Capital Value ( RCV ). Consideration of more fundamental changes to the regulatory framework (such as the approach to RCV indexation) is best addressed through industry-wide policy work, outside of these redeterminations. Financeability 90. We will assess and ensure that the decisions in our redeterminations are consistent with the financing duty (see Appendix for more details of Ofwat’s duties). 91. As part of this assessment, we will consider how best to assess financeability, including issues such as the appropriate target credit rating, the appropriate debt and equity metrics, and any other assumptions necessary for the assessment.
We will also consider whether it is appropriate to use any of financeability ‘levers’, such as PAYG rates or RCV run-off rates as part of this assessment. Allowances for tax 92. We will recalculate the tax allowances to update for any changes to the price control for each of the Disputing Companies. We note that for all Disputing Companies the tax allowance is a zero contribution to allowed revenues in Ofwat’s PR24 FD, given the size of the investment programme and the ability to deduct the full capital expenditure from the taxable revenue. Retaining unchallenged aspects of Ofwat’s PR24 FD 93.
There are a number of aspects of Ofwat’s PR24 FD which we do not intend to reconsider as they were unchallenged – ie not raised as issues by the Disputing Companies or third parties. For example: (a) Ofwat’s business plan quality and ambition assessment; (b) in-period adjustments (such as true-ups or uncertainty mechanisms); (c) PR19 reconciliations; and (d) the methodology relating to retail price controls. 94.
Where an issue has not been challenged and we have not explicitly outlined above in this document our intention to prioritise a particular issue, we do not intend to reconsider it (unless we consider that doing so is necessary to come to a view on the specific requests) and will instead apply Ofwat’s approach. 23