WATER SERVICES
REGULATION AUTHORITY News Release (PN 32/07) issued by The
Government News Network on 25 September 2007
Water companies
are continuing to invest to deliver environmental and water
quality improvement, according to a report published by Ofwat today.
The Financial performance and expenditure of the water companies
in England and Wales 2006-07 report provides a comparison between
the industry's actual performance over the last financial
year and Ofwat's expectations of when the price limits were
set in 2004.
Ofwat Director of Regulatory Finance and Competition, Keith Mason said:
"We take our role of protecting consumers very seriously and
will continue to monitor each company to make sure that it
delivers the work that consumers have paid for.
"We welcome the progress that companies have made but where
a company fails to provide the service or deliver schemes assumed
when we set price limits, we will make sure consumers are not
disadvantaged and will take action where necessary."
Our analysis shows that the trends in levels of service
performance across the industry continue to be broadly
satisfactory. For example, drinking water quality is of a very
good standard (99.96% compliant).
But, overall investment in spending on assets (which includes
maintenance and improvement schemes) is behind Ofwat's
expectations for the first two years of the current price limit
period. While the majority of companies are investing what is
needed in most areas to maintain the standard of service consumers
expect, there have been delays in delivering some improvement schemes.
Despite lower than expected revenues and higher operating costs,
operating profits were at a similar level to 2005-06. However,
interest costs in 2006-07 fell significantly (by £171 million)
because of favourable interest rates. This contributed to a
significant increase in pre-tax profits of 26% to £2.4 billion.
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 allow
companies to carry out their functions properly, and finance them.
Its duties include protecting the interests of consumers, wherever
appropriate by promoting effective competition.
2. Since privatisation the industry has invested approximately
£70 billion in water and sewerage infrastructure in England and
Wales. This equals average annual capital investment of more than
£3.9 billion compared with an equivalent investment figure of £2
billion a year during the 1980's.
3. The report, 'Financial performance and expenditure of the
water companies in England and Wales 2006-07', is available
on the Ofwat website, http://www.ofwat.gov.uk
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