REG - Water Services Auth - Majority of companies to return money to customers

United UtilitiesAnnouncement

14/11/2023 08:15

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RNS Number : 3047T  Water Services Regulation Authority  14 November 2023

Ofwat confirms majority of companies will return money to customers

 

Ofwat is today confirming the financial penalties and payments for all water
companies for the 2022-23 year, with the majority of companies having to
return money to customers.

 

The determinations also include funding for the green recovery programme.

 

Thames Water will return the most to customers, with a final determination of
£73.8m.

 

The final determination follows on from the announcement of draft decisions in
September, the consultation for which closed on 18 October 2023.

 

ENDS

 

Notes to editors

·    The links to the final decisions can be found on the Ofwat website
here
(https://www.ofwat.gov.uk/regulated-companies/price-review/in-period-odi-determinations/in-period-determinations-for-2022-23/)
.

·    For some companies the final revenue adjustment that will be applied
to 2024-25 can differ from the reported outcome delivery incentive (ODI)
payments for the year because other adjustments may be included. For example,
Severn Trent's revenue adjustment includes additional funding for Green
Recovery investment, and the recovery of deferred outcome delivery incentive
payments from previous years.

·    There are some changes for specific companies from the draft
decisions.

o  The amount being returned to customers by Southern Water accounts for an
additional £21m which will be deferred to 2025-26

o  We adjust the size of water companies' net ODI payments to reflect their
marginal rate of corporation tax. This ensures that companies receive the
level of ODI payments as envisaged in the PR19 final determinations, which
maintains the degree of financial incentive intended by PR19. If we did not do
this, the financial incentives PR19 intended for companies would be weakened.
A 0% tax rate has been applied to Thames Water and Anglian Water, after
adjusting for the funding those companies received at PR19 (when it was
assumed that they would pay some tax during 2020-25) to ensure fairness to
customers. This change is based on additional evidence submitted by the
companies, including substantive detail on their tax losses, as well as the
benefits of 'bill smoothing' measures.

·    We carry out in depth analysis of water company performance through
publications such as our Water Company Performance Report and Monitoring
Financial Resilience report.

·    Our 2019 price control determinations set the price and service
packages that companies have to deliver through to 2025. The ODIs are the
financial or reputational consequences for companies of outperformance or
underperformance against their performance commitments. Performance against
the majority of performance commitments is reviewed annually so the financial
consequences happen close in time to company performance and customer
experience. The payments will affect the amount of revenue companies can
recover from customers through their 2024-25 bills.

 

 

 

 

 

 

 Company                             Ofwat FD payments including C-Mex and D-Mex (£m)   ODI payments deferred from 2021-22, or to 2025-26 (£m)   Green economic recovery (£m)   Other adjustments (£m)   Final determination on total ODI payments to be applied to customer bills in
                                                                                                                                                                                                         2024-25 (£m)
 Affinity Water                      -8.088                                             0                                                        0                              0                        -8.088
 Anglian Water                       -22.362                                            0                                                        0                              -4.822                   -27.185
 Dŵr Cymru                           -18.314                                            0                                                        0                              -5.766                   -24.080
 Hafren Dyfrdwy                      -0.401                                             0                                                        0                              -0.085                   -0.486
 Northumbrian Water                  -0.113                                             0                                                        0                              0                        -0.113
 Portsmouth Water                    -0.042                                             0.343                                                    0                              0                        0.302
 SES Water                           -1.123                                             0                                                        0                              0                        -1.123
 Severn Trent Water                  26.983                                             31.594                                                   30.129                         -0.009                   88.698
 South East Water                    -5.188                                             0                                                        0                              0                        -5.188
 South Staffs Water                  0.328                                              0                                                        0.756                          -0.216                   0.869
 South West Water (South West area)  -9.244                                             0                                                        0                              0                        -9.244
 South West Water (Bristol area)     -2.573                                             0                                                        0                              0                        -2.573
 Southern Water                      -42.903                                            21.451                                                   0                              0                        -21.451
 Thames Water                        -100.719                                           0                                                        0                              26.953                   -73.766
 United Utilities                    25.284                                             0                                                        0                              -0.055                   25.229
 Wessex Water                        0.718                                              7.242                                                    0                              0                        7.960
 Yorkshire Water                     -19.830                                            0                                                        0                              0.005                    -19.825
 Industry total                      -177.588                                           60.630                                                   30.885                         16.006                   -70.066

 

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