WATER SERVICES
REGULATION AUTHORITY News Release (07/08) issued by The Government
News Network on 27 March 2008
Ofwat today
published its guidance for companies on how it will go about
setting price limits for customers' water and sewerage bills
for five years from 2010-15. It takes account of responses to its
consultation paper published last October.
The approach has its foundations in the robust challenges that
Ofwat has always brought to its scrutiny of companies'
business plans. Ofwat will set price limits that deliver best
value now and in the future.
The guidance also supports Ofwat's work in developing
competition in customers' interests.
Ofwat Chief Executive Regina Finn said:
"We are setting price limits at a time when the water sector
is facing demanding challenges, including climate change,
population growth and rising energy costs. Companies will need to
be innovative and creative if they are to meet these challenges
while delivering water and sewerage services at prices that
customers regard as fair.
"At present our price limits are set for these monopoly
businesses to protect customers who cannot choose their supplier.
But we are moving towards an approach that promotes real
competition and this might include setting separate price limits
for different parts of the water and sewerage businesses in the future."
Much of Ofwat's approach is tried and tested. But the water
regulator will also be seeking to set price limits that take
account of the long-term needs of consumers, and the pressures on
the water sector. The process will include a new form of
incentive-based regulation for capital expenditure that encourages
each company to submit a realistic business plan.
Regina Finn said:
"We asked companies to develop and publish 25-year strategic
direction statements, encouraging them to set out how they plan to
meet their customers' long-term needs. This innovation will
help each company to develop a business plan that will safeguard
high-quality sustainable services for its customers today and for
future generations."
The next step in the 2009 price review process will be for each
company to submit a draft business plan to Ofwat by 11 August 2008.
Notes to Editors:
1. The Water Services Regulation Authority (Ofwat) is the
economic regulator of water and sewerage companies in England and
Wales. It exercises its powers in a way that it judges will
protect the interests of consumers, promote value and safeguard
future water and sewerage services by allowing efficient companies
to carry out their functions properly, and finance them.
2. The PR09 methodology paper published today, 'Setting
price limits for 2010-15: Framework and approach' is
available on the Ofwat website, http://www.ofwat.gov.uk and
from the Ofwat Library on 0121 625 1373.
3. The consultation paper, 'Setting price limits for
2010-15: Framework and approach - a consultation paper', was
published last October and is available on the Ofwat website, http://www.ofwat.gov.uk and
from the Ofwat Library on 0121 625 1373.
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