1 / 14

Protecting consumers, promoting value, safeguarding the future 1

City briefing – final determinations 26 November 2009. Protecting consumers, promoting value, safeguarding the future 1. What has been achieved so far. Leakage has fallen by 35% since peak in 1994-95. £85 billion has been invested.

aria
Download Presentation

Protecting consumers, promoting value, safeguarding the future 1

An Image/Link below is provided (as is) to download presentation Download Policy: Content on the Website is provided to you AS IS for your information and personal use and may not be sold / licensed / shared on other websites without getting consent from its author. Content is provided to you AS IS for your information and personal use only. Download presentation by click this link. While downloading, if for some reason you are not able to download a presentation, the publisher may have deleted the file from their server. During download, if you can't get a presentation, the file might be deleted by the publisher.

E N D

Presentation Transcript

  1. City briefing – final determinations 26 November 2009 Protecting consumers, promoting value, safeguarding the future 1

  2. What has been achieved so far Leakage has fallen by 35% since peak in 1994-95 £85 billion has been invested. Companies are more efficient – bills are 30% lower than they would have been Network is functioning better – more companies have stable serviceability than ever before Water and environmental quality has improved – more than 100 Blue Flag beaches in England and Wales, and fish in the Thames again Customer service is significantly better than 17 years ago – only 6,620 properties (0.03%) are now at risk of low water pressure, compared with 344,259 (1.6%) properties in 1990-91 Protecting consumers, promoting value, safeguarding the future 2

  3. Headlines Additional notified items for bad debt and abstraction charges Protecting consumers, promoting value, safeguarding the future 3

  4. Average annual price limits – weighted industry average 7.0 6.0 5.6 5.0 4.0 3.0 2.5 2.5 2.3 2.0 1.6 1.4 0.9 1.0 0.7 0.6 0.6 0.5 0.4 0.3 0.1 -0.2 0.0 2010-11 2011-12 2012-13 2013-14 2014-15 Annual average -0.5 -0.6 -1.0 -2.0 -2.1 -3.0 Final determinations Final business plans Draft determinations Protecting consumers, promoting value, safeguarding the future 4

  5. Total capital expenditure assumptions 25 20 15 £ billion (2007-08 prices) 10 5 0 Final business plan Draft determinations Final determinations £24.2 billion £20.8 billion £22.1 billion Protecting consumers, promoting value, safeguarding the future 5

  6. CIS baseline ratios Protecting consumers, promoting value, safeguarding the future 6

  7. Actual and projected net capital investment by purpose category 30 60 25 50 20 40 RCV £ billion 15 30 Investment in £ billion 10 20 5 10 0 0 1990-95 1995-2000 2000-05 2005-10 2010-15 FD 2010-15 FBP Price review period Capital maintenance Enhanced service level RCV Supply/demand balance Quality enhancement Protecting consumers, promoting value, safeguarding the future 7

  8. Operating expenditure since 1989 4.4 4.2 4.0 3.8 3.6 3.4 3.2 £ billion 3.0 2.8 2.6 2.4 2.2 2.0 89 90 91 92 93 94 95 96 97 98 99 00 01 02 03 04 05 06 07 08 09 10 11 12 13 14 15 Total opex adjusted for exceptionals and atypicals 2009 Final business plan total opex projection 2009 DD modelling assumptions 2009 FD modelling assumptions Protecting consumers, promoting value, safeguarding the future 8

  9. Additional operating expenditure £0.4 billion 2014-15 Operating expenditure arising from enhanced service 40% Pensions 24% Energy 4% Transfers from capital expenditure 6% Rates 25% Traffic management act 2% Other -2% EA abstraction charges 1% The ‘other’ category is negative because it includes spend to save outputs Protecting consumers, promoting value, safeguarding the future 9

  10. Risk and uncertainty RPI and COPI indexation CIS capex symmetry Revenue correction mechanism Five-yearly price review Change protocol Logging up and down Interim determinations Substantial effect clause Notified items:Climate changeTraffic Management ActBad debtAbstraction charges Protecting consumers, promoting value, safeguarding the future 10

  11. Cost of capital Protecting consumers, promoting value, safeguarding the future 11

  12. Financeability Target credit rating of A- or equivalent Incentive adjustments (FD £178 million, DD £307 million) Actual capital structure is a matter for companies and their investors Equity injections assumed for three companies (Thames, Bristol and South East) Protecting consumers, promoting value, safeguarding the future 12

  13. Conclusions Scope for innovation and better management Investors can drive management performance Companies and investors can reap the benefits of outperformance But they must accept the risks Future challenges:Climate changeIncreasing populationNew environmental standards Protecting consumers, promoting value, safeguarding the future 13

  14. Questions and answers See our website for more details: www.ofwat.gov.uk Protecting consumers, promoting value, safeguarding the future 14

More Related