The statement sets out the government's strategic priorities and objectives for the water regulator and will no doubt be both relevant and influential to the way that the Ofwat oversees the forthcoming public water company ‘price review 2019’ (PR19) just starting.
Defra refers to two priorities in particular - securing long term resilience (to water scarcity) in the water sector, and protecting vulnerable customers against high prices.
The NFU agrees that future supply issues are becoming increasingly important. The mild winter weather of 2016-17 has seen recent (March 2017) public reservoir, river and aquifer levels drop to below normal levels across England.
With the ‘Open Water’ market for non-household retail services due to be launched on 1 April, it is interesting to note that Defra seems to be in no hurry to make a decision on whether to open the retail market for household customers.
We can also expect the future publication of a National Policy Statement on water that could complement the work of the National Infrastructure Commission by highlighting the need for nationally significant water supply infrastructure projects.
In keeping with the focus of the (still awaited) 25 year Environment Plan, Defra also highlights the importance of the ‘natural capital’ approach to environmental improvement.
Defra proposes a role for Ofwat in encouraging the sustainable use of natural capital by water companies, by encouraging them to “have appropriate regard to the wider costs and benefits to the economy, society and the environment”.
The draft Defra statement also includes provisions for water companies to plan and invest to meet the needs of current and future water and wastewater customers, promote markets to drive innovation in resilience, protect and support vulnerable customers, and focus on the needs of small business customers who could struggle to access the best deals.
The Defra consultation on the strategic priorities for Ofwat is available via this link
The deadline for response is 11 April and members wishing to contribute to the NFU response should send their comments to cGF1bC5oYW1tZXR0QG5mdS5vcmcudWs= by 4 April.