Regulators set out a more company-specific, regional approach for PR29

The Drinking Water Inspectorate, the Environment Agency, Natural England, Natural Resources Wales and Ofwat have published Working together to deliver PR29, their first joint outline of the next price review, together with a letter to industry leaders (Water Magazine). It is the first statement of how the 2030–35 settlement will be built while the regulators themselves are being reorganised.

What we know

• Company-specific. PR29 keeps the core building blocks: expenditure, outcomes, and risk and return. It will give more weight to each company's circumstances, performance, financial resilience, asset management and delivery capability. Benchmarking stays, but not as the only lens.
• Regional evidence. Companies must show how local and regional evidence shaped their plans. That evidence should come from engagement with local authorities and catchment partnerships and, in England, mayoral strategic authorities.
• Longer horizon. Controls still run for five years, but plans must show how they fit 10- and 25-year pathways. They should draw on statutory plans: WRMPs, DWMPs, DWSSPs and RBMPs.
• Asset health. Companies will be expected to give forward-looking evidence on asset condition and the maintenance and replacement needed.
• Environmental planning. Regulators are examining how WINEP (England) and NEP (Wales) could be folded into statutory drainage and water resources plans.
• Governance. Ofwat keeps responsibility for publishing the methodology while England moves to a single integrated regulator. A joint enforcement and compliance strategy is promised for the new year.

The regulators say greater flexibility "will not reduce environmental ambition or alter legal obligations".

PR29 at a glance

1. Rest of 2026

   Engagement on high-level policy options; initial direction on WINEP/NEP integration

2. Early 2027

   Welsh Government Strategic Steers to the Price Review Forum

3. Sept–Dec 2027

   Consultation on the PR29 methodology

4. 2028

   Companies submit business plans

5. 2029

   Regulators assess plans and make determinations

6. 2030

   New price controls take effect

Illustrative

Background

The outline closely follows the government's water reform white paper, A new vision for water. That paper keeps the five-year cycle but adds a 5/10/25-year planning frame. It proposes ringfenced capital maintenance allowances and forward-looking asset health metrics. It also moves towards supervision by company-specific teams rather than relying mainly on industry-wide benchmarking (GOV.UK). The white paper would abolish Ofwat and merge its functions with the water roles of the DWI, EA and Natural England. Existing regulators keep their full powers until the new body is set up, and no establishment date has been given.

Wales is running a parallel track. In a 23 October letter to Ofwat, NRW and the DWI, Cabinet Minister Llyr Gruffydd said Wales wants the regulatory border aligned with the national border for the start of AMP9 in 2030. He listed affordability and asset health among the Welsh priorities for PR29, pointed to a newly established Price Review Wales Forum, and said Strategic Steers would follow in early 2027 (Welsh Government).

PR29 also follows a contested PR24. Five companies appealed Ofwat's 2024 determinations. In March 2026 the Competition and Markets Authority allowed £463m of the £2.7bn extra revenue they sought, adding about 2.2% to average bills on top of the 24% increase from Ofwat's price control (CMA). The CMA said much of the extra money reflected higher financing costs.

What we don't know yet

• How "company-specific" allowances will be squared with comparative efficiency challenge, and what evidence will justify departures from benchmarks.
• When the integrated regulator in England will exist, and whether it will be in place before determinations in 2029.
• What the WINEP/NEP integration will mean for the size and timing of environmental programmes.

What to watch

• Initial direction on WINEP/NEP integration before the end of 2026.
• The joint enforcement and compliance strategy promised for the new year.
• Welsh Strategic Steers and an updated Strategic Policy Statement for Ofwat.
• The methodology consultation window, September to December 2027.