Demand Utilisation Risk in Water Resources

Southern Water commissioned Economic Insight to consider the implications of Ofwat’s proposal to allocate demand risk to companies in relation to water resources.

Our report considers what impact the proposal would have on the level of required returns that investors would seek in order to take on greater financing risk for new water resources and examines the rationale behind it.  

It further questions why existing regulatory tools cannot achieve the same outcome and considers whether the proposal will have unintended consequences on company and consumer behaviour.