Evolving regulatory framework and new markets

The last price review in 2014 introduced substantial changes, placing an emphasis on agreeing high-level outcomes with customers and on a total expenditure (totex) approach to planning. Combined, these aspects provide significant flexibility in how companies meet customers’ expectation.

Under this flexibility, many companies have reviewed their asset planning approach. Integration of capital and operating solutions under totex has required updates to common risk frameworks, and decision-making processes. Understanding the balance between spend, risk and performance is key to manage this opportunity.

The future

Planning for the next price review in 2019 is well underway, building on and evolving the principles introduced in PR14.
Following the introduction of competition in retail services, new markets for water and bio-resources (sludge) are planned for introduction from 2020. These new markets place further emphasis on efficiency, demonstrating best whole life value across all parties as well as solution types.

Introduction of information platforms will provide further basis for comparison and separate price controls will require further cost allocation steps to avoid any cross-subsidies. Companies are starting to evaluate the implications on their operating models as well as in relation to future investment in assets, particularly those on the boundaries of their operating areas.

We’re helping companies adapt for PR19 and beyond, reviewing their approach to asset planning, assessing efficiency and planning investment effectively to reflect uncertainty and take advantage of new opportunities.


Contact:
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