The challenge is operating within the 5-year AMP cycles, which result in five-year cyclical spending patterns. Instead of innovation, utilities have been driven to large framework agreements with a small group of outsourcing specialists, driving down margins through economies of scale.8 Ofwat regards efficiencies as being deliverable within each AMP period after which each utility’s cost base is re-set, cancelling out the efficiencies attained during the period. Smart metering has too long a payback time for this model. Ofwat has commissioned UK WIR (the w'ater utility joint research body) to prepare an evaluation of the costs and benefits of smart metering before the price setting for AMP6 in 2014-15.