Ofwat Price Review Explained – AMP8 (2025 – 2030)

Introduction

Three days – that’s the length of time someone can survive without water. This makes the water industry one of the most critical sectors worldwide. The amount we pay for water services and the quality of service provided are crucial for everyone.

In this article, we cover Ofwat’s role in regulating the water industry and how its price review process affects customer bills and investment in the sector. Exploring how regulation ensures a balance between affordability and necessary investments.

So who are Ofwat?

Ofwat was established in 1989 when the water and sewage industry in England and Wales was privatised by Margaret Thatcher. It is responsible for the economic regulation of the industry, ensuring companies operate efficiently and provide good value while maintaining sustainability.

The regulator operates independently but works with policymakers, environmental agencies, and industry stakeholders to ensure a well-functioning water sector. Ofwat’s responsibilities include pricing regulation, service quality enforcement, investment oversight, and supporting environmental objectives.

The Price Review Process

Ofwat carries out a price review every five years. These reviews coincide with the end of an Asset Management Period (or AMP for short). Since privatisation, there have been seven AMPs, with AMP8 set to begin in April 2025. The price review process determines customer bills and investment requirements for maintaining and upgrading infrastructure over the following AMP cycle.

As competition in the water industry is limited, there’s a risk that companies may not deliver expected services or could charge higher prices for profit. This is why Ofwat regulates the industry by setting price, investment, and service controls. Ofwat’s regulations ensure:

Consumer interests are protected, with competition promoted where appropriate.
Water companies properly carry out their functions and maintain service quality.
Companies have the necessary funds to maintain and improve services.
Water systems remain resilient to future demand and climate challenges.
Innovation and efficiency improve services while keeping costs fair.
Environmental sustainability and compliance with regulations are upheld.

Ofwat consults stakeholders, including consumer groups, environmental organisations, and water companies, to strike a balance between keeping bills affordable and enabling necessary infrastructure investment.

The PR24 Price Review and AMP8

The 2024 Price Review (PR24) is a key milestone, setting the price, investment, and service framework for 2025-2030. PR24 focuses on sustainability, resilience, and long-term infrastructure investment to meet future challenges.

So let’s bring you up to speed on Ofwat’s 2024 price review.

In December 2020: Ofwat published the discussion paper “PR24 and Beyond: Future Challenges and Opportunities for the Water Sector”.
In May 2021: Ofwat released “PR24 and Beyond: Creating Tomorrow, Together”, outlining ideas and ambitions for PR24.
In July 2022: The draft methodology for PR24 was published on 7 July 2022.
In December 2022: The final methodology was released on 13 December 2022.
In July 2024: ‘Your water, your say’ meetings were held on 23 and 24 July 2024 to discuss the draft determinations.
In December 2024: Final determinations were issued on 19 December 2024, setting the framework for AMP8.
In February 2025: The deadline for companies to appeal decisions to the Competition and Markets Authority is 18 February 2025.

Following publication of the final determinations, six companies have requested references to the Competition and Markets Authority (CMA). These are:

Anglian Water
Northumbrian Water
Thames Water
Southern Water
South East Water
Wessex Water

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