UKWIR/Ofwat: efficiency methods (2006-2007)

The independent review of Ofwat's 2004 price control review process had suggested that a joint Ofwat/industry review of the controversial efficiency studies used by Ofwat should be undertaken.

UKWIR and Ofwat jointly tendered for this review through a project steering group. Reckon was awarded the project.

We conducted a thorough review of what Ofwat had done in 2004, and explored ways in which it might be improved or clarified in the future.

We examined in particular:

Having reached some tentative views, we presented our work to a workshop attended by representatives of the water companies, including those that had not been involved with the day-to-day work of the project steering group. This broader consultation led us to identify areas in which further research was needed, and to modify aspects of our findings.

The main findings of the final report are:

*Franck Latrémolière

*Nicholas Francis

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Reckon LLP is an economics consultancy with expertise in data analysis, economic regulation and competition law.