The regulator has fleshed out its ideas for setting wholesale price limits in 2014 in a way that focuses on outcomes rather than outputs. It includes proposals to encourage more bulk water trading between companies, discourage unsustainable abstraction and address a bias towards capital expenditure.
The consultation document outlines four packages of measures to choose between, with a trade-off between flexibility for companies and implementation risk. The package Ofwat considers would be most effective depends on companies providing high quality information in their business plans.
Ofwat reaffirmed a commitment to using the concept of regulatory capital value, linked to the retail price index at least until 2020.
The consultation runs until 28 September.