Economic Regulatory Services

1.Purpose This notice seeks offers for economic consultancy services and support of Scottish Water’s Strategy & Regulation team from February 2024, in the context of developing our medium- and long-term strategic plan for the business. This will lead to setting up a framework agreement for initial 3 year period with 3 x 1 year extension options, with up to [4] economic consultancies. The main design and delivery of the work will be undertaken with the internal teams and these consultancies. 2.Context This involves the development of Scottish Water’s medium-term (SR27) business plan alongside its long-term strategy to deliver Scotland’s Water Sector Vision. Areas where Scottish Water may require expert regulatory economic support include: •Developing cost and efficiency benchmarking workstreams and helping Scottish Water develop its internal capability. This may include econometric modelling of opex, and capex, as well as broader benchmarking of performance. •Designing/developing performance measures that align with the business’ strategic direction; •Providing “critical friend” challenge to the team developing Scottish Water’s long-term strategy and preparing the SR27 business plan with respect to inter alia: oOur strategic cost benefit analysis tool, which has been developed in order to bring the customer perspective into our investment prioritisation process. oThe economic analysis that underpins our asset management strategy. oThe overall strength and coherence of our evidence base. •Supporting Scottish Water in identifying, assessing, and planning for responding to potential risks and opportunities in both the medium- and longer-terms, including with respect to influencing customer behaviour, managing climate change etc. In addition to the above matters, Scottish Water may require expert economic support with various other strategic and/or regulatory matters. 3.Our requirements The consultant should be able to demonstrate track records in •cost and efficiency benchmarking for regulated businesses, including using econometric tools as well as drawing on established alternative approaches and available datasets. •designing performance measures that align with the strategy being pursued by a regulated business. •working openly and constructively with clients and third-party stakeholders to achieve agreement over analytical approaches, assumptions and methodologies. •techniques, challenges and approaches to infrastructure investment appraisal. •applied cost-benefit analysis with cash and non-cash monetised external benefits. Experience of advising regulated water companies would be an advantage. Additional information: The PQQ/ITN documents can also be accessed by logging in through the Scottish Water Delta e-sourcing webpage https://scottishwater.delta-esourcing.com/ and through the Response Manager section using the following Access Code : 8MANV85862