Six firms to get licence changes to enable direct procurement project delivery

Ofwat is consulting until 22 March on modifications to the licences of six water companies, to give effect to the delivery of large infrastructure projects using the Direct Procurement for Customers (DPC) model.

The six firms – Severn Trent, South West, Wessex, Thames, Yorkshire and South East – all have DPC projects expected in the 2025-30 period. They join five other companies who had DPC licence provisions introduced in 2021.

The modifications concern:

• specifying the process to follow in carrying out DPC procurement;

• the recovery of charges from customers, outside of price controls, to pay the competitively appointed provider for its services – normally the design, build, financing, maintenance and operation of assets; and

• allowing a bespoke interim determination if the project has to return to in-house delivery.

Under Ofwat’s PR24 final methodology, water companies must use DPC by default for any discrete projects with a whole life totex over £200m.