The Future of the Water Market
As part of new Charging Arrangements introduced by Ofwat in April 2020, Water and Wastewater adoption via the New Appointments and Variations (NAV) market provides an alternative to a traditional incumbent adoption. Leep Utilities’ Business Development Director, Matt Ling, explains what these changes mean for the future of the water market.
Over recent years, the government and relevant bodies have been looking more critically at what can be done within the water market to ensure customers benefit from the highest possible standard of service at a regulated price.
I strongly believe it is vital that NAVs like ourselves find a way to ensure developers understand the benefits of moving away from the traditional system and towards a more flexible and hugely cost beneficial process that a NAV can offer.
The recognition that regulation alone would not drive the best benefits from the market, particularly for housing developers and industrial customers, ultimately led to the introduction of the NAV regime.
Subject to the same regulations and obligations as the bigger incumbents, NAVs provide greater flexibility as they are not limited by geography and can work with developers to ensure the best commercial value is realised.
The flexibility demonstrated in the adoption of SUDS can be hugely beneficial to housing developers. Rather than having to work with different organisations, it provides a one-stop-shop to help navigate the whole process.
As with any substantial change in process, it is important that NAVs are able to communicate their points of difference and the value they offer.
The shift from front end payments is one of the most substantial changes to impact developers. Traditionally helping offset the cost of the build, this has been replaced with a staggered infrastructure charge payment distributed across the length of the build (and dependent on type), meaning there is a delay in cash flow from day one payment to connection.
A key element of the NAV offering, through the NAV Asset Value, is the opportunity to offset some of this capital expenditure, required to install the networks. This is now the only way to ensure that developers are maximising the amount they are receiving for their water connections.
When using a NAV, the Asset Value for domestic projects is paid per plot connected, meaning that it is particularly beneficial for developers working on high-rise developments.
As leaner organisations, NAVs are in a position to work alongside developers and their appointed self-lay contractors, in an effort to ensure that asset delivery is a smooth process driven by individual timelines. This is directly at odds with the traditional system which saw progress controlled by the convenience of incumbent’s available resource.
This flexible and innovative approach is telling of the future of the water market and marks a clear break away from the traditional local water company installing and/or adopting installations.
For Leep Utilities, utilising the NAV Licence regime means the business is in a strong position to tailor what is being offered to each specific development scale and further reducing the price of multi-utility quotations.
Following the acquisition of SSE’s water and wastewater networks in 2019, Leep became one of the largest UK operators within the NAV market and continues to grow at pace. The business’s dedicated water team is well placed to advise on the future of the water market.
For more information contact the team by emailing info@leeputilities.co.uk and we’ll be more than happy to help.