Cost Assessments

Setting performance commitments and incentives to deliver best value for money

Reference: 16/RG/07/39
ISBN: 1 84057 812 2
Published Date: 21/09/2022

Performance commitments (PCs) and outcome delivery incentives (ODIs) will remain at PR19, but there is a question around how the framework should be developed in future.
 
This project identified lessons learned from PR14, options for the future framework, and potential implementation issues. In terms of the future framework, it focused on four key aspects: the use of comparative information; the timeframe over which PCs are set; how ODIs are set; and how customer engagement should be carried out.
 
These topics are expected to be part of Ofwat’s consultations in late 2016 and mid-2017, meaning that the report will be of interest to those involved in that consultation.

The Full Report can be ordered in printed format as normal, or downloaded by section free of charge below:

• Overview
• Executive Summary
• Main Body
• Appendices

Water company benchmarking

Reference: 16/RG/07/38
ISBN: 1 84057 808 4
Published Date: 10/02/2016

This report outlines a methodology for benchmarking performance in the UK water sector. The methodology addresses legitimate concerns over the application of benchmarking in the current regulatory climate, but also enables the benefits of benchmarking to be realised. In addition, the report sets out a set of 50 key performance indicators (KPIs) (broken into 23 ‘main’ customer focused KPIs and 27 ‘secondary’ more technical KPIs) which could be used to benchmark performance. If applied, the methodology and the KPIs could create a more open and transparent sector, leading to improved regulation of companies, drive performance improvements and ultimately, better service to customers.

The future approach to price-setting in the wholesale value chain

Reference: 15/RG/07/37
ISBN: 1 84057 801 7
Published Date: 08/12/2015

The passing of the Water Act 2014 and Ofwat’s Water 2020 programme mean that the approach to pricing in the wholesale water and sewerage value chains needs to be re-considered. Separate price controls, access charges and price signals might be considered as tools to promote contestable markets and more effectively regulate monopoly activities. Allocation of the Regulatory Capital Value (RCV) across the value chain might also be considered. In this context, UKWIR has commissioned FTI Consulting LLP to consider options which might be available for upstream pricing in the future and to undertake a preliminary assessment of those options. This report contributes to the industry’s thinking on these issues by presenting a range of evidence, drawing on theory, practical experience in other sectors and applied analysis of what these reforms might mean for the water industry.

To view a free copy of this report, please click here.