PC13 Final Determination Website version
| Year | 2016 |
| Published date | 19 September 2016 |
| Energy Sector | Electricity |
Water and sewerage service
Price Control 2013-2015
Northern Ireland Water
PC13 Final Determination Main Report
December 2012
UTILITY REGULATOR WATER
W114_40_03 (v01.12) 1
Water and sewerage service
Price control 2013-15
PC13 final determination
Contents
Foreword ........................................................................................... 5
Summary ........................................................................................... 6
1. Introduction ............................................................................. 10
1.1 Background .............................................................................................. 10
1.2 Governance Framework ........................................................................... 10
1.3 PC13: A Proportionate Approach .............................................................. 12
1.4 Areas of Focus for PC13 ........................................................................... 13
1.5 Outcomes from PC10 ............................................................................... 14
1.6 Outline of this Document ........................................................................... 15
2. Overview of responses to key issues and our decisions .. 16
2.1 Introduction ............................................................................................... 16
2.2 Key issues ................................................................................................ 16
2.3 Other issues.............................................................................................. 21
2.4 Summary of key changes from the draft determination ............................. 21
3. Price Limits for PC13 .............................................................. 23
3.2 Allowed Revenue ...................................................................................... 23
3.3 Financial Sustainability ............................................................................. 26
3.4 Price Limits and Charges .......................................................................... 27
3.5 Management of Risk and Uncertainty ....................................................... 30
4. The Investment Programme .................................................. 32
4.2 Our Approach ........................................................................................... 32
4.3 Changes from the Draft Determination ...................................................... 32
4.4 Capital Investment Outturn for PC10 ........................................................ 33
4.5 Capital Investment in PC13 ....................................................................... 35
4.6 Our Assessment of the Proposed Investment Programme ........................ 35
4.7 Application of Investment .......................................................................... 38
5. Outputs .................................................................................... 42
5.2 Definition of Outputs ................................................................................. 42
5.3 Summary of Key Benefits.......................................................................... 49
5.4 Overall Performance Assessment (OPA) .................................................. 50
UTILITY REGULATOR WATER
W114_40_03 (v01.12) 2
6. Operational Costs and Efficiency ......................................... 53
6.2 Background .............................................................................................. 53
6.3 Scope for Operating Cost Efficiency ......................................................... 53
6.4 Establishing Baseline Opex ...................................................................... 54
6.5 Additions / (Reductions) to Base Operational Expenditure ........................ 55
6.6 Transformation Costs ................................................................................ 58
6.7 Opex from Capex ...................................................................................... 60
6.8 Special Factors ......................................................................................... 60
6.9 Relative Efficiency Gap and Catch-up ....................................................... 62
6.10 Frontier Shift Assumptions ........................................................................ 65
6.11 Treatment of PPP/PFIs ............................................................................. 67
6.12 NI Water Opex Proposals ......................................................................... 69
6.13 Overall Challenge to NI Water .................................................................. 70
7. Conclusions............................................................................. 75
7.2 NI Water‟s performance against the First Price Control – PC10 ................ 75
7.3 PC13 Final Determination – Challenges for NI Water ............................... 75
7.4 NI Water‟s Governance Framework .......................................................... 76
7.5 Next Steps – The need for a Strategic Outlook and Certainty of Funding .. 77
8. Monitoring Delivery ................................................................ 78
Glossary of Terms .......................................................................... 81
Abbreviations ................................................................................. 86
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 – Overview of responses to key issues and our decisions
Annex N: Utility Regulator: Responses to the Draft Determination
Chapter 3 – Price Limits for PC13
Annex F: Utility Regulator: Financing Investment
Annex G: Utility Regulator: Sources of Revenue
Annex H: Utility Regulator: Memorandum of Understanding
Annex I: Utility Regulator: Draft Consequent Written Agreement for PC13
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