PN 46/04: Ofwat publishes final price limits for water companies in the west of England

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PN 46/04	2 December 2004
Ofwat publishes final price limits for water companies in the west of England

Ofwat today published final price limits for Wessex Water, Bristol Water, Bournemouth & West Hampshire Water and Cholderton Water for the five years from 1 April 2005.

Effect on customers' bills

Customers' bills will be as high as they need to be to enable the water companies to carry out their functions, but no higher.
Average household water and sewerage bills for Wessex Water's customers up by £70 to £347 by 2009-10, before inflation. This compares with the company's proposal for an increase of £87 over the period and Ofwat's draft increase of £55.
Initial increase of £25 in Wessex's bills in April 2005 to reflect the build-up of company costs.
Bristol Water, Bournemouth & West Hampshire Water, and Cholderton Water, which provide water services only, will also be allowed increases.

Benefits
The price increases would enable Wessex Water to invest more than £750 million to:

Safeguard all essential services – including a bigger programme to maintain pipes, sewers and treatment works.
Ensure customers receive safer, more reliable drinking water – achieved through further improvements in water quality including additions to Empool water treatment works to reduce nitrate levels in drinking water supplied to customers in Weymouth.
Provide further protection for the environment – achieved through a major investment programme to improve rivers and coastal waters, e.g. work at Poole sewage treatment works to reduce the level of nitrogen discharged into Holes Bay in Poole Harbour (a nature conservation site and Special Protection Area) which will provide a healthier environment for fish; and investigations into the impact of water abstraction on the environment, including the Hampshire Avon, Upper Wylye and Avon Valley Special Protection Area.
Resolve or alleviate internal flooding from overloaded sewers for all high risk properties identified in the company's plan.

Philip Fletcher, Director General of Water Services, said:

"These price limits are as much as the companies need to continue to provide high quality services, but no more than is necessary. This is to protect the interests of customers.

"We have considered carefully the comments made by customers, the companies, environmental groups and others, and we have taken into account guidance from Ministers following the announcement of our draft decisions in August.

"To protect the progress that the companies have already made on customers' services and the environment, and to deliver further improvements, bills will need to rise.

"Although the increases are higher than our draft decisions, they are still lower than the companies asked for. We have challenged the companies' costs to ensure customers continue to receive value for money from their water and sewerage services.

"The increases will enable the companies to invest more in pipes, sewers and treatment works in order to safeguard supplies for the future. They will also be able to play their part in continuing to protect the environment on a long-term, sustainable basis. The benefits they will deliver include the water quality and environmental improvements that Ministers wanted.

"We have listened carefully to customers, WaterVoice and Wessex Water who wanted to see more investment to deal with the scourge of sewer flooding. These increases mean the company will be able to resolve or alleviate, by 2010, all known high risk problems identified in its plan where overloaded sewers cause flooding inside properties. It will also be able to make further progress in dealing with external sewer flooding."

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.
2. The final determinations document, 'Future water and sewerage charges 2005-10' - Final determinations', will be available from the Ofwat library on 0121 625 1373 and on the website at www.ofwat.gov.uk
3. The figures quoted in all the attached tables are before inflation. Average household bills in both tables are presented in 2004-05 prices.
4. Although this marks the end of the periodic review, companies will have until 1 February 2005 to ask the Director General to refer the price limits he has set to the Competition Commission for redetermination.

Media enquiries to Ofwat Press Office on : 0121 625 1416/1496/1442. Out of hours enquiries to pager: 08700 555 500 water 503/509.

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