Bristol Water’s view on Cost Efficiency
Assessing how efficient each company is forms a major part of the price determination process where Ofwat sets the amount of revenue we are allowed to collect over the following five-year period. How this assessment is carried out is a matter of expert judgement, with numerous measures and techniques available.
To support our understanding of how efficient we are relative to other water companies we have commissioned economic consultants NERA and Economic Insight to analyse the factors that drive costs in our Wholesale and Retail operations respectively, and how they should be combined into an assessment model.
Ofwat is shortly due to publish a consultation on the approach that it should adopt on efficiency assessment. We have provided this analysis to Ofwat for consideration in the development of its consultation. We are also publishing it today on our website to provide stakeholders and customers with a transparent view of our recommendations.