Ofwat indicates support for most of the CMA’s draft decisions

(by Karma Loveday)

Ofwat has indicated a muted response to the PR24 provisional redeterminations from the Competition and Markets Authority (CMA) for the five water companies that appealed their 2025-30 regulatory settlements.

The CMA has not yet published stakeholder responses to its October draft decisions, but in a summary shared by Ofwat of the key points it has raised, the regulator welcomed the bulk of the Authority’s judgement. It said the CMA decisions are “within 1% of our own 2024 Price Review decisions, when removing the impact of new information”.

It further noted that most of the £556m revenue increase proposed is due to financial market changes providing a rise in the cost of capital; that nearly 80% of companies' additional revenue requests were deemed unjustified; and that the CMA upheld Ofwat’s measures to hold companies to account for delivery.

However, Ofwat said it had called on the CMA to “reconsider some of their proposed changes which we assess would result in higher bills for customers of the five companies than they would have had under our assessment.” No detail was shared on the specifics of this, but likely candidates are the CMA’s simpler cost assessment models and elements of its cost of capital approach.