Water companies must ensure their PR19 business plans are “real and meaningful” and are not distorted by “optimism bias”, a senior figure at South West Water has urged.
Speaking at Utility Week Live, Mark Worsfold, director of asset management at South West Water, said the “optimism bias” associated with business planning needs to be challenged to “make sure the plan reflects the real values and benefits for customers”.
“Optimism bias is where, going into a price review particularly, you see a desire within the companies that every particular problem is the most important priority within the business, and that all of these things can be accommodated within the next five-year business plan, and that the benefits associated with a particular aspect are far greater than actually exist,” he said.
He added that, in order to get things into a business plan, a lot of people will try to “get the costs down and hype the benefits up”.
“There is a real optimism bias associated with people hyping those things,” he said. “The reality is that if you had a business plan that contained all of those things, a) you couldn’t deliver it and b) it’s going to cost you a lot more to deliver it.”