Energy & Utility Skills Releases Policy Briefing on PR19 Price Review

  • New policy briefing guides water companies on meeting workforce resilience expectations
  • Workforce resilience is now a requirement for PR19 business plan submissions
  • The briefing focusses on Ofwat’s key themes of customer engagement – affordability, resilience, innovation and how these will be assessed

Energy & Utility Skills has released a comprehensive new guide to Ofwat’s PR19 methodologies. The guide aims to help regulated companies in the water industry to understand what is expected of them in delivering long-term workforce resilience planning within the 2019 Price Review, the areas to consider and how their business plans are likely to be assessed.

Workforce resilience was initially flagged as important in Ofwat’s ‘Resilience in the Round’ approach for a sustainable water sector, before featuring heavily in the price setting Draft Methodology. It is now a requirement for PR19 business plan submissions under the Final Methodology.

At a time when UK labour markets are at their tightest levels since records began, there is high competition between infrastructure and business sectors for available talent. The utility sector has known skills gaps and diversity challenges, the cost of UK-wide recruitment and retention is increasing and with the implications of a European exit yet to materialise, Ofwat’s strategic approach to ensuring sustainable development and sector resilience, is both visionary and prudent.

The need for a resilient, skilled and sustainable workforce has increasingly been recognised by central and devolved governments, as a key challenge for all of the main UK business sectors in a post European-exit economy. The subject is a central plank of the UK Industrial Strategy and is core to the productivity and efficiency needs of the National Infrastructure Plan. The utility sector is the largest single contributor to the £0.5 trillion infrastructure investment strategy.

Under the PR19 methodology, companies will be assessed on how well they have considered and planned for resilience, foreseen and mitigated risks and considered the holistic picture of resilience throughout their business.

The policy briefing focusses on Ofwat’s key themes of customer engagement – affordability, resilience, innovation and how these will be assessed. It breaks down the PR19 methodology into a guide that will help and direct water companies as the 2019 Price Review approaches. The current price control period is due to end on 31 March 2020 and the 2019 Price Review will set price controls for the period between 2020 and 2025.

The briefing covers four key areas:

  • the context behind the 2019 Price Review
  • resilience aspects of the price control process
  • Ofwat’s expectations of company business plans
  • a timeline of action companies need to take

Nick Ellins, Chief Executive of Energy & Utility Skills,* said: “Ofwat has made an important statement in its Final Methodology, clearly demonstrating its commitment to its sustainable development and resilience duties, whilst standing clear of prescriptive approaches and leaving companies to set out their internal and extraneous workforce challenges.

“It is not just about the directly-employed labour within water companies or the recruitment issues of today, Ofwat is looking for clear demonstrations of company understanding of their whole workforce, including the vital supply chain, for the five- year period but also long-term projections for ten years beyond in a fast changing labour market and in meeting new and evolving consumer demands.

“Without such robust action, core corporate and operational resilience is at risk. We can all talk about achieving resilient infrastructure, but unless you have the people and capabilities to make it resilient, it’s a bit of an arbitrary point. A workforce with the right skills is vital for a resilient water sector. The challenges we now face mean that the sector must pay even more attention to the long-term skills it will need and the ways in which they will differ from the needs of the past.”

The Policy Briefing is available for download here.

For further information, contact:
Veron Graham, PR Manager – Energy & Utility Skills
E: T: 0121 713 8204 M: 07834 651 311

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