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SES and Thames both accept final determination

The boards of Thames Water and SES Water have accepted Ofwat's final determination of the companies’ business plans for 2020-25.

Compared to the draft determination, Thames’s final determination includes an increase in total expenditure allowances, up to £180 million in funding for the North East London water resilience scheme, the movement of some key performance metrics and the reduction of some Outcome Delivery Incentive penalty rates.

In a statement the company said: “While the company is committed to doing all it can to increase efficiency and deliver an improved service for customers, there are some areas of concern. Ofwat’s settlement is most challenging on the water network and does not allow for essential resilience upgrades over the entire system. Therefore, looking forward to the next price control, it will be critical that a programme to replumb London is set in motion.

“A request to Ofwat to make a reference to the Competition and Markets Authority (CMA) was carefully considered as part of the price review process. However, it was agreed a CMA referral would lead to significant management distraction at a time when the company is seeing improvements in customer service and leakage reduction. It was deemed to be in the best interests of both customers and employees to accept the final determination, to ensure certainty in the months and years ahead, and to move forward positively and constructively.”

SES Water has accepted its final determination from Ofwat but highlighted concerns to the regulator regarding the gap in its costs and the required drop in bills.

Recently appointed chief executive Ian Cain said: “Following a detailed review of whether we can meet the stretching performance commitments with the funding we have been given, as well as ensuring we can remain profitable over the five-year period, we have today accepted Ofwat’s final determination on our Business Plan for 2020 to 2025.

“Delivering our revised plan – the most ambitious in our history - will not be without its challenges, largely due to the remaining cost gap and the reduction in allowed revenue from customer bills. We have highlighted this concern to Ofwat, as well as the need to look at the alternative solutions available to ensure we are able to adequately deliver our customer service activities going forwards. We have also emphasised the view, shared by our Customer Scrutiny Panel, that our customers want us to invest to ensure we can continue to supply a resilient supply of high-quality water for the long-term, rather than further reduce the bill for what they already consider a good value, essential service.

“As the incoming CEO it is a privilege to be leading SES Water at what is a crucial time for water companies across the country and we are committed to continuing to build on our strong performance and set new standards in the areas that matter most to our customers.”


Author: Alec Peachey,
Topic: Policy & Regulation
Tags: ofwat , Thames Water , SES Water , PR19


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