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Ofwat Forward Programme Summary
Our Vision
A water industry that delivers a world-class service, representing best value to customers now and in the future.
Our Mission
To regulate in a way that provides incentives and encourages the companies to achieve a world-class service in terms of quality and value for customers in England and Wales.
How do we do it?
By:- Setting price limits at levels which:
- Enable well-managed companies to finance the delivery of services in line with relevant standards and requirements.
- Provide incentives for companies to improve efficiency and service delivery.
- Share the benefits between customers and investors.
- Ensuring that we are aware of stakeholders' views and priorities by consulting with customers' groups, the industry and others, and undertaking customer surveys.
- Facilitating the development of competition to promote further efficiency gains and, where practicable, further choice for customers.
- Working with the quality regulators to make sure that Ministers have the information they need to set the quality improvement programme within a long term framework.
- Ensuring that customers' tariffs are fair and do not unduly discriminate or show preference to any class of customer.
- Handling disputes and complaints involving the companies economically, effectively and fairly.
- Monitoring the companies' performance and taking action, where necessary, to protect the interests of customers and other stakeholders.
- Openly and transparently publishing information, which allows customers and other stakeholders to have their say in regulatory decisions.
- Making sure that Ofwat delivers best value in its regulatory role and by valuing and encouraging the development of its entire staff.
- Assessing company performance by making appropriate comparisons between the regulated companies, drawing on relevant information from other sectors and from international comparisons where available.
OUR PRIORITIES FOR 2003-04 TO 2005-06- Our main focus over the next year will be on price setting, leading up to the next review of water company price limits in 2004.
- Our primary statutory duties are to act in a way that we judge will enable efficient companies to finance and carry out their functions, within the context of protecting customers.
Price setting: PR04- Every five years we set prices for the water companies in England and Wales. We set each company a price limit which caps what it can charge you for its services. We will next set prices in November 2004 for the five years 2005 to 2010.
- We set out our approach to the next periodic review in 'Setting price limits for 2005-10: Framework and approach', published in March 2003. You can view it on our website at: www.ofwat.gov.uk
Safeguarding customers- Our role is to make sure that companies maintain the quality of services they deliver to customers. We monitor their performance and publish the results in our five annual performance reports.
Comparative competition, industry structure and companies' finance- The water industry is made up of regional monopolies and there is very little competition - customers cannot choose which company supplies them. To drive companies to become more efficient we operate a comparative competition regime. That means we compare the companies with each other and their international peers.
The Water Bill- The Water Bill was introduced into Parliament on 19 February 2003. During 2003-04 we will be focusing on the preparatory work necessary to allow the new legislative framework to come into effect. We intend to establish industry working groups to assist in the preparatory work for the new competition framework.
- The Water Bill establishes a new regulatory Board to replace the existing Director General of Water Services and a new independent Consumer Council for Water replacing the WaterVoice committees. We will work with DEFRA in supporting the setting up of these new structures.
Regulatory action
Ofwat will continue monitoring company performance across a broad range of factors related to quality of service, tariffs and company investment outputs. We will publish our findings and if required take the necessary regulatory action. Analysis will be based on the companies' June returns plus other information captured by Ofwat and the quality regulators.
OFWAT MILESTONES 2003-04
Price setting- Publish initial feedback on cost base submissions - May 2003
- Publish updated guidance on the interim determinations process - Quarter 1
- Provide feedback to companies and their reporters on draft business plan submissions - Oct – Dec 2003
- Respond to requests for interim determinations and issue counter notices where necessary - Quarter 3
- Publish results of joint customer research
Safeguarding customers- Publish 'Tariff structures and charges' – May 2003
- Publish 'Financial performance and expenditure of the water companies in England and Wales' – August 2003
- Publish 'Levels of service for the water industry in England and Wales' – Quarter 2
- Publish companies' leakage performance – Quarter 2
- Publish the June return 2003 - October 2003
- Publish 'Security of supply, leakage and the efficient use of water' – October 2003
- Report progress on Thames' security of supply in 'Security of supply, leakage and the efficient use of water' – October 2003
Comparative competition and companies' finance- Consult on proposed modifications to licence condition B – April 2003
- Publish international comparison report – October 2003
- Publish 'Water and sewerage unit costs and relative efficiency' – December 2003
- Publish results of independent external review of reporters work on companies' business plans – Quarter 3
- Publish updated regulatory capital values (RCVs) for 2000-05 – March 2004
Competition- Second report on Competition Act 1998 (CA98) casework – Quarter 1
- Respond to CA98 queries – as requested
- Respond to applications for inset appointments within stated timescales – as requested
Resources and accountability- Publish annual report – May 2003
- Publish our annual accounts – October 2003
RESOURCES AND ACCOUNTABILITY
We estimate our budget for 2003-04 will be £13.6m.
The estimated net amount charged to companies will be £12.6m, the first increase in the Licence fee charges to companies since April 1999.
Our resources will be allocated to the following work areas, which reflect our priorities for the coming year. We will reallocate resources should our priorities change.
 | 2003-04 |
| % |
| Price setting | 37 |
| Safeguarding quality and protecting customers | 18 |
| Comparative competition and companies' finance | 7 |
| Competition | 10 |
| Watervoice | 28 |
| Total | 100 |
Staff
We will continue to invest in staff development and will seek investors in People re-accreditation in July 2003. We will maintain progress on the Modernising Government Initiative.
Annual Report
The Director must make an annual report to the Secretary of State for Environment, Food and Rural Affairs and the First Secretary of the Welsh Assembly Government. This is laid before Parliament and published. We will publish our annual report in May 2003 and in it set out our achievements against last year's forward programme 2002-03.
This is a summary of our document 'Ofwat Forward Programme 2003-04 to 2005-06', which is also available on our website: www.ofwat.gov.uk
Office of Water Services
Centre City Tower
7 Hill Street, Birmingham B5 4UA
Telephone: 0121 625 1300
Fax: 0121 625 1400
Website: www.ofwat.gov.uk
e-mail: enquiries@ofwat.gsi.gov.uk
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