Ofwat Price Determinations

Ofwat has made 4 references from water companies to the CMA for a redetermination following its 2019 price review.

From:
Competition and Markets Authority
Published
19 March 2020
Last updated
9 April 2021 — See all updates
Case type:
Regulatory references and appeals
Case state:
Closed
Market sector:
Utilities
Closed:
17 June 2021

Administrative timetable

Published on 2 April 2020, as required by Rule 7 of the Competition &Markets Authority Rules of Procedure for Merger, Market and Special Reference Groups (CMA17). Any revisions made to the timetable will be published on this website.

Date Action
18 March 2021 Statutory deadline
Mid-March 2021 Target for determination(s) to be sent by CMA to Ofwat
3 February 2021 Final deadline for representations
January 2021 Consultation period
Late November to early December 2020 Third Party and Main Party Hearings
October 2020 - mid January 2021 CMA analysis phase
27 October 2020 Deadline for responses to provisional determination
29 September 2020 Publish provisional determination
17 August 2020 Deadline for main party submissions
Late July to early August 2020 Main party hearings and additional third party hearings if required
25 June 2020 Deadline for third party submissions
Late May to late August 2020 CMA analysis phase
Late May 2020 Deadline for affected water companies’ responses to Ofwat’s reply
May 2020 Third party hearings
Mid May 2020 Parties (Ofwat) present to Group
Early May 2020 Deadline for Ofwat’s response to the affected water companies
Early to mid April 2020 Parties (water companies) present to Group
Early April 2020 Affected water companies submit details of the grounds for redetermination(s)
19 March 2020 References made and initial submission received from Ofwat

Final report

The CMA submitted its final report to Ofwat on 17 March 2021. The summary of the report is below.

(*) On 17 March 2021, the CMA published the Summary of our final report to Ofwat. We have identified a minor transposition error which results in a number of small changes to Northumbrian’s figures in Tables 1 and 8 which we have now corrected in the published version of the Summary as follows. In Table 1, the Average bill under the CMA determination for Northumbrian is revised from £334 to £335. In Table 8, Northumbrian’s wholesale allowed revenue is revised as follows: PAYG from £1487m to £1490m; revenue reprofiling £2m to £3m; Wholesale revenue from £3,226m to £3,230m; the change vs Ofwat’s FD from +£111m to +£115m; and from +3.5% to +3.7%.

(**) We have also made a correction to Northumbrian’s leakage reduction PCs in Table 8-1 to reflect revisions made to Ofwat’s FD, this does not change the determination but we have clarified that these adjusted PCs apply to our determinations.

(**) We have also updated the estimate of CMA costs at paragraph 11.132.

(**) Please be aware that there is a small cross referencing error on page 736 of the CMA Final Report (9.4.21), paragraph 8.205 subparagraph (c). The text refers to Table 8-10 but should instead refer to Table 8-11. Thus the subparagraph should read “(c) to provide new underperformance penalty rates, as shown in Table 8-11; and”

Final submissions

Main party final submissions

Third party final submissions

Consultation Responses

Responses to leakage enhancement totex allowance working paper published 15 January 2021

Responses to Elsham working paper published 15 January 2021

Responses to cost of capital working papers published 8 January 2021

Responses to 2019/20 data for base cost models working paper published 13 January 2021

Consultations

15 January 2021: The CMA is consulting on the appropriate approach to take in these references towards enhancement allowances for leakage. Responses are requested by noon on 25 January 2021.

Working paper – Leakage enhancement totex allowance

15 January 2021: The CMA is consulting on the appropriate approach to take in these references towards Anglian Water’s Elsham scheme. Responses are requested by 22 January 2021.

Working paper – Elsham

13 January 2021: The CMA is consulting on whether to include 2019/20 data in the base cost models for these references. Responses are requested by 4pm on 18 January 2021.

Working paper – 2019/20 data for base cost models

8 January 2021: The CMA is consulting on the proposed approach to take in these references towards two aspects of cost of capital. Responses are requested by 27 January 2021.

Working papers – Cost of capital

Main party post-hearing submissions

Main party replies to the responses to the provisional findings

Responses to provisional findings

Third party submissions

Main party submissions

Provisional findings

29 September 2020: The CMA has published its provisional determinations in relation to the Anglian Water, Bristol Water, Northumbrian Water and Yorkshire Water price controls for 2020-2025 following a reference from Ofwat on request of each company.

The CMA invites comments to be received by 9am on 27 October 2020. Please send representations to: [email protected]

(*) We identified a presentational error in the provisional decision report first published on 29 September 2020 in relation to Tables 9-8 and 9-11, where we presented the results of our analysis of raw equity betas for Severn Trent and United Utilities. The weekly betas presented in these tables have now been corrected. These tables input into the unlevered equity betas reported in Table 9-12, which were presented correctly. Our results and our provisional determination findings are unaffected.

CMA’s approach to water redeterminations

11 June 2020: This document sets out the CMA’s approach to the 2020-2025 Ofwat price redeterminations.

Main party submissions

Submissions following the main party hearings

Replies to Ofwat’s further submissions

Ofwat’s further submissions

Replies to Ofwat’s response to Statements of Case

Ofwat responses to Statement of Cases

Statement of Case

Submissions from third parties

Call for submissions

The CMA is inviting comments by 11 May 2020 on the issues raised in the References from Ofwat and the Main Party Submissions, including from interested parties such as customers and representative groups and other water companies. Submissions may still be made after this date, but earlier submissions will help in scoping our work and will provide an opportunity for any further engagement that may be necessary in relation to the issues raised.

Please send any submissions to [email protected].

Notice of Extension

The CMA has asked Ofwat for an extension of up to 6 months, which Ofwat has granted. This is reflected in the administrative timetable.

Special reference group

24 March 2020: The CMA has appointed the special reference group:

References from Ofwat

In December 2019, Ofwat published its Final Determinations on the price review called ‘PR19’, which will apply to water companies in England and Wales for the period 1 April 2020 to 31 March 2025. 4 water companies have rejected Ofwat’s determinations and have asked Ofwat to refer the disputed final determinations to the CMA for a redetermination.

The 4 companies are Anglian Water, Bristol Water, Northumbrian Water and Yorkshire Water.

Updates to this page

Published 19 March 2020
Last updated 9 April 2021 + show all updates

  1. Final report, appendices and glossary published.

  2. The CMA has submitted its final report to Ofwat, the summary of the final determinations is now published on the page.

  3. Final submissions and an additional response to the cost of capital consultation published.

  4. Additional responses to cost of capital working papers published.

  5. Responses to the Elsham, 2019/20 data and leakage consultations published.

  6. Further third party submissions published.

  7. Consultation responses published.

  8. Additional working papers published. Final deadline for representations is 3 February 2021.

  9. The CMA is consulting on whether to include 2019/20 data in the base cost models for these references. Additional working paper published.

  10. The CMA is consulting on the proposed approach to take in these references towards two aspects of cost of capital. Responses are requested by 27 January 2021. Working papers published.

  11. Update to the administrative timetable.

  12. Main party replies to responses to the provisional findings published.

  13. Changes to administrative timetable.

  14. Additional third party responses to the CMA's provisional findings published.

  15. Third party submissions published.

  16. Main party responses to the CMA’s provisional findings published.

  17. Submissions published following the main party hearings.

  18. Corrections made to Tables 9-8 and 9-11 in the provisional findings report.

  19. Full provisional findings report and appendices and glossary published.

  20. Summary of provisional findings published.

  21. Update to the admin timetable. Publication of the provisional determination to be in late September 2020.

  22. Administrative timetable updated.

  23. Replies to Ofwat’s further submissions and Ofwat’s summary published.

  24. 6 Ofwat's further submissions published.

  25. Additional third party submissions from Balfour Beatty, Cambridgeshire County Council, Citizens Advice, Timothy Farewell and Waterlevel, published.

  26. Additional representations from third parties published.

  27. CMA's approach to water redeterminations published.

  28. Replies to Ofwat’s response to Statement of Case and additional representations from third parties published.

  29. Additional representations from third parties published. Deadline for third party submissions extended to mid-June.

  30. Additional representations from third parties published.

  31. Representations from third parties published.

  32. Ofwat responses to Statement of Cases published.

  33. Call for submissions published.

  34. Third party statements of case published.

  35. Administrative timetable and notice of extension published.

  36. Notice of references published.

  37. First published.

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