Utility Week

UTILITY Week 9th October 2015

Utility Week - authoritative, impartial and essential reading for senior people within utilities, regulators and government

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UTILITY WEEK | 9TH - 15TH OCTOBER 2015 | 13 Policy & Regulation Analysis Ross makes her mark at Ofwat Change starts at the top. That must be what Ofwat chief executive Cathryn Ross believes as she gets the regulator in shape to deliver a 'challenging' price review in 2019. Mathew Beech reports. T he evolution of Ofwat's senior leader- ship team, announced for consultation at the end of last month, sees two high- profile roles disappear and four new posi- tions created, all reporting to Cathryn Ross. This flat structure will replace the hierar- chy that was cobbled together and required the outside assistance of a delivery partner to get PR14 through the door. It is designed to meet the challenges of the Thames Tideway Tunnel, maintain investor confidence and satisfy the new requirements of the Water Act. Why is change needed? The previous senior leadership team was a hangover from the difficulties and inter- nal turmoil Ofwat faced in delivering PR14, which saw the previous chief executive Regina Finn resign in the middle of the price review process in May 2013. To compound matters, Ofwat had just emerged from a bruising set of spending cuts as part of the Comprehensive Spending Review, which slashed its budget by 10 per cent and scaled back staff numbers by 45. To get PR14 delivered on time, Sonia Brown was promoted to the newly created role of chief regulation officer and PwC was brought in as the official delivery partner. This was about "keeping PR14 on the road", according to Ross, and the running repairs and patches worked, with the price review successfully delivered. However, Brown's promotion to chief reg- ulation officer created a "hierarchy" in the senior leadership team and is now "problem- atic in the post-PR14 Ofwat", Ross said. New roles Under the new structure, Brown's role as chief regulation officer and the senior direc- tor of finance and networks position, held by Keith Mason, will disappear, although Ross insists it is nothing personal. "It is about the posts within the senior leadership team and the structure and not about people," she told Utility Week. Four new jobs will be created: senior director of strategy and planning; senior director, Water 2020; senior director, finance and governance; and senior director, Thames Tideway. Although Brown and Mason can apply for one of these new roles, they have not been placed in one already. Other members of the senior leadership team have been transferred into the new set-up. Richard Khaldi will remain in post as senior director of customers and casework; Bev Messinger, currently senior director of operations, will take on a new role as sen- ior director of business improvement; Claire Forbes will remain senior director of corpo- rate communications; and Elizabeth Hillman will remain general counsel. Ross says this new, flat structure of seven directors and a general counsel will ensure the regulator has the "capability to deliver strong, competent, committed, clear leader- ship corporately, across programmes and resource pools and with our stakeholders". PR19 challenges Ross and Ofwat chairman Jonson Cox expect PR19 to be less traumatic than its predeces- sor, though they admit it could be "poten- tially quite a difficult time" because of the challenges the sector faces: maintaining investor confidence; delivering the Water Act reforms; and helping to integrate the Thames Tideway Tunnel project into the regulatory regime. The "benign financial climate" of recent years is predicted to end as interest rates creep up. It is down to Ofwat to ensure the knock-on effect does not create pressure on the companies, leading to a higher cost of capital and ultimately higher costs to customers. The challenge is to keep the balance between investor confidence and affordabil- ity. It is the conundrum of delivering more for less, and as Ross says, "that's the chal- lenge we're getting in shape to deliver". Add in the small matter of market open- ing, and the regulator has a mountain to climb over the next few years, with necessar- ily limited resources. The water market and political and economic climate in which it operates are changing – so the regulator is changing as well, starting at the top. Latest updates: www.utilityweek.co.uk Chief regulation officer Senior director, strategy and planning Senior director, finance and networks Senior director, customers and casework Senior director, operations Senior director, corporate comms General counsel PR14 senior leadership Chief executive Ofwat's current structure Ofwat's proposed structure Chief executive Senior director, strategy and planning Senior director, Water2020 Senior director, finance and governance Senior director, customers and casework Senior director, Thames Tideway Senior director, corporate comms Senior director, business improvement General counsel PR19 senior leadership team

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