Utility Week

UTILITY WEEK | MAY 2021 | 23 Policy & Regulation phased in a way that makes the investment achievable but keeps things affordable for customers." The next asset management plan period will emphasise nature-based and lower car- bon solutions, which Fletcher says effectively bring greater environmental benefits for every pound of customer money spent. Challenging the sector The current price review was designed to push the sector on performance commit- ments. The challenging approach caused four companies to request a referral to the Competition and Markets Authority (CMA). "PR19 was set out to be tough but it's a truism that you don't know what's achiev- able until you try," Fletcher says. "Part of our role as a regulator is to be challenging to get a sense of what is possible. " A†er 12 months of representations and hearings, the CMA's conclusion was as close to a happy medium as all parties could have hoped for. The major differences between the CMA's determination and Ofwat's was where they landed on cost of capital, which is down to different judgements on the available evi- dence. Fletcher says Ofwat never expected the CMA to end up with the same answers. "A different expert body looking at dif- ferent evidence a year on is bound to land at different judgements on different parts of the settlement. But fundamentally they agreed that performance improvements were needed, that investors need to earn their money and that customers didn't need to pay more for better service: those are all really important stakes in the ground." She adds that learning from the response to PR19 and the four appeals is "part and parcel of what regulators should do" and something Ofwat is taking on board for PR24. "Regulators shouldn't stand still, we always learn from price reviews and how we can do better next time." As Fletcher returns to a sector that she spent 15 years in, she says she will miss the deep connection with the natural environ- ment the water sector has. "I'm confident we've got an industry that really wants to do good for the natural world. I'm going to miss that because in energy the focal point is net zero, but I don't want to lose sight of the fact that protecting biodi- versity and our natural resources has to be looked at as a part of sustainable living just as much as reducing emissions is. We have to focus on both – we can't work to reduce emissions but destroy waterways that we enjoy and benefit from so much." Ruth Williams, water correspondent Fletcher has returned to the energy sector with a senior job at Octopus Energy

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