Ofwat's views on capital maintenance planning (MD161)

Ofwat letter suggesting that, in future price control reviews, each company will need to justify its capital maintenance expenditure plan by demonstrating how it maintains the flow of services to customers at least cost in terms of both capital maintenance and operating expenditure, recognising the trade off between cost and risk, whilst ensuring compliance with statutory duties. "Appraisals of capital maintenance, operating expenditure and risk can be compared using discounted cash flows."

(These requirements eventually led to the development of the Capital Maintenance Planning Common Framework.)

For further information or advice please contact Franck Latrémolière.

Filed under Ofwat, Price controls, Water.

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