AMP 5

Geoff,

You'll have to be a little more specific -what kind of information do you want?

Gary,

i would like to know its defintion and it's importance.

Hi Geoff

I found this on Yahoo in 15 seconds.

AMP is short for what OFWAT calls an 'Asset Management Plan'. AMP5 refers to the 5 year planning period for 2010-2015. AMP4 was 2005-2010 etc etc. Basically OFWAT monitors the water companies efficiency in a huge range of categories i.e. the capability of the network, environmental non-compliances etc then tells the company if they are allowed to increase their charges. They balance the level of risk and price that they think is acceptable for customers on our behalf. How a company performed in AMP4 will affect their budget in AMP5. 

You could have done the same and not bothered us with puerile questions.

Best regards

Mike Testro

To expand a bit on that:

-In the last year or two of an AMP, each water company will undergo a price review. -A big report submitted to OFWAT which covers all the capital projects they feel they need to commission and OPEX they will need to spend over the next AMP in order to achieve OFWAT & other regulatory bodies' requirements (eg EA), in terms of water quality, disruptions to supply, leakage, effluent quality, etc

-These projects are costed based on previous projects (UK water companies have some very detailed and rigourous cost capture processes for this reason) and justified based on a range of data including customer willingness to pay surveys

-OFWAT then review these submissions in detail, and eventually come back to the water companies with their Final Determination. This tells them what projects they must complete in the next AMP, when they must be completed by, and how much they can charge their customers.

-During that AMP period, the water companies are required to report reugularly on key projects completion milestone. OFWAT have the power to fine water companies if they fail to meet the obligations of the final determination.

-So UK water companies make their profits by either cutting operating expenditure to below OFWAT's determination, or by delvering projects cheaper than OFWAT's determination.