The Utility Regulator has published its latest Cost and Performance Report for NI Water, which reviews their performance in 2020-2021, the sixth and final year of the company’s previous 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.
The assessment of NI Water’s performance undertaken for our 2020-2021 Cost and Performance Report shows that the company broadly delivered on its performance targets across the duration of the PC15 price control period. This is despite having to deal with some very challenging circumstances, including Brexit and COVID-19. The company continued to deliver an improved overall level of service to consumers, but under performed against its operational expenditure (opex) efficiency target. The key findings from our assessment are summarised below.
Operating expenditure
NI Water’s operating expenditure was £239.2m in 2020-2021. This was above our regulatory allowance of £204.1m (in real prices), a difference of £35.1m. However, this reporting year spanned the beginning of the COVID-19 pandemic which, along with other factors detailed in the report, added significant pressure to the company’s opex.
Capital investment
The company invested £177.3m of capital expenditure (capex) in 2020-2021, contributing to a total investment of £971.5m over the PC15 price control period. This was c£32m lower than the nominal figure of £1,003m included in the PC15 final determination. Capital investment was constrained by the available public expenditure budget, which contributed to the lower levels of investment than expected. We therefore worked with NI Water, Department for Infrastructure and other key stakeholders to ensure that the company delivered the best possible package of outputs within the funding available.
Output delivery
We use an Overall Performance Assessment (OPA) score to assess NI Water’s overall delivery of service to customers. This is a composite score which includes a broad range of measures covering service delivery in the areas of water supply, sewerage service, customer service and environmental performance. NI Water met and exceeded our PC15 OPA target in every year of the PC15 price control and achieved its highest ever OPA score in 2020-2021.
NI Water met 36 of the 45 output targets set for water and sewerage services in the PC15 final determination. This included 12 out of 15 consumer service measures and all but one of the eight water and sewerage quality outputs. NI Water delivered the majority of its nominated output targets and delivered stable or improving serviceability in all service categories. There was a delivery shortfall in some areas, primarily in the delivery of wastewater outputs. Although NI Water suggests that the inability to re-profile budgets due to its funding model was a contributory factor.
Where appropriate we made adjustments within our PC21 price control determination for areas of our performance and under performance.