Water regulator Ofwat has proposed a number of changes to its Regulatory Accounting Guidelines (RAGs) which set out in detail how water companies must treat particular items where disclosure and reporting requirements go further than those normally required under company law.
Companies must use these guidelines to complete their annual performance report, which is in turn used by Ofwat and other stakeholders to allow easy comparison of each company’s performance.
Under the changes proposed by Ofwat, water companies would face expanded disclosure requirements in a number of areas including:
- Greater transparency and clarity about the financial returns to companies’ equity holders each year; and,
- A requirement for companies to report on the money they receive from customers and spend each year to reinforce their networks, and an explanation for the difference.
The RAGs have been amended to take account of an exercise carried out by Ofwat in December 2018 to set out all water companies’ licence obligations in clearer, more accessible language.