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Ofwat board agrees to RPI linked wholesale prices

24th July 2012

UK Water Regulator, Ofwat is set to keep wholesale prices linked with inflation, as stated in the Ofwat minutes of the 21 June 2012 Board meeting, “the Board agreed that an approach which would expressly confirm in companies’ Licences Ofwat’s previous assurances that wholesale would be linked to RPI –K would be more appropriate than the broader modifications originally proposed in the December 2011 consultation. The Board noted that there was still time for a short period of further engagement with stakeholders before a final decision on the exact details of the Licence change could be agreed.”

This comes after an uproar from industry stakeholders and investors around the regulators proposals to remove reference to the RPI in licences, in relation to broader reforms. Ofwat’s Chief Executive Regina Finn and Chairman Philip Fletcher are due to engage in further stakeholder discussions before the exact wording is decided.

This collective board decision backs Ofwat’s previous pledge, when it said it did not plan to remove the RPI link in the foreseeable future.