- April 17, 2019
- Posted by: adennison
- Category: regulatory frameworks, water
Release of farrierswier’s review of the PREMO model applied by the Essential Services Commission for the 2018 water price review.
PREMO stands for Performance, Risk, Engagement, Management, and Outcomes. It is an economic regulatory model that was first developed and applied by the Victorian Essential Services Commission for its 2018 water price review. PREMO introduced new financial, reputational and procedural incentives to better align the interests of water businesses and the customers they serve.
Our report provides a public record of this major economic regulatory reform. It covers the history of how and why PREMO evolved to look as it does. It also provides farrierswier’s assessment of how well PREMO delivered against its stated objectives in the 2018 water price review. Though still early days, we conclude that PREMO achieved much of what it set out to do, contributing significantly to the overall objective of economic regulation of water businesses, promoting the best long-term outcomes for Victorian water customers.
Our report also offers some observations and insights about future application of this novel approach to driving improved business performance for government-owned businesses.