Cost Base Support
Increase the confidence in your PR14 Cost Base submission by validating your approach
- Validation of Water Company methodology
- Opportunity identification
- Increase the confidence grades of each Cost Base Line
- Fuller understanding of performance in the Draft Cost Base exercise
Aqua has considerable experience of Periodic Reviews and the Cost Base submission that forms part of this process. What is clear is that the Ofwat guidance for Cost Base can be interpreted a number of different ways, which can lead to embedded inclusions that can distort the comparison with other Water Company’s returns.
Aqua understands the PR09 Cost Base guidance intimately, and can therefore provide a validation service for the Cost Base submission. This includes validation of the Water Company’s methodology and approach to the Cost Base, particularly with respect to inclusions and exclusions.
The findings of the validation exercise can be fed back into the Final Cost Base submission with the intention of improving the quality and consistency of the submission whilst also increasing confidence both internally and externally.
Aqua understand the general scepticism regarding Cost Base that stems from past submissions whereby there were concerns that Ofwat were not being able to compare like for like across the board.
The guidance for the PR09 Cost Base is interpretable, however AQUA have been audited on our approach to inclusions and exclusions for a Water Company by Ofwat.
The success of these audits is proof of our understanding of the Cost Base process. Due to the specialist nature of our team, we are able to undertake a detailed validation of the Cost Base that can identify opportunities for reduction within each Line Item.
This exercise will validate the approach whilst also creating an opportunity to increase the confidence grades for each Line Item.
