Ofwat consults on WaSCs' bioresources assets value approach
A consultation on the approach for water and sewerage companies (WaSCs) to value their bioresources assets has been launched by Ofwat.
The consultation, which closes on March 31, 2017, will inform how the regulator allocates the legacy wastewater Regulatory Capital Value (RCV) at March 31, 2020 between the network plus and bioresources controls at PR19 and the information that is required from companies in September 2017.
In order to provide a level playing field for bioresources trading and processing and to protect customer interests, Ofwat said it is important that a robust and accurate valuation of sludge assets supports the proposed RCV allocation to bioresources. The proposed guidance in the consultation document sets out its view of the appropriate approach to asset valuation.
Ofwat currently has a single value for wastewater RCV that is the capital value of its wastewater assets, including bioresources assets, for regulatory purposes. It captures the capital invested in the business and forms part of our building block approach to price controls.
To allocate part of the wastewater RCV to the new bioresources price control, Ofwat will take a focused approach, where the allocation is based on the value of the assets used. A focused allocation means the RCV allocation is not driven by the historic discount to the RCV at privatisation (i.e. the difference between the value of the RCV and the value of the assets).
This is important as to the extent that the economic value of assets is over and above the RCV, it is rightly attributable to customers and their interests need to be protected. The remainder of the RCV after deducting the economic value of the sludge assets will be allocated to the wastewater network plus control.
Alongside this consultation, Ofwat has published a report that it had commissioned from Reckon LLP (with Jacobs) that it intends will be used by companies as they consider their valuation of sludge assets to inform their proposed RCV allocation. The report provides supporting guidance on the topics considered in the consultation.
- Ofwat tells UU, Bristol and Thames to cut £1.3BN from AMP6 plans Ofwat has today written to United Utilities, Thames Water and Bristol Water outlining a £1.3BN difference between the... Read More >
- Water abstraction licence reform - more work ahead Water UK has warned that more work needs to be done to fully understand the effect of the proposals contained in the... Read More >
- Clugston Construction awarded Knostrop WWTW contract Clugston Construction has been awarded a £14.9M contract by the Amey Black and Veatch Joint Venture to provide Civil... Read More >
- Interview: Ben Jeffs, Chief Executive, MOSL “The whole industry has really mobilised around market opening, and the water companies deserve credit for that.” Read More >
- Close-Up: Who will be the big fish in the new water retail market? With a £2.5BN new market for non-domestic water retail to open in England in April, joint ventures, incumbents and new... Read More >
- Water Industry Procurement: could Brexit provide a fresh start? Could Brexit lead to a re-examination of the procurement rules which govern the water industry and other infrastructure... Read More >
- Industry View: Let's not drop the ball after PR19 There must be better alignment between PR19 strategic plans and actual delivery plans if water companies are to get full... Read More >
- Close-Up: From Sludge to Bioresources As a separate price control for sludge takes shape for PR19, who will be the winners from the new market for bioresources? Read More >
- Head of Engineering Our members control and maintain the critical national infrastructure that delivers the gas and electricity services into our homes and... Read more here.
- Assistant gas to grid engineer GENeco is a multi-award winning recycling and renewable energy company. We were created by Wessex Water in 2008 to help our parent company... Read more here.
- Chief Executive Officer The Electricity Association of Ireland (EAI) is the representative body for electricity producers, retailers and distributors on the island... Read more here.