Today we publish our latest Cost and Performance Report for NI Water, which reviews their performance in 2019-2020, the fifth year of the company’s third regulatory price control PC15.
The Cost and Performance Report outlines our independent assessment of how the company performed against the efficiency targets and key performance indicators outlined in the PC15 Final Determination for 2019-2020.
We are pleased to report that NI Water has largely delivered on the annual targets set in the PC15 monitoring plan for the fifth year of PC15. PC15 is a six year price control covering the period 2015-2016 to 2020-2021. The company continued to deliver an improved overall level of service to consumers, but underperformed against its operational expenditure (Opex) efficiency target. Our key findings are as follows:
• NI Water’s operating expenditure was £224.4m in 2019-2020. This is above our regulatory allowance of £205.3m (in 2019-20 prices), a difference of £1.9m. This is in part due to a number of one-off cost pressures experienced in year, as well as real terms opex increases in some expenditure items, for example, ‘materials and consumables’.
• The company invested £172m of capital expenditure (capex) in 2019-2020, contributing to a total investment of £793m in the first five years of the PC15 price control period. Capital investment in real terms has been constrained by the available public expenditure budget and we have worked with NI Water, the Department of Infrastructure and other key stakeholders to ensure that the company delivers the best possible package of outputs within the funding available. We will continue to assess cumulative delivery over the medium term taking account of changes in budget, inflation and the delivery of capital efficiency.
• NI Water met and exceeded our PC15 Overall Performance Assessment (OPA) target in 2019-2020. NI Water’s performance was the company’s highest ever OPA score and is equal to the OPA target set for the 2020-2021 year.
• The company met or exceeded planned delivery in 35 of the 45 Outputs set in the PC15 final determination. This includes 12 out of 15 consumer service measures and all but one of the water and sewerage quality outputs. NI Water delivered the majority of its nominated output targets and maintained stable serviceability in all service areas. There is a lag in delivery in some areas as a consequence of public expenditure budget reductions in the first two years of PC15, primarily in the delivery of wastewater outputs.