PC21 Mid-Term Review

Northern Ireland Water (NI Water) is currently in its fourth price control period, namely,  PC21.  This covers the six-year period from April 2021 to March 2027. 

PC21 is the second of our longer duration price controls. Whilst this duration provides benefits in terms of providing extra time for efficient planning and delivery, it also introduces a degree of uncertainty associated with planning over the long term.

We therefore included the provision for a Mid-Term Review during PC21. This was to provide an opportunity for any material changes associated with the uncertainty that existed at the time of the PC21 Final Determination to be considered.

We published a document explaining our approach to the PC21 Mid-Term Review on 15 May 2023.  This built upon the outline proposals included in our PC21 Final Determination and outlined the extent and scope of the work that would be undertaken through reference to specific elements of our price control.  It was informed by the responses that we received following a period of consultation on our draft proposals, which were published on 27 March 2023.

We received NI Water’s PC21 Mid-Term Review submission on 29 September 2023. After completing an assessment of the submission, published our Draft Determination for consultation on 2 May 2024.

The consultation on our Draft Determination closed on 27 June 2024 and we received responses from NI Water, Consumer Council for Northern Ireland, Drinking Water Inspectorate, Northern Ireland Environment Agency and the Ulster Farmers Union.

Our Final Determination was published on 30 September 2024.  This sets out our final PC21 Mid-Term Review findings, following our assessment of NI Water's submission and consideration of the comments received in response to our Draft Determination consultation. 

Our PC21 Mid-Term Review determines:

• Some limited adjustments to output targets.
• An average tariff increase of 4.5%  in each of the last two years of the PC21 period to mitigate against an unprecedented increase in NI Water’s power costs. 
• A capital allowance of c£2.4bn in 'money of the day' prices (nominal) for the full price control period to maintain existing services and deliver the upgrades required to meet its quality, environmental and service level obligations.

It remains consistent with the principles of the Department’s Social and Environmental Guidance for the price control period and its conclusions remain largely in line with those in our Mid-Term Review Draft Determination.  However, the Mid-Term Review process has identified that some further work is required to establish why some of NI Water’s capital costs are higher than predicted, despite the lack of evidence for cost pressures above inflation (i.e. Real Price Effects). This piece of work will be undertaken and concluded separately and outside the Mid-Term Review process. We will take account of the outcome of this work as part of the PC21 Outturn Report process.