Interim Econometrician Support on Cost Assessment

Purpose On 13 December 2017 we published our final methodology for the 2019 price review (PR19). This set out our approach to securing cost efficiency and outlined how we will assess company costs and set efficient cost baslines for water companies at PR19.

We will use comparative assessment to form a view of comparative efficiency in the sector. This includes: • econometric models for cost benchmarking - these models will cover the majority of companies' costs; and • a separate assessment of cost items that are not covered by the main econometric models, such as components of enhancement expenditure.

We are looking for one econometrician to help us refine our initial set of cost assessment models in the area of residential retail services. The successful candidate may also be asked to provide econometrician support on other areas of cost assessment. Residential retail expenditure covers costs associated with providing a customer service function, meter reading activity and doubtful debt (including expenditure to manage the recovery of customer debt), which is a material component of residential retail costs. Retail expenditure may be driven by a number of factors including type and number of customers, customer bill size and deprivation levels in the area served (relevant to the assessment of bad debt).

Key responsibility and outputs The key output is the development of robust models and analytical approaches to assess cost efficiency in residential retail. The successful candidate may also be asked to provide econometric support support on other areas of cost assessment. We require one econometrician experienced in cost modelling and preferably with knowledge of retail funtions in utility sectors. The successful candidate will provide econometric modelling support, data analysis, advice and assurance to assist us in the development of econometric models to assess residential retail costs. The successful candidate will be required to work closely with the cost assessment team. The candidate will need to work collaboratively in a multi-disciplinary environment, with colleagues across the cost assessment team.