On Thursday 19 Dec you may have struggled to use the printer in the Woods as the water team commandeered it. It was Final Determination day, the day that Ofwat publishes its view on the business plans for all water companies from 2025-30.
Here are the key things you need to know.
- There are 4 categories of performance. At Draft Determination (DD), there were 3 x companies in the bottom category ‘Inadequate’ – Thames, Southern and Wessex – with South East Water listed as ‘lacking ambition’. At Final Determination (FD), 3 companies had moved out of lowest performing so that only Thames are left.
- In general, there’s more money for the companies than the DD outlined. But Ofwat have made it more difficult to collect the money as it is predicated on delivery of stretching performance levels.
- There was a lot of back and forth on the overall totex spending. To summarise: In Dec 2023, companies originally asked for a total of £104.5bn
- Ofwat pushed back in July 2024 at DD, only allowing £88bn
- Companies called this undeliverable, and went back by the end of Aug 2024 with more evidence and more requested spending at £112bn
- The key number you need to know is, at final determination Ofwat has approved a spending package of £104 billion for the sector. This represents a £14 billion (or 18%) increase compared to its draft decisions in July and it means the regulator has approved the lion share of the £112 billion worth of spending that water companies had asked for in their business plan submissions.
- The average bill increases by £157 (36%) over the next five years. The average bill increase in 2025-26 will be £86 (20%), excluding inflation, with smaller percentage increases in each of the next four years. Southern has the largest increase in bills of all the companies.
| Company | Base | Enhanced | Totex (after frontier shift and real price effects) |
| Anglian Water | 6,121 | 5,092 | 10,971 |
| Dŵr Cymru | 3,667 | 2,462 | 5,997 |
| Hafren Dyfrdwy | 221 | 51 | 266 |
| Northumbrian Water | 3,614 | 2,660 | 6,153 |
| Severn Trent Water | 8,554 | 6,679 | 14,917 |
| South West Water | 2,326 | 1,602 | 3,847 |
| Southern Water | 4,080 | 4,618 | 8,530 |
| Thames Water | 12,575 | 8,299 | 20,464 |
| United Utilities | 7,545 | 6,043 | 13,312 |
| Wessex Water | 2,232 | 2,100 | 4,231 |
| Yorkshire Water | 5,479 | 3,046 | 8,345 |
| Affinity Water | 1,700 | 692 | 2,341 |
| Bristol Water | 586 | 139 | 709 |
| Portsmouth Water | 268 | 212 | 471 |
| South East Water | 1,282 | 580 | 1,821 |
| South Staffs Water | 779 | 167 | 926 |
| SES Water | 779 | 47 | 367 |
| Total | 61,356 | 44,489 | 103,667 |
What happens next?
Between now and 18 Feb 2025, companies need to consider what they want to do. If companies accept their FD, they need to deliver the service levels agreed in their business plans at the price agreed. If they reject the assessment, they can submit a case to the Competition and Markets Authority (CMA). We don’t know if any water company will refer, but it is extremely likely that Thames Water will seek a referral.
By Victoria Nevin
Victoria Nevin is Head of Product Implementation at Skewb. To speak with her about this topic in more detail, you can connect with her on LinkedIn.
