Ofwat is consulting until 27 October on new connection charging rules to complement the deregulation of developer services that it will implement as part of PR24, and to encourage greater water efficiency and more sustainable drainage across all types of new development.
To advance competition, the regulator will remove the contestable activities involved in connecting new homes to the water and wastewater network from the price control. Ofwat said it will both refine how companies set their infrastructure charges and seek to ensure customers remain protected from abuses of market power. Its proposals included:
requiring companies to tether charges for typically uncontested sites to those of typically contested sites;
increasing transparency and supporting the market through a requirement to further unbundle charges for activities involved in service connections;
introducing two new scenarios for which companies will publish worked examples, to offer additional assurance to developer customers at sites not represented by existing scenarios;
providing enhanced guidance via Regulatory Accounting Guidelines on how to allocate costs to developer services;
a market review prior to PR29, for companies to demonstrate how they support the developer services market; and
requiring companies to set infrastructure charges taking account of differences between actual and forecast costs and revenues.
Ofwat has also proposed a common framework for environmental incentives in England, for implementation in April 2025. It previously made clear each water company will need to collect revenue from the developer of every site in its area so that environmental incentives can be funded from within the developer community.
This will be collected as a new environmental component within the infrastructure charge, and companies will be required to offer environmental incentives in accordance with guidance.
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