Policymakers set high bar for green recovery investment

In a joint letter published on Thursday, Defra, Ofwat, the Environment Agency, the Drinking Water Inspectorate and CCW set out their requirements for water company green recovery proposals in more detail, together with information on how schemes will be assessed.

There will be a two-stage process.

First, for initiatives involving no extra cost to the customer before 2025, such as the acceleration of existing AMP7 plans, assessment can get underway “as soon as possible” and will be relatively light touch. There is a preference for “enhanced use of nature based solutions”.

Second, companies were invited to submit proposals for initiatives that will require extra customer cash by 31 January – but the authorities warned there would be a “high bar” to cross to get the green light. This included providing “persuasive evidence” that cost estimates are robust and efficient, including by providing evidence of outturn costs of comparable projects, activity cost benchmarking and third party assurance. Firms must also have ruled out all alternative funding sources and provide evidence of customers’ views of how acceptable and affordable the proposals are in terms of the potential bill impact.

The authorities also told companies that before bringing anything forward for assessment, they need to be on track with their existing investment programmes and performance commitments.