Ofwat’s chief executive has said that despite some calls for early regulatory adjustments, she currently sees no evidence for immediate intervention.
In an open letter, Fletcher said concerns had been raised that customers may benefit more from earlier regulatory adjustments, rather than waiting until the end of first year of the AMP.
In April Fletcher wrote to chief executives to say adjustments to the regulatory regime would be considered when the impacts of the pandemic were better understood and urged companies to put the wellbeing of employees and customers ahead of regulation concerns.
Fletcher’s most recent letter said Ofwat had not yet seen any evidence in favour of taking early action. She explained adjustments would be evidence-based and taken in the round considering all relevant circumstances and would take into account companies’ individual response to the challenges of the pandemic.
“While we will be careful to ensure that we do not reward poor management or poor governance, or companies that seek to put aside key ambitions of PR19, please be reassured that we will not assume the benefit of hindsight when considering a company’s performance during the crisis.”
Fletcher said discussions with companies had brought up three shared ambitions of Ofwat and the sector:
She cited the need to advance capital expenditure programmes as quickly as possible, not least to give suppliers visibility of future projects.
Secondly, commitments made in PR19 should be maintained. She said she had seen “innovative approaches” to companies honouring these commitments despite difficult circumstances.
Finally, companies should continue to prioritise customers’ interests, especially vulnerable ones and those who may struggle to pay their bills as well as planning for how to deal with other incidents during coronavirus working conditions.
“We are grateful to all your staff who have overcome challenges and shown their public service spirit to focus on delivering essential services to your customers,” Fletcher said. “I have also been encouraged to see some in the sector examining ways in which they can support a green economic recovery.”