Where does the money go?

PR14 into AMP6

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Climate and population change are still relative unknowns in terms of timing and solutions, and this will continue to play a major part in the risk profile of operational decisions.


 At an industry level, PR14 into AMP6 is about defining service ‘outcomes’, and replacing the historic approach of defining inputs with more options for water companies to meet these outcomes.


 

Changes in 2017

Retail markets will change in 2017 in terms of competition in the UK water sector for non-domestic customers. At a customer service level, the service incentive mechanism provides greater roles for customers to influence what they want from suppliers – and therefore influence operational strategy. This is coupled with government and conservation-driven requirements for customers, to use less water in order to alleviate shortages and reduce power and chemical use.

These factors spur change, such as: 

  • allocation of risk at the capital and operational strategy level
  • returns on investment from innovation in ways of working
  • long-term (up to 25 year) sustainability of the operational strategy and approach
  • what the ‘right’ price for activities is, as opposed to what the ‘historic’ cost profile dictates it is likely to be.

The above drivers manifested themselves as three themes that featured in nearly every recently submitted PR14 plan:

  • a shift to being customer or service oriented
  • more extensive collection and use of real-time asset data to drive operational control and decision-making in order to prevent problems
  • recovering of energy from sludge.