Price review process
OFWAT is the financial regulator for the water industry, for more information on the price review process, please see here. We are currently working with OFWAT on the price review for 2024 (PR24) and will set out in guidance the long-term planning obligations on water companies relating to drinking water quality, water resources, SEMD (Security and Emergency Measures Direction) and NIS (Network and Information Systems Regulations).
DWI’s Long Term Planning Guidance
The Inspectorate expects the following in Water Company long-term planning:
- A risk-based approach should be undertaken by Companies planning strategic water resource schemes to identify existing and potential risks to water quality and appropriate risk mitigation options.
- Deterioration of raw water quality should be considered, including how changing weather patterns might affect water quality and the availability of sources, the potential loss of sources and the need for additional risk mitigation, such as catchment management and treatment to remove contaminants.
- The risk of Emerging contaminants (such as PFAS) should be assessed by companies in their raw water sources and appropriate mitigation measures put in place to maintain wholesome supplies.
- Changing or introducing new supplies such as a new source or altering the blend of an existing supply must not increase the risk of consumers being supplied with unwholesome or aesthetically unacceptable water. For example, where sources are blended or changed, water chemistry must be taken into account and potential impacts on quality, disinfection efficacy, hardness, taste and odour must be managed.
- Resilience arrangements in water resource planning should be a priority for business planning purposes with suppliers planning for environmental pressures, demographic changes, shifts in customer behaviours and the impacts of climate change including planning for a once in 500 years drought events, as recommended by Water Resources Management Plan (WRMP) 24. Companies should ensure distribution networks are designed and maintained to provide sufficient supply to consumers during all foreseeable future demands.
- Asset management and asset health should be considered within company risk assessments and this information should inform ongoing maintenance as well as long term strategies for assets. Companies should ensure their assets are resilient to meet the demands of consumers now as well as planning for future risks such as extreme weather events and population growth.
- Interim risk mitigation should be undertaken in all cases until the desired long-term plans and outcomes are delivered, and companies should include investment in local infrastructure to meet current duties to make and maintain a supply.
- Considerations for a changing climate should be integral to short and long-term planning of water supply resilience for water quality and sufficiency. For example, considerations of extreme temperatures and weather events, flooding, logistics, supply chain resilience, treatment efficacy and distribution networks. Companies are expected to incorporate lessons learned from past events into future planning, such as the freeze thaw event in 2018.
- Reducing the risk of lead in drinking water should remain a priority. Companies should be ambitious in their long-term lead strategies and continue to plan and invest in reduction of lead exposure through drinking water. Pilot trials should inform wholescale lead pipe replacement programmes and consider any future reduction in plumbosolvency control. Companies should use the findings of the report Long-term Strategies to Reduce Lead Exposure from Drinking Water and any findings from Green Recovery lead trial schemes in their plans.
- The Security of Network and Information Systems Regulations (NIS) should be considered by Companies for inclusion in their business plan submissions where risks requiring mitigation measures have been identified in their cyber assessment framework.
- Security and Emergency Measures Direction (SEMD) requirements should be included in Company’s business plan submissions where the company has identified hazards through the company self-assessments.
PR24 Timeline
- From present until 31 December 2022, the Inspectorate will be welcoming engagement with companies to discuss specific proposals and the PR24 process.
- By 31 January 2023 companies are required to submit a summary statement (appendix A below) that highlights significant new future risk mitigation measures that a company will be seeking support for in the PR24 proposals.
- No later than 31 March 2023 companies should submit draft business plans (appendix B template provided below) for drinking water quality to the Inspectorate.
- No later than 30 April 2023 companies should submit NIS and SEMD proposals to the Inspectorate.
- By 31 August 2023 all final decision letters will be issued to companies ahead of the deadline for submitting business plans to Ofwat.
- By 29 February 2024 all supported schemes will have legal instruments in place.
Downloadable Appendices
SEMD PR24 Submission Template
NIS PR24 Submission Template
Links to guidance documents
Long Term Guidance Resilience of Water Supplies in Water Resource Planning – a supplementary note to long term planning for the quality of drinking water supplies
Long Term Planning Guidance on Water Quality
SEMD/NIS PR24 Guidance
Water resources planning guideline – WRMP guidance