accepted the companies’ April 2019 revised business plans in full. It counselled: “The CMA should be astute, in our opinion, to avoid the disputing companies seeking to take advantage of this re-determination process to obtain benefits beyond those that they need or have previously claimed. That would involve a highly questionable use of the current process. It would risk creating severely distorted incentives on companies in relation to their handling of future price controls.”

The four companies’ replies were also published last week. These comment on the specifics of the PFs, Ofwat’s response to them and the timetable. For full coverage, see December’s THE WATER REPORT.