Ofwat updates proposals to amend Tideway licence in light of Covid impacts

Ofwat has updated the revisions it proposed in April 2021 to Tideway’s licence, to take account of Covid-19 impacts.

It has provisionally agreed to a new request from Tideway to adjust how the Financing Cost Adjustment Mechanism (FCAM) operates, after the company argued extraordinary macro-economic circumstances are introducing extreme revenue impacts affecting financial resilience, and that the existing FCAM would remove c25% of its revenue from 2024/25. In light of this, Ofwat has withdrawn its April proposal to provide a different depreciation rate for Covid-19 expenditure which would have increased Tideway’s cashflow.

Elsewhere Ofwat stuck with its April plan for a new regulatory date to take Covid delays to the project into account, and proposed a 20:80 sharing rate between Tideway and Thames customers for Covid-impacted expenditure between 25 July 2020 and 30 June 2021.