NI Water has completed its first regulated price control (PC10) – which covered three years from 2010-11 to 2012-13. The company also accepted our final determination for the price control (PC13) – which covered two years from 2013-14 to 2014-15.
PC15 is our third price control for NI Water which covers a six-year period from 2015-16 to 2020-21. While closing the efficiency and performance gap between NI Water and comparator companies remains a dominant issue, PC15 will also address longer-term sustainability issues. This strategic approach is facilitated by the Long Term Water Strategy being developed by the Department for Regional Development working with other principal stakeholders.
Consumers remain at the centre of our consideration, and the Consumer Council for Northern Ireland, working with NI Water, will gather consumer views to inform and influence policy and investment decisions.
Further information on our approach to PC15 can found in our Approach Document which highlights our aims for PC15, outlines our approach to key areas of the price control and sets out a programme up to the publication of the PC15 Monitoring Plan by NI Water in April 2015.
Our Approach to Asset Maintenance
We published a draft Approach to Asset Maintenance for PC13 on 6 February 2013. This sets out a range of techniques which are used by regulators and companies to assess future asset maintenance needs. The document describes how we are minded to apply these to determine asset maintenance investment in PC15.
We consulted with NI Water and principal stakeholders (including the quality regulators, CCNI and DRD) on this approach.
PC15 Our minded to Approach to Efficiency
A key role of the Utility Regulator is to promote the efficient delivery of services to consumers by monopoly suppliers such as NI Water. We do this by benchmarking NI Water’s costs against comparable companies taking account of special factors such as the scale of the company and the local economy. We also consider how the efficiency of the comparative companies might move over time. This work allows us to set achievable but challenging targets at each Price Control.
In preparation for PC15, we set out our PC15 Approach to Efficiencies which we sent the company on the 15 May following a period of consultation. More detailed ‘minded to’ approach papers were also shared concerning operational efficiency and capital efficiency.
PC15 Information Requirements
The Utility Regulator’s Information Requirements were published on the 15 May 2013. These requirements asked NI Water to submit the information we needed to set price limits including strategies, assumptions, justification and supporting information for costs, expenditure and outputs. But they do not constrain the development of the company’s Business Plan. It is for the company to develop its plan to provide an efficient and effective service which will meet the needs of its consumers, and to then communicate this to the Utility Regulator.