Information for regulation and the June return

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Ofwat home > Publications > Information notes

Information for regulation and the June return

Why do we need information?
We, the Office of Water Services (Ofwat), need information to enable us to regulate the water and sewerage companies in England and Wales.

We obtain the information we require from a number of sources including: the Department for Environment, Food and Rural Affairs and the Welsh Assembly Government (the chief industry standards setters); the Environment Agency and the Drinking Water Inspectorate (the quality regulators); the water companies; reporters; auditors; customers; specialist advisers; and commentators.

This note sets out the information we collect each year from the companies and the quality regulators. At price reviews we need additional information.

Why do we collect this information?
We collect information to:

monitor companies' progress towards achieving environmental and drinking water quality objectives;
compare companies' performance in carrying out their functions;
measure and compare their costs;
make sure that customers' bills avoid undue preference and undue discrimination and are in line with the price limits;
approve companies' charges schemes;
make sure that customers' standards of service are protected; and
prepare for price reviews.

We collect sufficient information to perform our duties, but no more. It is the quality and reliability of information that is important.

Our monitoring is based on data that has been scrutinised by independent professionals – reporters and auditors – who examine and test the reliability of the information and report their opinion to us.

What submissions do we collect?
The June return
All the companies are required by their licence to make an annual return covering their activities in the previous financial year (ending on 31 March). This return, sent to us each June, is our primary source of information.

The June return provides us with the following information.

Key outputs (levels of service indicators)

Companies must report their achieved performance on: restrictions on water use; low pressure; interruptions; flooding from sewers; responses to billing queries and written complaints; the answering of telephone calls; and frequency of meter reading.

Company performance under the Guaranteed Standards Scheme (GSS)

Customers are entitled to certain guaranteed standards laid down by the Government. Where these are not met, compensation is payable. The GSS covers: interruptions to the water supply; flooding from sewers; written account queries; making and keeping appointments; and responding to account queries and complaints.

Non-financial measures
– population supplied;
– number of households and non-households receiving measured and unmeasured supplies of water and sewerage services;
– new connections;
– meter installations;
– supplies to non-households;
– volumes of water affected by various undertakings and relaxations;
– the volume of water delivered, including leakage;
– volumes of sewage and effluent collected, treated and disposed;
– lengths of water mains and sewers inspected, repaired and renewed;
– water sources;
– treatment needs; and
– types of water and sewage treatment works.

Regulatory accounts
– profit and loss accounts and balance sheets (on both an historic cost and a current cost basis) for the regulated business;
– cash flow statement for the regulated business;
– operating costs analysed by types of direct cost;
– maintenance and other expenditure for water and sewerage services;
– revenue from measured and unmeasured supplies of water and sewerage services and other sources;
– values and types of assets;
– movements in working capital; and
– transactions with associated companies.

Financial measures
– additions to the company's asset base;
– maintenance and depreciation by type and asset life;
– expenditure by purpose for water and sewerage services (base service, quality enhancements, enhanced service levels and improvements to the supply/demand balance); and
– proceeds from land disposals.

The principal statement
Companies also produce a principal statement in January each year.

It contains companies' intentions and the rationale behind their tariff proposals for the coming charging year. This is used to check that price increases are within the limits allowable, and that companies comply with licence Condition E, which prohibits undue preference and undue discrimination in their charges.

Charges schemes set out each company's individual charges for the coming year. The companies submit their schemes to us in January with their principal statements. Following approval by us, schemes take effect on 1 April.

What other information is supplied to us?
We work with the quality regulators to check that the companies achieve the outputs allowed for in price limits. Companies have to finance improvement programmes to meet new legally enforceable quality and environmental obligations.

The Drinking Water Inspectorate and the Environment Agency regulate the quality of drinking and waste water respectively. They supply us with annual assessments of the companies' compliance with current quality standards and progress with programmes to meet new statutory obligations. This helps us to make sure that customers do not pay for services that the companies do not deliver.

Are copies of this information available?
Yes. We aim to publish as much information as possible. However, some of the information we collect is submitted on a 'commercial-in-confidence' basis and is not available.

After analysing companies' June returns, we publish reports each year setting out the companies' performance. The four main reports that we publish annually are:

– 'Security of supply, leakage and the efficient use of water';

– 'Levels of service for the water industry in England and Wales';

– 'Water and sewerage service unit costs and relative efficiency'; and

– 'Financial performance and expenditure of the water companies in England and Wales'.

Each spring we publish a report on the companies' tariff structures and charges.

The individual company June returns and regulatory accounts (except the 'commercial-in-confidence' sections) are placed in the Ofwat library together with relevant information supplied by the quality regulators. Since the start of 2004, a public version of the 2003 June return has been available on our website at
www.ofwat.gov.uk.

For further information
Send an e-mail to enquiries@ofwat.gsi.gov.uk
Contact our library on 0121 625 1361
Visit our website at www.ofwat.gov.uk

March 1996
(Revised October 2004)

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