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CEPA contributed to Ofwat's consultation by developing and assessing options for the regulation of developer services at PR24 and beyond. The aim of our study was to assess whether customers could be better served by developer services remaining in the wholesale price controls, or by reducing the regulation of developer services and relying more on market processes.

Our work suggests that Ofwat should focus on two high-level strategic options for PR24, reflecting different points on a spectrum of relying more or less on ‘ex ante’ regulation of developer services (i.e. price control regulation) versus ‘ex-post’ monitoring and enforcement:

• An evolution of the current regulatory approach, where all developer services continue to be regulated within the scope of the wholesale price control, potentially with a view to a further transition towards more separate regulation or deregulation of developer services in the future.
• A more fundamental change in approach that would be more reliant on ‘backstop’ regulation of contestable developer services, akin to Ofgem’s approach to regulating new connections in electricity.