Price Review 2009 approach and methodology
In 2009 prices will be set by Ofwat for 2010-2015 in England and Wales. Prices were last set in 2004 (PR04, covering prices from 2005-2010). A detailed independent review of that process chaired by John Baker has helped shape the approach for 2009 (PR09).
In particular Ofwat stated that its objectives for PR09 would take account of “increasing consumer expectations, the impacts of climate change, volatile weather and the demands of a growing population”.
Ofwat consulted on its approach for setting prices in 2009 and set out its framework and approach in March 2008. The regulator proposes to keep the methodology largely consistent with that adopted in previous price reviews, with a few evolutionary innovations.
Ofwat has also emphasised the importance of innovation and creativity and is seeking to prepare the way for increased competition within the water sector.
The PR09 review process has been set within a longer-term framework – there is a strong focus on looking beyond the five-yearly cycle of previous reviews to consider the outlook for 25 or more years ahead.
Through consultation with customers and stakeholders, water companies have each prepared a strategic direction statement of their longer-term objectives and challenges. These were published as part of the first phase of the price review (December 2007).
In April 2008 the water companies in England and Wales also published for consultation their water resource management plans looking ahead 25 years. The plans were submitted to the government and the Environment Agency and open to public comment until July 2008.
