Ofwat, the regulator of water and sewerage companies in England and Wales, has published research undertaken by DotEcon on alternative forms of a price control that may be adopted for application to the 23 regional water and sewerage companies. In particular, DotEcon was commissioned to provide advice on the range of options available to Ofwat (including price caps, revenue caps and revenue corrected caps correcting for over- or under- recovery during previous periods) and the criteria against which to assess these options (including for example the resulting effects on bill stability and water efficiency).
DotEcon was also commissioned to peer-review Ofwat’s own price control models quantifying the effects of the various options. Ofwat now expects to propose a revised form of control in its October consultation on the methodology for its 2009 periodic review. The report and the peer review can be downloaded here and here.