Bristol Water boss ‘confident’ about PR19 outcome

New business planning process will “start and finish with the customer”

Bristol Water chief executive Mel Karam is “confident” that the company will have a “good outcome” from the next price review – PR19.

He said his objective is to “make sure that we have an effective business planning process that starts and finishes with our customers in mind”.

“If we manage to do that, which is our intention, then by definition we should have fallen in line with the regulatory expectations of a good operator,” he added.

Karam told Utility Week in an interview that he is confident the company will achieve this objective and, “to the extent that I believe that aligns with the regulatory requirements, I’m confident that we will have a good [PR19] outcome”.

Ofwat is due to publish its draft methodology for PR19 on Tuesday (11 July).

Bristol Water has run into trouble during previous price reviews. In both 2010 and 2014, it disputed Ofwat’s final determinations, triggering referrals to the Competition Commission and the Competition and Markets Authority (CMA) respectively. The 2014 referral was largely knocked back by the CMA, which found Ofwat’s critique of Bristol’s business and investment plans persuasive.

Karam acknowledged this difficult period for the company and its impact on Bristol Water’s relationship with the regulator. 

“Any company which ends up in a disagreement with its regulator twice in a row should look carefully at what it’s done and what it’s doing,” he admitted.

For PR19 he added: “We do not want to be in those circumstances where we’re at odds with our regulator – that is not a good position to be in.”

Speaking about the wider water sector, Karam insisted that it is “hugely important” for the whole of the industry to “work together to demonstrate that privatised utilities add a legitimate value to society as a whole”.

The lead-up to the June general election raised questions about the legitimacy of privatised utilities, including privatised water companies.

Karam said the issue is “not just about prices and services”, but is about “the trust and confidence society has in us as good operators”, and “custodians of strategically important assets and services”.

“They need to trust us that in the short, medium and longer term in particular, we look after their interests and that we are looking after the infrastructure for them in the longer term.”

These sentiments echo those expressed by Ofwat chief executive Cathryn Ross in a recent lecture at the London School of Economics, where she said the role of the regulator is “ultimately to ensure that the public have trust and confidence in privately-provided water and wastewater services”.

“The relationships that services providers have with their customers matter enormously,” said Ross, adding: “If people look at the governance structures within these companies and look at what they are reporting and don’t feel confident they are operating in the public interest, they worry. That trust and confidence – such a fragile thing – gets chipped away.”

The full interview with Mel Karam will be online next week, and in the 14 July print issue