Oil & Gas Q3 2023 Insights
This article originally appeared in The Water Report (March 2023)
Direct Procurement for Customers (DPC) is progressing from nascent at PR19 to greater prominence at PR24. Underpinned by Ofwat’s push for ‘DPC by Default’ to be the starting position for all schemes that meet the £200m TOTEX threshold.
This heightens the need for water companies to deliver credible assessments in their PR24 business plans. Taking learnings from PR19, Ofwat’s recently launched consultation on the technical guidance for DPC shows that the regulator is attempting to simplify the evaluation process to help increase the uptake.
For PR24, all signs point to companies needing to be more proactive to keep a scheme in the pipeline for DPC rather than ruling it out too easily. For example, if a single infrastructure scheme is less than the £200m threshold but a company has comparable schemes, Ofwat is clear in stating their expectation that companies should try to ‘club’ these schemes together to meet the threshold.
With backing from UK Government’s latest, Strategic Policy Statement, DPC is seemingly here to stay for the sector. Water companies should push to land robust assessments against potential schemes the first time around. This will enable companies to hit the ground sooner in AMP8 and mitigate against an arduous process of back-and-forth with the regulator on what is and what is not DPC-appropriate.