Water companies must do more to plan for the long-term to remain financially resilient

9 Nov 2017 11:55 AM

Water companies must do more to plan for the long-term if they are to have the financial resilience to deal with challenges they face now and in the future, Ofwat has cautioned.

In its second, annual ‘Monitoring Financial Resilience’ report, Ofwat has compiled and published information about all water companies as part of its efforts to boost transparency about the water sector’s financial arrangements.

Ofwat is urging all water companies to deliver ‘resilience in the round’, by focussing not just on the resilience of their assets and processes, but also on their financial resilience.  But the report highlights that five companies’ ‘long-term viability statements’ only stretch to 2020. The need for long-term planning is all the more necessary as we approach what will be a challenging new price review period, which begins in 2020. To manage that challenge, Ofwat is warning companies they need to be preparing themselves now and getting in shape for that new era.

Speaking at the publication of this report, Ofwat Senior Director, Aileen Armstrong, said:

“We’ve been calling for greater transparency in the sector and today we help to deliver that by shining a light on water companies’ finances. The report shows that companies are responding to the challenges of the current price control – and we will ensure that customers benefit from improvements in services.  But companies can do more to demonstrate how they are planning for the future – companies should be planning now to ensure that they are ready for the challenges of the coming price review. Looking ahead to 2020 doesn’t qualify as long-term planning for businesses whose assets last hundreds of years.”

Notes to editor: 

  • Click here to download the full report
  • Click here to download comparative reports and data which accompany ‘Monitoring Financial Resilience’
  • This is the second annual monitoring report under Ofwat’s Financial Monitoring Framework. The Framework helps to identify risks to the financial resilience of individual water and wastewater companies. The Framework also enables Ofwat to build up a picture of the sector’s performance and structure over time.
  • Ofwat expects all water companies to include a Long Term Viability Statement in their annual report which confirms that they are financially viable over the longer term.

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