Reflecting on final determinations by the CMA on 2024 price review and looking ahead to PR29

Published: 28 May 2026

The final determinations on PR24 published by the Competition and Markets Authority (CMA) do more than adjust allowances and returns. They provide an early indication of how evidence, deliverability and risk allocation are likely to be tested in AMP8 and PR29.

Three insights from the final determinations

While the final package leaves the core structure of Ofwat’s framework intact, it also shows where the CMA was willing to intervene – and where it was not.

1. PR24 was recalibrated, not reset

Across the five disputing companies, the CMA allowed an additional £463 million of confirmed revenue relative to Ofwat’s updated PR24 position, equivalent to 17% of the additional revenue sought. Base expenditure allowances were slightly lower overall (with a reduction of £32 million), enhancement expenditure allowances increased by £289 million, and the allowed return increased to 4.20%. Taken together, these changes imply a further 2.2% average increase in bills relative to Ofwat’s PR24 final determinations for the disputing companies.

More importantly, the CMA broadly upheld Ofwat’s framework and made refinements where it considered updated evidence, revised modelling or targeted methodological changes justified a different result under the current regulatory framework.

While the CMA considered the Independent Water Commission report, it was clear that its determinations had to be made within the existing regulatory framework.

2. Appealing does not automatically improve the outcome

Relative to Ofwat’s updated PR24 position, Southern Water (+£155m) and Anglian Water (+£150m) receive the largest increases in allowed revenue, followed by Wessex Water (+£106m) and South East Water (+£62m). Northumbrian Water (-£9m) is the only company to come out below Ofwat’s updated PR24 position.

The CMA has not rewarded companies in promotion to the scale of their appeals, but has selectively accepted some arguments, rejected many company-specific claims, and relied heavily on cross-cutting changes to modelling, enhancement funding and returns.

3. Evidence and delivery credibility matter more than broad challenge

The most important differences relative to Ofwat’s PR24 fall into three areas:

Balance between base costs, enhancement and returns
Revised approach to base cost modelling
Targeted adjustments to the outcomes package rather than wholesale redesign

The CMA adopted a simpler single modelling framework, reduced the frontier shift from 1.0% to 0.7%, and broadly retained Ofwat’s price control deliverable (PCD) and outcome delivery incentive (ODI) framework while adjusting selected performance commitment levels and ODI rates.

Taken together, these choices suggest the CMA remains willing to intervene where evidence is strong, but still places a high bar on company-specific claims and continues to favour disciplined delivery within the existing framework. In practice, this mattered where the CMA judged whether additional funding was sufficiently evidenced, whether uncertain schemes should instead move into gated processes, and whether companies had demonstrated a robust basis for company-specific claims.

Funding and returns	Modelling	Outcomes
Base cost cut: £-7.2m Enhancement cost rise: £486.8m Small increase in allowed return: 4.03% to 4.2%	Simpler single model adopted; frontier shift reduced to 0.7%	Ofwat's PCD and ODI framework mainly retained

What this means for companies now

The final determinations provide some additional headroom relative to Ofwat’s PR24 final determinations, but not a material loosening of the regime. The CMA was explicit that strong incentives and penalties remain important to ensure companies deliver what customers are paying for, and it reattained the wider PR24 package on that basis.

In practice, companies should now focus on:

Strengthening evidence on efficient costs, benefits, and productivity improvements
Improving the quality and readiness of gated-process submissions
Reassessing AMP8 delivery plans where allowances remain tight
Understanding financeability, performance, exposure and regulatory requirements under the final package

Company-level allowed revenue outcomes

Company	Ofwat PR24 FD (£m)	CMA Provisional Determination (£m)	CMA Final Determination (£m)	Difference between CMA FD and Ofwat FD (%)
Anglian Water	9,634	9,751	9,797	1.6%
Northumbrian Water	5,205	5,257	5,190	-0.2%
South East Water	1,679	1,751	1,740	3.7%
Southern Water	6,466	6,645	6,646	2.4%
Wessex Water	3,632	3,768	3,734	2.9%

What this means for PR29 and the wider sector

The wider significance of the final determinations lies less in the immediate revenue impact and more in the signals for future regulation.

The CMA placed the redeterminations in the context of the Independent Water Commission and the Defra white paper, but stressed that PR24 still had to be decided within the existing framework. Within that constraint, the final determinations point to three areas that are likely to matter for PR29: base cost modelling, asset health evidence, and the growing importance of uncertainty mechanisms.

The move to a single modelling framework is likely to influence the next round of debate on how efficient costs should be assessed and how company-specific circumstances should be reflected. The CMA also noted the lack of robust evidence on the condition of water company assets and that this issue is better addressed through broader sector work than within the confines of a redetermination.

At the same time, several schemes were moved into gated processes rather than funded fully upfront, allowing funding to be released later as scope, timing and cost become clearer. This is important for companies and investors alike, because some of the practical impact of the CMA's decisions will depend on how these mechanisms operate during AMP8.

Overall, the CMA’s final determinations amount to a targeted recalibration of PR24 rather than a reset. Ofwat’s framework remains broadly intact, but the CMA has adjusted key parameters around cost modelling, enhancement funding, and returns. For the disputing companies, that means a somewhat more permissive settlement than Ofwat’s PR24 final determinations, but one that still preserves strong delivery and performance expectations.

The main legacy of these redeterminations may not be the immediate revenue changes, but the clearer signal that evidence and delivery credibility will matter most in AMP8 and PR29.