The Utility Regulator has published its latest Cost and Performance Report for NI Water, which reviews their performance in 2021-22, the first year of the company’s fourth regulatory price control, PC21.
The Cost and Performance Report outlines our independent assessment of how the company performed against the efficiency targets and key performance indicators outlined in the PC21 final determination. It shows that the company has broadly delivered against its targets in challenging circumstances.
The company’s operational expenditure (opex) and capital expenditure (capex) were materially higher than the allowances set in our final determination, however there were some mitigating circumstances for both. The reasons for the expenditure variances and other key findings from our assessment of the company’s performance in 2021-22 are summarised below.
Operating expenditure
NI Water’s operating expenditure was £272.1m in 2021-22. This was £29.7m above our regulatory allowance of £242.4m (in 2021-22 prices). NI Water attributes £9.4m of this figure to differences in how the PC21 final determination allowed for pension costs and how NI Water allows for them within its accounts, leaving an overspend of £20.3m when measured on a ‘like-for-like’ basis. This is mainly due to the increase in power costs which almost doubled in nominal terms from £32.2m in 2020-21 to £61.6m in 2021-22.
Capital investment
The company invested £229m of capital expenditure (capex) in 2021-22. This was £46m higher than the figure published in our final determination. The difference is accounted for by the Department for Infrastructure (DfI) adjusting the public expenditure allocation to account for higher than expected inflation, re-profiling of funding and expenditure from later in the programme to utilise budget availability and the provision of additional funding through ‘in year’ monitoring rounds. In recognition of these changes, we will continue to assess cumulative delivery over the medium term taking account of adjustments in budget, inflation (taking account of any movements from assumptions made within the final determination) and the delivery of capital efficiency.
Output delivery
The company met or exceeded planned delivery for 37 of the 45 key output measures set in the PC21 final determination. This includes 10 out of 13 consumer service measures and all of the water and sewerage quality compliance measures. NI Water met two thirds of its nominated output targets and maintained stable serviceability in all service areas. There is a lag in delivery in some areas, primarily in the delivery of wastewater outputs.
Copies of all documents can be made available in large print, Braille, audio cassette and a variety of relevant minority languages if required.