Ofwat accuses the CMA of “fundamental errors of approach” and presses for more time

Ofwat has accused the Competition and Markets Authority (CMA) of “fundamental errors of approach” in its response to the authority’s Provisional Findings in the PR19 cases of Northumbrian, Yorkshire, Anglian and Bristol Water.

Ofwat argued: “ The errors are both substantive and procedural. They relate in particular to:

(a) the consistency and rationality of its approach;

(b) the adequacy of its reasoning; and

(c) its selective and flawed use of evidence.”

Ofwat also said the CMA's provisional findings were “materially incomplete in relation to some issues…Unless the CMA articulates its intended decisions in sufficient time both to permit consideration and response and to enable the responses to be taken into account, its decision-making will not comply with the principles of fair consultation.”

It has pressed for the CMA to use the whole timetable available to it rather than issuing final findings in December as planned, taking the process through to March 2021.

Elsewhere Ofwat set out its disputes with the actual findings as well as the process. These related chiefly to cost of capital, high gearing, leakage, and cost sharing rates.

The disputing company responses largely welcomed the CMA’s provisional ruling as a step in the right direction towards remedying the problems with Ofwat’s final determinations set out in their Statements of Case. However, they argued the settlement remained stretching and each raised discrete issues on which it would like to see further movement.