5 Things Important to Water Company Developer Services Teams as They Build New Connection Charging Arrangements for 2025-26
As we approach February 2025, when the new connection charging arrangements will be published, Water Company Developer Services teams are preparing for the significant changes these new arrangements will bring. The updated charges will come into force from April 2025, and water companies must start planning now to meet the expectations of both regulators and customers.
Here are five key areas that Water Company Developer Services teams need to focus on:
- Adapting to Regulatory Changes
One of the most significant shifts is the removal of activities from the Network Plus Price Control. This means Developer Services teams will need to act as if they have their own P&L, eliminating cross-subsidy practices of the past. Furthermore, regulatory scrutiny around charges and cost reflectivity will increase throughout the next AMP, as part of the broader initiative to promote competition through Self-Lay Providers (SLPs) and New Appointment and Variations (NAVs). The level of competition varies greatly across the country, so companies with low penetration need to be agile in adapting.
- Responding to Economic Pressures
The government’s continued emphasis on building new homes, combined with inflation and rising material costs, will place additional pressure on water companies to develop efficient charging structures. The construction industry already faces resource shortages, and these economic factors will impact not only the ability to meet home-building targets but also the cost structures involved in new connections. Striking a balance between affordability and maintaining service standards will be crucial.
- Learning from Past Charging Arrangements
Charging arrangements taught water companies valuable lessons, particularly around customer satisfaction and cost management. Increased costs can negatively affect customer experience, making it vital for companies to streamline their processes and reduce operating costs wherever possible. Another key takeaway is the need to adapt delivery contracts as work volumes fluctuate, ensuring contractors remain viable even as workloads change.
- Ensuring Flexibility in Charging Structures
Flexibility in charging is essential, particularly when catering to a wide range of developers—from small SMEs to large-scale builders. Protecting customers where competition is insufficient is critical, and environmental incentives could also play a significant role. For example, smaller developers might find it harder to meet water efficiency standards, leading to higher infrastructure charges, while larger builders may benefit from discounts. Developer Services teams must carefully consider how these charges impact different customer groups.
- Integrating Sustainability and Environmental Goals
Sustainability is no longer a “nice to have”—it’s a core driver for AMP8. With water scarcity becoming a major issue, particularly in the South of England, developers are increasingly required to build water-neutral homes. This has a direct impact on connection charges, as water companies need to reflect these environmental requirements in their pricing structures. Developers who build water-efficient homes may benefit from lower charges, but those who are unable to meet these standards will face higher costs.
Conclusion
Water companies face a complex and evolving landscape as they build their new connection charging arrangements for 2025- 26. By focusing on regulatory compliance, economic realities, lessons from the past, charging flexibility, and sustainability, Developer Services teams can position themselves to meet both regulatory requirements and customer expectations. The time to start thinking about these changes is now.
By Rob Upton-Moir
Rob Upton-Moir is chief of staff at Skewb. To speak with him about this topic in more detail, you can connect with him on LinkedIn.
