Bulk Charges for New Appointments and Variations Regime (NAVs) in the Water Industry in England and Wales

The Supplier will be required to evaluate the bulk charges available to NAVs (waste and potable water) provided by the incumbent water companies, using publicly available information and information obtained from the incumbent water companies. The Supplier will then take a view of an appropriate cost base to use.

For 2019/20 only one small water only company is yet to publish NAV tariffs. Two companies (United Utilities and Yorkshire Water) have published indicative tariffs and are consulting before finalising. Initial analysis of the published NAV tariffs suggest that there is a broad range in the size of the wholesale margins being offered to NAVs and varying degrees of transparency as to how these margins have been determined.

Some NAVs have raised concerns that published NAV tariffs are inconsistent with incumbent water companies' existing tariffs, with the most extreme examples being NAV tariffs that are always higher than the Non-Household Tariff and others which are significantly worse than their 2018 NAV tariffs.

Other NAVs have argued that incumbent charges do not reflect geographic differences in costs of supplying services. These may not be captured within the charges to developers, or Bulk Charges.

There remains a number of unexplained variations in the application of NAV tariffs as the size of the connection (normally determined by number of connections) increases. The consultant must seek to understand the methodological differences as well as differences in actual cost, which drive the differences in margins both across companies and by relevant site specific criteria (typically site size/number of connections, but potentially also geographic location).

Additional information: For Further Information ,please contact: procurement@ofwat.gov.uk