'Golden opportunity' to end boom and bust
Government recommendations that could resolve the long-standing issues of cyclicality in the water sector present €š¬Ã..."a golden opportunity€š¬ to end the boom-and-bust effects of the five-yearly AMP cycle on the industry's supply chain.
A report by HM Treasury’s Infrastructure UK in collaboration with regulator Ofwat and the water industry sets out a number of recommendations to improve certainty, productivity and value for money; and to reduce the regular round of significant redundancies in the sector.
Called Smoothing Investment Cycles in the Water Sector, the report reveals that more than £600M could be saved in the water industry every five years if the recommendations. Thousands of jobs losses could also be prevented over the next five years. Ofwat will publish its Future Price Limits consultation this autumn, which will examine how these recommendations can be adopted, and set out the future process for price reviews.
The recommendations include:
• Developing effective incentives that drive choices for investment across the transition, including, where appropriate, bringing projects forward, recognising the balance of costs and risks between company and customer
• The water companies committing to early development of projects in advance of the next pricing control period
• The utilities initiating early engagement and improved integration with their supply chains to improve productivity, efficiency and promote innovative solutions
Chris Newsome, asset management director at Anglian Water said: “The industry should support the recommendations made in this report, which highlights the need for regulators, water companies and their supply chains to work more collaboratively to address the issue.”
Keith Mason, senior director of Finance and Networks at Ofwat, said: “Ofwat’s work on Future Price Limits principles will help address a number of incentives in this area, encouraging innovation and longer-term planning.”
The Civil Engineering Contractors Association said it hopes this report will be taken up by water companies.
- CIWEM blueprint urges incentives to cut emissions CIWEM is urging regulator Ofwat to offer financial incentives to help the water industry play its part in meeting an 80%... Read More >
- Task group reports to Ofwat on building water sector resilience A group set up by Ofwat to consider how the water sector can become more resilient has made ten recommendations in its... Read More >
- AECOM launches Natural Capital Laboratory Global infrastructure services firm AECOM has launched a Natural Capital Laboratory, located on a 100-acre site near Loch... Read More >
- The end of 'business as usual' in the water sector? James Connolly, head of partnerships at digital asset and works management company eviFile, assesses the message coming... Read More >
- Ofwat's assessments keep water companies in check The regulator's initial assessment of water companies' business plans reveals that a tight financial settlement is on the... Read More >
- Ofwat's PR19 assessments: How the industry reacted After Ofwat published its initial assessments of water companies' business plans for 2020-25, we look at the responses... Read More >
- Offsite build powers South East Water's £22M treatment works expansion South East Water's expansion of Bray Keleher Water Treatment Works is in full swing, with offsite manufacture aiding... Read More >
- Comment: Capital Maintenance comes to the fore The tight cost of capital set by Ofwat for PR19 will mean water companies will need to place the emphasis on maintenance... Read More >