PC13 Draft Determination
| Year | 2012 |
| Published date | 13 September 2012 |
| Energy Sector | Water |
Water and sewerage service
Price Control 2013-2015
Northern Ireland Water
PC13 draft determination main report
September 2012
UTILITY REGULATOR WATER
W114_40_02 (v09.03) 1
Water and sewerage service
Price control 2013-15
PC13 draft determination
Contents
Foreword ........................................................................................... 6
Summary ........................................................................................... 7
1. Introduction ............................................................................. 11
1.1 Background .............................................................................................. 11
1.2 Governance framework ............................................................................. 11
1.3 PC13: A proportionate approach ............................................................... 13
1.4 Areas of focus for PC13 ............................................................................ 14
1.5 Outcomes from PC10 ............................................................................... 15
1.6 Outline of document .................................................................................. 16
2. Price limits for PC13 ............................................................... 17
2.2 Allowed revenue ....................................................................................... 17
2.3 Financial sustainability .............................................................................. 20
2.4 Price limits and charges ............................................................................ 21
2.5 Management of risk and uncertainty ......................................................... 24
3. The investment programme ................................................... 26
3.2 Our approach ............................................................................................ 26
3.3 Capital investment out-turn for PC10 ........................................................ 26
3.4 Capital investment in PC13 ....................................................................... 28
3.5 Our assessment of the proposed investment programme ......................... 28
3.6 Application of investment .......................................................................... 31
4. Outputs .................................................................................... 34
4.2 Definition of outputs .................................................................................. 34
4.3 Summary of key benefits........................................................................... 41
4.4 Overall Performance Assessment (OPA) .................................................. 42
5. Operational Costs and Efficiency ......................................... 45
5.2 Background .............................................................................................. 45
5.3 Scope for Operating Cost Efficiency ......................................................... 45
5.4 Establishing Baseline Opex ...................................................................... 46
5.5 Additions / (Reductions) to Base Operational Expenditure ........................ 47
5.6 Transformation Costs ................................................................................ 49
5.7 Opex from Capex ...................................................................................... 52
UTILITY REGULATOR WATER
W114_40_02 (v09.03) 2
5.8 Special Factors ......................................................................................... 53
5.9 Relative Efficiency Gap and Catch-up ....................................................... 54
5.10 Frontier Shift Assumptions ........................................................................ 56
5.11 Treatment of PPP/PFIs ............................................................................. 57
5.12 NI Water Opex Proposals ......................................................................... 58
5.13 Overall Challenge to NI Water .................................................................. 60
6. Conclusions............................................................................. 64
6.2 NI Water‟s performance against the first price control – PC10 .................. 64
6.3 PC13 draft determination – challenges for NI Water ................................. 64
6.4 NI Water‟s governance framework ............................................................ 65
6.5 Next Steps - The need for a strategic outlook and certainty of funding ...... 66
Glossary of Terms .......................................................................... 67
Abbreviations ................................................................................. 72
Annexes
The following annexes are published separately on the Utility Regulator‟s web-site and are
organised in order of the chapters in this report:
Chapter 2 – Price Limits for PC13
Annex F: Utility Regulator: Financing Investment
http://www.uregni.gov.uk/uploads/publications/ANNEX_F_-_Financial_Investment_-
_PC13_DD.pdf
Annex G: Utility Regulator: Sources of Revenue
http://www.uregni.gov.uk/uploads/publications/ANNEX_G_-
_Sources_of_Revenue_for_PC13_-_PC13_DD.pdf
Annex H: Utility Regulator: Memorandum of Understanding
http://www.uregni.gov.uk/uploads/publications/ANNEX_H_-
_Memorandum_of_Undestanding_-_PC13_DD.pdf
Annex I: Utility Regulator: Draft Consequent Written Agreement for PC13
http://www.uregni.gov.uk/uploads/publications/ANNEX_I_-
_Consequent_Written_Agreement_-_PC13_DD.pdf
Chapters 3 – The Investment Programme
Annex J: Utility Regulator: PC10 Capex Out-turn Report
http://www.uregni.gov.uk/uploads/publications/ANNEX_J_-_PC10_Out-
turn_Capex_Report_-_PC13_DD.pdf
Chapter 4 – Outputs
Annex E: Utility Regulator: Overall Performance Assessment
http://www.uregni.gov.uk/uploads/publications/ANNEX_E_-_OPA_-_PC13_DD.pdf
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