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Ofwat today published a strategy paper, Setting water and sewerage price limits for 2005-10: Framework and approach. The document explains how Ofwat will carry out the 2004 price review following responses to its three-month consultation. Price limits for water and sewerage services in England and Wales will be announced in November 2004 and take effect from April 2005. Philip Fletcher, Director General of Water Services, said: "I welcome the constructive approach which respondents took. We have considered all the points made and changed our views in several cases. Our aim is to enable each water company to deliver a high level service to its customers in a sustainable and efficient way whilst making essential environmental and other improvements. "Many respondents were particularly concerned about incentives and uncertainty. We accept that since privatisation in 1989 many of the easier efficiency gains have now been made. But there is still scope for the water industry to become more efficient, and we are publishing a preliminary report by consultants on this today. "We recognise the need to be sure that there are sufficient incentives for companies to continue to outperform our assumptions. We are doing further work on this now and plan to consult in May 2003. "We have also looked again at the mechanisms for dealing with uncertainties at and between periodic reviews. We have a duty to set price limits to enable well managed companies to finance their functions. But this is not the same as adjusting price limits for every change in company circumstances. Our paper sets out how we intend to provide more clarity on handling issues of uncertainty. "It is too early to start forecasting what the effect on customers' bills will be. The scale of the expenditure programme required, the need to ensure that companies can raise money from the markets and the scope for efficiency will all have an important bearing. I shall ensure that customers face no higher burden than is necessary. But it would be unwise, in the light of likely pressures on most companies, for customers to expect real term reductions in bills from the new price limits." Note to Editors: 1. The Director General of Water Services is the economic regulator of the water and sewerage industries in England and Wales. He exercises his powers in a way that he judges will allow them to carry out their functions properly, and finance them. Customers' interests are represented by WaterVoice. 2. The strategy paper, 'Setting water and sewerage price limits for 2005-10: Framework and approach', will be available on the Ofwat website on www.ofwat.gov.uk or from the Ofwat library on 0121 625 1373. 3. Alongside the strategy paper, Ofwat is also publishing today four other documents:
MEDIA ENQUIRIES TO OFWAT PRESS OFFICE ON: 0121 625 1416/1496/1442 Out of hours enquiries to pager: 08700 555 500 water 503/509. Ofwat publications and press notices can be found on Ofwat's website at: www.ofwat.gov.uk  | ||||||
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