Ofwat approves Anglian’s Elsham interim determination

Ofwat is consulting until 7 July on accepting Anglian Water’s proposed costs to deliver the transfer pipe and conditioning plant components of its Elsham scheme that was originally earmarked for delivery through the Direct Procurement for Customers (DPC) route.

Anglian made an application for an interim determination on 22 June, after Ofwat agreed to remove those elements from the scope of the DPC. This was in view of the risk the scheme would not be delivered on time and its criticality to alleviate forecast supply demand deficits, and ensure the company is resilient to meet 1 in 200 year droughts and can meet its statutory environmental obligations by March 2025.

The company applied for addition totex funding of £87.9m for in-house delivery. As part of that sum, Anglian proposed reducing the £9.4m Ofwat allowed at PR19 to design and tender the project by £4.4m in view of the smaller scope of the scheme. The company also asked Ofwat to make a consequential change to one of its Performance Commitments to recognise the in-house delivery.

In a draft determination issued last week, Ofwat said: “Having reviewed Anglian Water’s application, our initial view is that the majority of its requested costs within the application are appropriate and efficient, and in total exceed the materiality threshold for interim determinations in relation to a DPC project. We are, therefore, proposing to accept the majority of Anglian Water’s application and proposing to apply a small challenge in relation to the value of the DPC costs that it should return to customers.” The table summarises this.

Ofwat also set out the details of the Performance Commitment change.