Ofwat has rejected calls to change its charging rules to let appellant companies implement whatever ruling the CMA determines from April 2021. The updated charges will now not come into place until 2022.
The CMA has updated its approach to the cost of debt and the cost of equity for the four water company appeals to PR19 business plans. The body has launched a consultation to its revised approaches that will inform the final redetermination in mid-February.
Ofgem's decision to shift on cost of capital in its final determinations for RIIO2 could be seen to have weakened Ofwat's position in convincing the Competition & Markets Authority to back its original position on returns. Alternatively, it could provide the ideal opportunity for compromise. Ruth Williams looks at the options.
Anglian, Bristol and Northumbrian have asked the water regulator to extend the charges deadline for 2021/22 to accommodate changes in the CMA's redetermination, which is due to be published in February
Yorkshire Water has accused Ofwat of resorting to "populist" tactics, with an "unrestrained attack" on foreign investors in the sector. The company warned that the regulator risks undermining trust in the system and driving away investors. The accusations are included in the latest submission to the PR19 appeals.
The CMA has confirmed it will publish its final determinations for Anglian, Bristol, Northumbrian and Yorkshire in February instead of December. It said the high level of stakeholder interest in the appeals meant it would make full use of the time available.
Anglian, Bristol, Northumbrian and Yorkshire Water may have to wait until February for a decision on their appeal against Ofwat's final determinations. Utility Week understands the CMA is consulting on extending the timetable to conduct as robust a review as possible
Ofgem has written to the CMA asking it to consider the impact on other regulated sectors of its stance on the cost of capital in water. Ofgem urged the CMA to ensure its redetermination is not “treated as making broader assessments beyond the present and specific context of PR19”.
Utility Week looks at the key themes emerging from the responses to the Competition & Markets Authority’s initial findings on the PR19 appeals. Was the panel qualified, did it have enough time and could an unhappy Ofwat move towards a judicial review?
Consumer advocate Citizens Advice has calculated that the Competition and Markets Authority’s findings in the appeal of four water companies’ price review could cost households as much as £3.7 billion by setting a "dangerous precedent" for energy networks' price controls.
The four water companies that appealed Ofwat's final determination for PR19 have said the Competition and Market Authority's preliminary redetermination strikes a better balance between risk and reward for investors but still doesn't go far enough towards improving the financeability of their business plans.