The two companies pre-qualified for the ‘enhanced’ status last month.
Since then, both South West Water and Affinity Water accepted Ofwat’s guidance on risk and reward, which included a weighted average cost of capital (Wacc) of 3.85 per cent.
South West Water and Affinity are now set to benefit from a fast track through PR14 as well as financial rewards of up to £17 million and £7 million respectively.
Ofwat will announce its draft determination on limits on prices for the two ‘enhanced’ companies at the end of April. The price limits will cover the period 2015 to 2020.
Cathryn Ross, chief executive at Ofwat, said: “In this price review we challenged companies to change their approach and they have.
“I am pleased to see increased ownership from boards and much greater engagement with customers.
“Such changes are crucial if the sector is to retain the necessary trust and confidence of the public.”
Ofwat’s chief regulation officer, Sonia Brown added: “Our process aimed to encourage high quality, customer-focused plans.
“South West and Affinity’s plans really stood out.”
South West Water said the approval was a “big vote of confidence” and chief executive Chris Loughlin said: “It’s encouraging to be rated by our regulator as having a high quality business plan.”
Affinity Water chief executive, Richard Bienfait, said he was “delighted” with the support shown by Ofwat, and that Affinity can now “start early” with implementing its PR14 plans.
Ofwat will publish draft determinations for enhanced companies on 30 April 2014.
The regulator will allow companies that have not gained ‘enhanced’ status an opportunity to accelerate their progress through the price review and request an earlier draft determination by submitting new evidence by the beginning of May 2014.
If this new evidence meets the required standard, Ofwat will issue draft determinations for these companies in June 2014.
Draft determinations for all other companies will be issued in August 2014.