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Ofwat has received an application from Bournemouth and West Hampshire Water to increase its price limit in 2004-05 because of changes to its financial position. The company says it has experienced a substantial and unforeseen shortfall in revenue compared to that assumed when Ofwat last set price limits in 1999. The company wants to increase charges to customers to reduce this shortfall in 2004-05. Bournemouth and West Hampshire Water has applied for a review of prices under the 'substantial effect' clause of its licence. The company says that the reduction in revenue relates to unforeseen reductions in demand from industrial customers and metered customers from those forecast at the 1999 periodic review. For Ofwat to consider the request the company must show that the:
Ofwat will look carefully at Bournemouth and West Hampshire Water's application, offset any savings associated with this change of circumstance and consider the most appropriate remedy. The substantial effect clause must deal with a range of unforeseen events. The Director General has greater flexibility in responding than to a standard application for an interim determination. Ofwat will consult on draft decisions in mid-January 2004. It will announce final decisions in February. Any changes will apply to water bills from April 2004. Any change to Bournemouth and West Hampshire Water's price limit in 2004-05 will be taken into account when Ofwat next year sets price limits for 2005-10. Note 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. Condition B of their licences allows water companies to apply for an adjustment of their price limit for certain relevant changes in their financial circumstances. Ofwat can also serve a Counter Notice if the regulator feels that companies have been allowed to raise money for work that may no longer be needed or made certain relevant gains or savings. 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). 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 %
AVERAGE BILL 2003-04 Bournemouth & West Hampshire £102 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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