Ofwat has decided to make a number of changes to water and wastewater company reporting requirement for the purposes of 2021-22 reporting, following on from its consultations earlier in the year. Not only are these important in themselves, but they also very much reflect Ofwat's general priorities going forwards: net zero and the promotion of markets (bioresources, water resources and developer services).
The most notable area of change is in relation to Greenhouse gas emissions reporting. The new rules amend the operational emissions reporting table to more closely align with the Carbon Accounting Workbook, the latest best practice and Defra guidance to require mandatory reporting for the 2021-22 reporting year. In addition, Ofwat is encouraging the use of a more standardised methodology for reporting on embedded emissions.
These changes signal the increasing focus on emissions both as regards the sector itself and in relation to how the sector sits within the wider economic and political environment.
Another key element is the incorporation of Ofwat's revised guidance concerning the allocation of revenues or avoided costs associated with energy generation in bioresources. This is important as energy prices increase to ensure the accuracy and consistency of financial data between regulated and non-regulated activities.
The new rules also cover overhead cost reporting, specifically in relation to bioresources, developer services and water resources markets.
These changes are not only a key compliance issues, but also demonstrate where Ofwat is most likely to be focusing over the near future as it builds towards PR24 and beyond.
"It is imperative that companies make more rapid progress in this area. Increasingly in the future, stakeholders will expect companies to be capable of demonstrating that their actions are contributing towards the UK and Welsh Governments' 2050 net zero targets."