Ofwat sets principles to guide public value

Ofwat has adopted a principles-based approach to supporting water companies to deliver further social and environmental value.

Following publication of, and responses to, its public value discussion paper in December 2020, Ofwat settled on providing a flexible approach within the context of a framework to help drive consistency. It noted flexibility was needed in recognition of clear differences in “companies’ resources and capabilities, and that community and environmental needs are different in different areas; within company boundaries, between companies, and between England and Wales. This means that what social and environmental value is delivered, and how much of it, is likely to be area and context-specific.” But it also argued that a level of consistency would be helpful, including for the forthcoming price review.

The seven principles are:

• companies should seek to create further social and environmental value in the course of delivering their core services, beyond the minimum required to meet statutory obligations;

• the mechanisms used to guide activity and drive decision-making should facilitate the delivery of social and environmental benefits that are measurable, lasting and important to customers and communities;

• companies should be open with information and insights on operations and performance;

• delivery of public value outcomes should not come at greater cost to customers without customer support;

• companies should consider where and how they can collaborate with others to optimise solutions and maximise benefits, seeking to align stakeholder interests where possible, and leveraging a fair share of third-party contributions where needed;

• companies’ public value activities should not displace other organisations who are better placed to act; and

• a company should take account of its capability and circumstances in scoping the delivery of greater public value.

Ofwat said the principles were relevant to all areas of work for regulator and regulated, including its innovation competition, PR24, Water Resources Management Plans, the Water Industry National Environment Programme and Drainage and Wastewater Management Plans. It noted that it is already seeing examples across the sector of companies considering further how to approach public value in their decision-making, their day to day activities and their interactions with their customers and other stakeholders.

Jenny Block, senior director, commented: “We believe these principles provide a framework that can help ensure water companies provide greater public value across all that they do long into the future. We look forward to exploring these principles further with companies and other interested parties."