Asset health is critical to ensuring long-term operational resilience in the water sector. Water companies must understand their assets, and what is driving changes in asset health over time, to ensure they maintain the long-term capability of assets and promote long-term asset health. We expect companies to have a robust asset management framework to enable them to understand their assets, develop and deliver mature well justified business plans to fund maintenance of their assets and deliver the right outcomes from short term serviceability to the long term. Water companies are accountable through their existing duties to effectively manage their assets.
At PR24, we wanted to better understand asset health and how it has changed over time. We collected asset condition data on water distribution mains, sewers, and bioresources assets, and analysed this as part of our final determination. Building on this progress in understanding the condition of assets across the sector, we set out our roadmap to continue enhancing asset health understanding in the water sector during the 2025-30 period.
Roadmap for the 2025-2030 period
The importance of this work was reflected by the White Paper by the Department for Environment, Food & Rural Affairs (Defra), which set out that Defra “will work with the new regulator to develop a fuller picture of asset health, building on Ofwat’s plans for a data-gathering exercise to provide a snapshot of asset conditions … [and] to develop forward-looking asset health metrics to ensure this critical infrastructure gets the funding it needs”.
We published an 2025 on our progress so far. We have made significant progress against the roadmap and are actively working collaboratively with the sector to continue delivering improvements. Our ongoing work includes:
- Asset health working groups: We have been engaging with water companies and other regulators through a series of workshops and working groups to deliver the roadmap collaboratively, and to help build a better understanding of asset health.
- Understanding asset condition: Over the 2025-27 period, we are working with the sector to prioritise a subset of assets to collect current asset condition and health data on. We have defined the initial list of priority assets that companies can submit claims for in 2026 and will consult on expanding the scope for 2027 and 2028.
- Developing a common asset hierarchy: We are developing a common asset hierarchy for water and wastewater assets supporting consistency in asset understanding, and future data collection and reporting.
- Exploring forward-looking metrics for asset health: We are exploring how best to understand forward-looking asset health. We are currently piloting developing forward looking asset health metrics, and the feasibility of Ofgem’s Network Asset Risk Metric (NARMs) in the water sector.
- Cost Change Process: Companies are able to submit asset health related investment proposals through the PR24 cost change process relating to a step change in investment towards the priority assets. Our assessment of these proposals will utilise sector wide asset condition and investment data collected through our roadmap to help determine the need for investment.
This work is joint led by our price review cost assessment team and engineering and asset management team. This work is being delivered alongside our ongoing work to improve the asset management maturity of the sector.