Bulk Supply Contracts and Pricing Water Services Regulation Authority (Ofwat) Tender Closes 19th February 2020

The aim of this project is to develop proposals for commercial contracts and pricing to support the successful delivery of RAPID’s goals and objectives. These are:

1. Ensure the timely and co-ordinated development of strategic water resources infrastructure schemes so that they are construction-ready early in the 2025-30 period, through;
– More collaboration – Improving the sector’s collaboration on water resources planning. By 2025, ensuring that enduring arrangements are agreed for strategic water resources infrastructure.
– Best value not least cost – Improving the evaluation of the full potential and impacts of schemes so that the best value portfolio of solutions is developed.
– Stakeholders are bought-in – Ensuring that stakeholders better understand the costs and benefits of the available options and demonstrating that the scheme assessment and selection process is transparent, fair and equitable.
– Commercially relevant – Supporting the development of commercial frameworks for construction, operation and maintenance of schemes. Aligning with and supporting the aims of DPC (Direct Procurement for Customers).
– Timely progress – Dynamically monitoring progress of the portfolio of strategic schemes.

2. Provide leadership and momentum to recommend a future-proof regulatory framework that best supports the vision on an enduring basis, through;
– Proactive – Developing recommendations for regulatory frameworks for strategic infrastructure schemes in time…on of how third party delivery including Direct Procurement for Customers (DPC) should be included.

Key tasks part two: Contract Pricing
– Assess and make recommendations about the most appropriate approach to value and ultimately price water transfers.
– Consider and set out the relative strengths and weaknesses of different approaches to establishing prices recognising there exists a range of approaches and range of potential market participants beyond the incumbent providers.
– Set out proposals for the establishment of a consistent approach to pricing that could be developed and applied more widely to future strategic infrastructure.
– Specifically consider the circumstances where the Bulk Supply Contract and associated revenue is facilitating the development and delivery of the infrastructure (including an assessment of the approach implemented for Havant Thicket).
– Assess issues and approaches to the valuation and pricing of counterparty risks
– Benchmark and assess the potential for contractual and pricing approaches in other sectors to be applied to strategic water infrastructure.
– Consider the impact of sustainability changes and the current abstraction licencing regime and how these risks could be valued and priced into contracts.
– Develop a roadmap setting out the steps for how to move from current ad hoc arrangements to a well-functioning market including the potential for market codes and a centralised market trading platform and/or system.

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