PA Consulting’s Wendy Kimpton, an energy and utilities expert, comments on the results of the Ofwat PR24 plans to allow water companies to compete for extra funding for next-zero investments, in an article in Utility Week.
Commenting on these plans, Wendy says: “The challenge for companies is substantial as Ofwat has raised the bar on performance, efficiency, collaboration and competition,” adding “The lower cost of debt and lower levels of gearing for PR24 will be demanding. The proposals on the base service levels required, long-term investment needs, growing pressure on customers’ pockets and company financeability will all be tough for companies to meet.”
Wendy goes on to add that: “Ofwat has set a clear direction of travel but the exact destination and the impact on companies remains to be seen.”
Concluding, Wendy says: “There are few surprises in the headline areas of focus around increasing environmental and social value, better understanding of customers and further improvements in efficiency and innovation. However, there are important changes in the three key building blocks – outcomes, costs and risk and return – that companies may find concerning.”