Southern Water accepts Ofwat's final determination

After significant discussion and deliberation, the Board of Southern Water Services has decided not to seek a reference of Ofwat's final determination to the Competition and Markets Authority (CMA).

In spite of the very challenging PR19 financial determination by Ofwat, in particular the level of the allowed cost of capital and a punitive Outcomes Delivery Incentive (ODI) regime, the Southern Water Board has reluctantly come to the conclusion that the significant disruption and substantial costs of a CMA referral would not be in the ultimate interest of Southern Water’s customers.

The Board is confident that the Southern Water business plan for 2020-2025 represents a step change in the company’s stated intention of becoming brilliant at the basics and sets out a pathway to a resilient water future for the South East, an area already categorised by the Government as being in water stress.

As the twin challenges of population growth and climate change become ever more real, more extreme weather events are expected which will test the company’s existing and planned networks further than they have ever been.

As such, Ofwat’s quite stringent determination adds to the increased overall balance of risk that the business faces over the next 5 years, but the company is now focussed on improving efficiency and targeting investment to support greater resilience and growth.