Contents Introduction .......................................................................................................................... 4 Invitation to submit views ..................................................................................................... 5 Next steps ............................................................................................................................ 6 Background .......................................................................................................................... 7 Issues and approach............................................................................................................
8 Fairly, efficiently, at proportionate cost within the statutory timetable .......................... 8 Approach to prioritising ................................................................................................ 9 Base costs ................................................................................................................. 12 Econometric benchmarking ................................................................................... 12 Sector-wide cost adjustment claims involving mains renewal, meter replacement and network reinforcement .......................................................................
14 Disputing Company-specific cost adjustment claims ............................................. 14 Other claims involving asset health ....................................................................... 14 Frontier shift .......................................................................................................... 15 Other base costs issues ........................................................................................ 15 Enhancement costs ................................................................................................... 16 Benchmarking models ...........................................................................................
16 Individual assessment allowances (shallow and deep dives) ................................ 16 Other enhancement costs issues .......................................................................... 18 Outcomes .................................................................................................................. 18 Outcome delivery incentives ................................................................................. 19 Price control deliverables ...................................................................................... 20 Risk and return ..........................................................................................................
20 Allowed return ....................................................................................................... 21 Balance of risk ....................................................................................................... 22 Retaining unchallenged aspects of Ofwat’s PR24 FD ....................................................... 23 Approach to use of new evidence and updated information .............................................. 24 Appendix: Timeline and principles for deciding water PR24 redetermination references .. 25 Timeline of water PR24 redetermination references .................................................
25 Principles for deciding water references .................................................................... 25 3