The Competition and Markets Authority (CMA) has nudged back the estimated date for its PR19 final redeterminations.
The watchdog now expects to deliver its verdicts on the business plans of Anglian, Bristol, Northumbrian and Yorkshire Water by “late” February, having previously indicated they would be ready by the middle of the month. This was already an extension from the original target of late December. The statutory deadline of 18 March remains unchanged.
It is close to one year since the four companies chose to reject Ofwat’s final determinations and appeal to the CMA.
The regulatory body published its preliminary findings in September but looks set to revise those ahead of the late-February deadline.
The CMA undertook consultations and further hearings on its approach to the cost of equity, cost of debt and cost of capital that would lower the weighted average cost of capital (Wacc) by around 0.3 per cent from its provisional findings – aligning it more closely with Ofwat’s final determinations.
There is one final week for representations to be made to the regulatory body by all parties before the CMA prepares its determination to send to Ofwat.
The change of approach to the cost of equity and debt so late in proceedings was criticised by the appellant companies and investors for not being based on new evidence, but on revised judgement.
Sector analyst Nigel Hawkins said there would inevitably be pressure on the CMA to find a compromise.
He said: “The odds must be on some sort of cobbled together deal that Ofwat and the CMA can both find acceptable, possibly at the prompting of the Treasury and Defra so that PR19 can be amicably concluded.”
The latest delay in publication of the CMA’s findings puts pressure on the gas and transmission networks mulling an appeal of Ofgem’s final determinations. The expected deadline for them to accept or reject the regulator’s stance is 3 March.