Looking to the future

The UK faces a number of challenges in securing an efficient, reliable water resource. The impact of climate change means that water scarcity will become an ever increasing reality, impacting some regions of the country more than others.

This means we will have to be innovative in how we respond to these issues.

In December 2011, the Government published a Water White Paper "Water for Life" which takes resilience as a key theme. It examines how the industry can become better equipped to repsond to climate change, whilst at the same time ensuring customers come first and water remains affordable for all. In May 2012, a Draft Water Bill was announced in the Queen's speech.

We have worked closely with the Department for Environment, Food and Rural Affairs (Defra) to ensure that changes to the water industry deliver the Government's priorities and prepare the industry for the challenges of the coming decades. We have helped drive debate through the publication of "In whose hands?: exploring vertical integration in the water industry" which looks at what structures best deliver secure, sustainable and affordable water services. Its core recommendation that vertically integrated water companies are the best means of delivering water and wastewater services was adopted in the White Paper.

 

  • Resilience

    Measuring resilience is one of the key challenges facing the water industry. Being able to consistently measure resilience across companies would be useful in helping customers understand their relative risk exposure, regulators and stakeholders in understanding and challenging company performance and to the companies themselves in learning from best practice and driving up standards.  This report recommends that resilience is measured through a basket of measures and we have developed a potential metric to contribute to the current debate.

    Read our report on measuring resilience in the water industry here (PDF 1.47 MB opens in a new window)

  • Wastewater cost assessment

    For PR19 we have commissioned Arup, supported by Vivid Economics, to carry out an independent study into the exogenous factors associated with WaSCs’ operating environments which influence the wholesale costs of wastewater services. The study investigated whether factors such as demographics, ecology, climate, geography and asset legacy issues have a quantifiable impact on the cost of delivering wholesale wastewater services in England and Wales. The work has brought together engineering and econometric evidence to identify and value the drivers of variation in costs between companies. The project assembled narratives on the causal factors that affect efficient costs, data on how these factors vary between regions, and statistical evidence on the relationships between different factors and efficient costs. This integrated approach to wastewater cost assessment adds a new and unifying perspective to existing commentary on the topic. View the report (PDF 6.51 MB opens in a new window).

  • Retail cost assessment

    Together with Northumbrian Water, we have commissioned Economic Insight to consider options for the assessment of household retail costs at PR19 (PDF 2.18 MB opens in new window).

    As part of the last price control process (PR14) Ofwat and United Utilities produced a report considering a range of issues associated with controlling prices for those customers who cannot choose their water supplier. The report reviewed some of the implications of this change in approach to cost assessment and considered a range of options for implementing the retail price control for those non-contestable customers. View the full report for more details (PDF 687 KB opens in new window).

    We have commissioned Equifax and Reckon to consider the role that deprivation and alternative indicators of arrears risk may have in the PR19 household retail cost assessment. View the report (PDF 1.58 MB opens in new window).

  • Upstream pricing concept paper

    As part of the programme of consultation supporting Ofwat's Water 2020 initiative, we have prepared a paper setting out our views on the best approaches to upstream pricing (PDF 1.14 MB opens in new window).

    In response to Ofwat's December 2015 consultation on its approach to regulating wholesale services from 2020 and beyond, we have produced a number of papers to contribute towards the debate. These cover the indexation of price controls, future approaches to the RCV, the development of access pricing, approaches to customer engagement and considerations for the development of a price control for sludge

    Document  
    Changing the basis of indexation from RPI to CPI Download (PDF 175 KB)
    Future approaches to the RCV Download (PDF 175 KB)
    The Framework for Upstream Pricing Download (PDF 175 KB)
    Improving Customer Research and Engagement Download (PDF 175 KB)
    Considerations for separate sludge price controls Download (PDF 175 KB)
  • Our responses to Ofwat consultations

    Our response to the consultation on Ofwat’s draft PR19 price control methodology

    In July 2017, Ofwat published its draft methodology for the 2019 Price Review (PR19). This is part of the Water 2020 process in which we are an active and engaged participant.

    In general, we agree that the draft methodology sets out clear expectations for companies wishing to be judged as “exceptional” at PR19 and we observe that it seeks to establish a very challenging benchmark performance for individual companies.

    Whilst we believe that in many areas the draft methodology successfully addresses Ofwat’s ambitions for the sector, we highlight a few key areas where we suggest that Ofwat considers modifying its approach.

    You can read our response in the following documents:

    UUW response to draft PR19 methodology (PDF 596 KB opens in a new window)
    EY report – balancing risk and reward at PR19 (PDF 430 KB opens in a new window)
    EY report – the cost of equity at PR19 (PDF 347 KB opens in a new window)

     

    Residential retail competition

    In July 2016 Ofwat published its assessment of the costs and benefits of introducing competition for retail services to residential customers in England. You can read our response here (PDF 1.14 MB opens in a new window).

  • Outcomes and performance measures

    In November 2016 Ofwat will be consulting on its approach to setting service performanec commitments at the next price review. This will include the balance between measures and targets being set nationally and companies setting their own measures and targets through local engagement. We have published a paper setting out our proposed approach (PDF 679 KB opens in a new window) as our contribution to the discussion.

  • Valuation of the Bioresources RCV

    Bioresources is being treated as a separate price control in the PR19 process. To support this process and to help to ensure that this is achieved in a way which will provide a level playing field for bioresources trading and processing, Ofwat have asked water and sewerage companies (WASCs) to submit their proposed allocation of the wastewater RCV to bioresources.  The overview of UUW’s submission is available here (PDF 229 KB opens in new window).