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Mr P J Edwards
Economic Regulation Manager-Dwr Cymru
Water UK
1 Queens Anne's Gate
London
SW1H 9BT 30 April 2004
Dear Paul
Aquarius 3 Draft Determinations
Thank you for your letter of 22 March. We have briefly discussed the issues and this letter confirms the Ofwat response on each issue.
We share the industry's desire not to use time after draft determinations on overcoming any technical problems loading Ofwat's draft determination datasets into the upgraded software. We will take steps to mitigate against the risks and address the concerns you have raised on behalf of the Water UK Aquarius 3 modelling sub-group.
1. Model changes between 12 March and draft determination
As flagged in the "known issues" with version 5.4.1 we will be correcting the errors found since 12 March before we model the draft determinations. We have also been improving some of the functionality, which we would also want to roll out on the industry version. These improvements reflect our learning from receiving and loading the final business plan scenario data.
It would be sensible to issue the draft determination software upgrade in advance of the draft determination itself. We believe we can meet your request for no later than two weeks in advance.
2. "Trial" Draft Determination
Our use of the importing routines on receipt of the draft and final business plans has gone smoothly. We would not expect companies to encounter problems. Whilst we are confident the import facility will work as intended, it would be sensible to test the import procedures at the company end in advance of the draft determination.
We will construct a trial dataset and create a revenue assumption set from the tariff basket model and a modelled scenario from the financial model using the upgraded software. This trial draft determination will accompany the software upgrade. The trial draft determination will not contain company specific data, it will be for a hypothetical company. All companies will receive the same trial dataset.
3. Technical Support
There will be cover to deal with technical queries (via aq3.enquiries@ofwat.gsi.gov.uk) throughout August. Whilst we will not be fully staffed as people take their holidays, we have planned leave so as to have at least one person in each of the three Aquarius 3 teams (IT systems development, Financial Modelling and Supply Demand Balance) at all times.
I trust you will appreciate that we will be accommodating extra work to create the trial draft determination during a busy time for us. At this stage I cannot give you a firm date for the release of the upgraded software and the trial draft determination. We are, however, aiming for at least two weeks in advance of 5th August.
Yours sincerely
Dawn Harrison
Head of Financial Modelling
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