Review of Independent Challenge Groups in the water sector

CCW commissioned Indepen to carry out a two-part review of the challenge arrangements that water companies put in place for the 2024 price review (PR24). The aim was to assist Independent Challenge Groups (ICGs), learn from best practice and strengthen their challenge to the companies.

This review was carried out in the context of CCW, ahead of PR24, stating that we thought “local representation is necessary”. We wanted local representation to “deliver for customers” and “produce outputs and achieve outcomes that are valued by both companies and Ofwat.”

Indepen’s review will help CCW, and others determine how successful ICGs have been in delivering for customers. Phase one of the review looked at the strengths and weaknesses of the various arrangements and it is clear from this report that many ICGs adapted their approach to reflect the phase one recommendations.

The second part of Indepen’s review considers the overall strength of the ICG challenge arrangements at PR24 and provides recommendations for effective local challenge in the future. This includes a framework for Ofwat and companies to consider when designing arrangements for future price reviews, if ICGs are considered to be the appropriate model for local challenge.

This report, while commissioned by CCW reflects Indepen’s view. CCW will use Indepen’s review to inform our own lessons learned work for PR24 as we consider what local challenge arrangements can deliver the best outcomes for all customers. As part of our 2024/25 work programme we will be considering how best to involve customers in decision making.