This site uses the UK Government AccessKeys system
|
|
What's new | Publications | Media centre | Price review | FAQs Update alerts | Consumer issues | Site map | Competition | Contact us |
| |||||||||||||||||||||||||||||||||||||||||||||||||||||
Media centre
Ofwat confirmed today that, following consultation, it will allow Bournemouth and West Hampshire Water to increase its price limit in 2004-05 because of changes to its financial position. The decision will allow the company to raise water charges by 4.3% for the remaining year of the current price review period, from 1 April 2004 to 31 March 2005. This is in line with the provisional decision published on 15 January. After Ofwat's decision, the average household water bill for Bournemouth and West Hampshire customers will be £104 in April 2004, an increase of £1 from April 2003. But customers will continue to benefit in real terms from the effect of the price reductions that were introduced in April 2000. After the proposed increase, customers' bills in April 2004, in real terms, will be lower than the level they were five years ago. The increase will also be taken into account when Ofwat sets price limits for 2005-10 for the whole industry in England and Wales later this year. Director General of Water Services, Philip Fletcher, said: "After listening carefully to the views of WaterVoice Wessex and the water company on our provisional decision I have concluded that we need to raise the price limit for the company in 2004-05. "I regret the need for an increase, but I have a responsibility to ensure that efficient water companies can finance the services they provide to customers. "I have scrutinised Bournemouth and West Hampshire Water's application fairly and consistently. In reaching my final decision I have sought to balance the need to protect customers' interests with the financial requirements of the company." Bournemouth and West Hampshire Water has demonstrated that a reduction in demand for water from what was forecast in 1999 has led to lower revenue which has had a substantial effect on its business. In the company's case the fall in revenue has been caused mainly by the closure of a number of large business users and lower than assumed consumption by metered customers, not because of the company's inefficiency. Ofwat considers that Bournemouth and West Hampshire Water should be entitled to increase its income in 2004-05 to enable it to restore the level of return and achieve the interest cover in 2004-05 that was forecast in 1999. Ofwat's decision to allow Bournemouth and West Hampshire Water to increase its price limits for 2004-05 was made in light of the specific circumstances set out in Bournemouth and West Hampshire's application. The issues driving this change in price limits will be considered in the wider context of the 2004 Periodic Review. As Ofwat has previously stated, it will be consulting on changes to this particular licence provision in connection with the coming price review. Notes to Editors: 1. The Director General of Water Services is the economic regulator of the water and sewerage companies 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. WaterVoice represents customers' interests. 2. Price limits were set on 25 November 1999 for all the water and sewerage companies in England and Wales for the period 2000-05. They came into effect from 1 April 2000. Copies of 'Final Determinations: Future water and sewerage charges 2000-05' are available on the Ofwat website (www.ofwat.gov.uk) and from the Ofwat library (0121 625 1373). 3. The substantial effect clause allows a company to ask the Director to consider whether it is appropriate to raise price limits. For Ofwat to consider the request the company must show that the: Net present value of the losses calculated over 15 years exceeds 20 per cent of turnover of the appointed business; and Losses could not have been avoided by prudent management action. 4. Following a request from Bournemouth and West Hampshire Water for a review of its price limits in 2001, Ofwat agreed to increase the company's price limits over the next three years from April 2002 (see PN 55/01, 14 December 2001). Bournemouth and West Hampshire Water requested extra revenue to pay for more monitoring of water quality. 5. Price limits are set using the formula RPI+/-K, where K is the number by which the company can change its charges to customers above - or below - the level of inflation. The price limits for Bournemouth & West Hampshire Water, set at the 1999 Periodic Review and following the interim determination in 2001, are as follows: PRICE LIMITS %
COMPARISON OF AVERAGE BILLS
(1) Bournemouth and West Hampshire submitted its Principal statement on 29 January. This provided more up to date information on actual consumption in 2003-04 and represents a change from the forecast data that was available to Ofwat when it announced its provisional decision. This alters the outturn average household bill for 2003-04 and therefore the increase required in bills for 2004-05. 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  | ||||||||||||||||||||||||||||||||||||||||
© Crown copyright |
Disclaimer & Privacy Statement |