Welsh Water has accepted its PR24 final determination (FD) – the first company to publicly do so, followed swiftly by Severn Trent.
Welsh Water’s settlement will see a 58% rise in total expenditure to £6bn, compared to PR19.
Pete Perry, chief executive, commented: “We have thoroughly reviewed Ofwat’s FD, and the detailed commitments contained therein, and intend now to focus solely on gearing up to deliver on our obligations to customers and regulators over the next five years and beyond.”
Perry acknowledged the “significant change” made by Ofwat since the draft determination and said the FD “reflects a balanced approach to addressing the overall risk and return package, affordability of bills, the requirements of the environmental regulators, and the sustainability of our operations, as part of a long-term plan to deliver the outcomes our customers and stakeholders expect”.
Nonetheless he said delivery would be challenging. But: “We are absolutely focused on achieving performance levels that move us out of our current ‘lagging’ status as assessed in Ofwat’s annual Water Company Performance Report.”
• Regulators had less positive news for Welsh Water in their annual review of its Water Resources Management Plan (WRMP) for 2023-24. A letter from Ofwat, Natural Resources Wales and the Environment Agency highlighted “significant concerns” relating to security of supply and environmental risk. The letter said: “We are concerned that current performance is making achieving the planned starting point for WRMP24 extremely difficult, especially for leakage and total Distribution Input and that this could impact zonal supply demand balances in the 2025-2030 period.”
The watchdogs told the company to:
Improve its performance on reducing leakage as a priority. “We are concerned that leakage has increased by 8.4Ml/d (3.27%) since 2022/23 and is not on track to meet the WRMP24 starting point.”
Ensure it meets its per capita consumption WRMP24 starting position. “Whilst the company [is] close to its WRMP24 position, it is 7.7Ml/d off track from its WRMP19 forecast.”
Take urgent action to reduce demand for water. Distribution Input is 4.7% above the WRMP24 2023/24 forecast, driven mainly by failure to reduce leakage.
Achieve a Supply Demand Balance Index score of 100 in 2024/25. The letter said the company was off track by 36.8Ml/d from its WRMP19 supply demand balance forecast.
The regulators also set out required actions and reporting requirements.
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