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PR24

Ofwat Considers A Change Control Process For Risky Price Control Deliverables - Ofwat is consulting until 10 October on introducing a change control process for a subset of price control deliverables (PCDs) – the mechanism which sets out the key outputs and outcomes that companies must deliver from AMP8 enhancement expenditure.

Ofwat said where costs are greater than 0.5% of the wholesale water or wastewater totex, they would be considered material and new the change control process justified for a subset of PCDs where companies have less ability to manage delivery risk.

Elsewhere in the consultation, Ofwat said non-delivery PCD clawback would not be applied at the end of the 2025-30 period where a company has started work and has spent at least 70% of the allowed expenditure but the output is not completed; this would only be applied if the output is still incomplete by the end of the 2030-35 period. In contrast, the clawback would stand where outputs are not started or less than 70% of the cost allowance spent. In either case, late delivery penalties would be applied in the form of a time incentive PCD so that companies are no better off by delivering late.

Water Resources

England Braced For The Spread Of Drought - The National Drought Group (NDG) – which includes the Met Office, government, regulators, water companies, the National Farmers’ Union, Canal & River Trust, anglers, and conservation experts – has warned drought may soon be designated in more parts of England.

Recent rain has done little to abate falling reservoir levels and groundwater levels. Across the country, reservoir levels are now 56.1% full on average compared to the average for this time of year of 82.8%. The lowest reservoirs are the Pennines group (29%) and Yorkshire stocks (30.3%). The Environment Agency has issued 19 drought permit s to Yorkshire Water, allowing it to release less water from 19 reservoirs to maintain river health, to maintain public supplies. The permits last for six months.

The NDG reported a wide range of impacts from the dry weather, including wildfires and peatland drying, closure of around a fifth of the canal network, poorer crop yields and early harvests, and multiple wildlife impacts. The group said it would take a wet autumn and winter to reverse the impacts of seven continuous months of below average rainfall, and that flooding during a drought is possible, including flash floods as dry soils struggle to soak up intense downpours.

Governance

Ofwat Consults Of Fit And Proper Person Tests For Water Bosses - Ofwat is consulting until 23 October on enacting a rule that will require all water companies to assess whether those being appointed to senior positions – including as CEO and directors – have the necessary skills, experience and financial expertise. This is under new powers from the Water Special Measures Act 2025.

Three core standards will be required:  

• Honesty and integrity

• Knowledge and experience

• Financial soundness.

From 1 April 2026, water companies will be responsible for assessing individuals as part of recruitment and annual reappraisals, and for reporting to Ofwat annually and in near real time for new recruits or changed positions. The news came the week CIWEM terminated the employment of its chief executive , Anna Daroy for conduct shortcomings. The Insolvency Service has disqualified Daroy from serving as a company director for 11 years due to historic Covid loan abuse.

Defra Defends Its £100bn Nationalisation Cost Estimate - Defra has published details of how it arrived at the conclusion that nationalising the water industry would cost £100bn.

Defra said its three central assumptions were:

• The regulatory capital value (RCV) of the water sector is the closest proxy for the total value of the sector’s debt and equity (£99.3bn in 2024 and £106.7bn in 2025, according to Ofwat data).

• The total cost of nationalisation would reflect the cost of purchasing the equity in companies and the cost of assuming their existing debt liabilities.

It is not appropriate to apply a discount or a premium to RCV, given the significant uncertainties and possible variation between companies.

The publication came in response to questions and criticism that the £100bn price tag was over-inflated, and the use of alternative nationalisation costings by other stakeholders.

Customers

Complaints Fall But More Are Escalated To CCW  - Household complaints to water companies fell by 8% to 205,853 in 2024-25, but complaints escalated to the Consumer Council for Water (CCW) were up 3% to 8,235, the highest number for nine years.

In its latest complaints report , CCW pointed to higher bills in explanation, noting bills dominated reasons for customer complaints (accounting for 63% made to companies and to 66% to CCW). Among those brought to CCW, there was a 138% rise in complaints about the scale of bill increases, while the number of people saying they could not afford the higher charges jumped by 39%.

Elsewhere, complaints to CCW about poor experiences with smart meter installations grew 48% on 2023-24 but those about environmental issues fell 31%.

In terms of company performance, Wessex and Portsmouth retained their top spots – and were joined by Bristol Water. At the opposite end of the table, putting in the worst performance, Thames and Yorkshire were joined by South West, along with SES and Affinity.

Drinking Water

Scottish Public Water Supplies At 99.94% Compliance - Public water supplies in Scotland remained of high quality in 2024, reaching 99.94% compliance. Scottish Water’s performance improved in terms of samples taken from customer taps and service reservoirs, but there was a slight decline in the results from water samples leaving treatment works. However, in its annual report , the Drinking Water Quality Regulator criticised “too many avoidable incidents” and said the 34 detailed investigations it had to conduct was “too high” a number.

David Reynolds, the DWQR since September 2024, said: “Our drinking water in Scotland is amongst the finest in the world, however we need to invest to ensure this remains true. Scottish Water is managing a number of risks, and I would like to see these greatly reduced by ensuring assets fail-safe when things go wrong. “Consumers expect their tap water to look and taste good. I am disappointed in the number of incidents where consumers received discoloured water and Scottish Water needs to do more to prevent these situations.” 

Wastewater

South West And Anglian To Pay £86m Of Wastewater Penalties - Ofwat has confirmed that Anglian Water and South West Water must pay a total of £86.8m due to breaches of their legal obligations in managing wastewater treatment works and networks. Anglian Water is responsible for £62.8m of this amount, while South West Water will fund £24m. These penalties follow public consultations on the draft decisions published in July.

Ofwat found that both companies failed to operate, maintain and upgrade their wastewater assets adequately, resulting in insufficient capacity to handle sewage and wastewater flows. Additionally, the regulator criticised the lack of oversight by the senior management and boards of both companies. This announcement marked the closure of five wastewater enforcement investigations by Ofwat in 2025, including earlier cases involving Yorkshire Water, Thames Water, and Northumbrian Water. Together these represent £240m of enforcement interventions.