This is a £3.6 million reduction from the estimate of £41.8 million that was provided in June 2015, Ofwat has said.
However, this is still significantly up on the mid-level estimate of £25.3 million that was set out in 2013.
The revision of the budget follows a letter to Ofwat from MOSL, providing assurance to the Board that it has the “capability and capacity to fulfil its functions”.
The revised estimate reflects a number of activities that have been completed since the June note was issued, including the appointment of a delivery partner by Ofwat and the completion of more detailed planning.
The regulator said the main reason for the change is the identification of a £3.1 million VAT saving by MOSL from the figures presented in June.
“There remain risks and opportunities associated with this budget estimate that may mean the overall budget could still change,” Ofwat said.
At the time of the last estimate, Ofwat chief executive Cathryn Ross told Utility Week the “budget is going to be kept under scrutiny” and that the final total could be lower, but that the £41.8 million budget “is a fair number based on good information.”