Water Supply Licensing (WSL) guidance for reporters on indicative access prices: Letter to RDs

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Ofwat home > Ofwat key work areas > Competition > Water Supply Licensing

5 July 2005

Dear Regulatory Director

WATER SUPPLY LICENSING (WSL) GUIDANCE FOR REPORTERS ON INDICATIVE ACCESS PRICES

In WSL 04/05 dated 24 June, we said we would ask reporters to review your company's indicative access prices to ensure that they follow the methodology prescribed in our guidance on access codes.

Our guidance to reporters is set out below. Your company reporter needs to submit a report to us a week before you publish your indicative prices. The deadline for publication is 31 August 2005, so your reporter will report to us by 24 August. Please ensure that they have access to your assumptions and methodologies.

The reporter should scrutinise the company's indicative access prices and comment on them to Ofwat. The reporter should:

Confirm or otherwise that the company has complied with the methodology for calculating indicative access prices set out in Appendix 3 of our guidance on access codes;
Review and comment on the reasons given by the company for any non-compliance with the methodology;
Examine and comment on the supporting costing information used by the company;
Assess and confirm or otherwise the reasonableness of associated cost assumptions, particularly whether or not they are biased;
Review and comment on the reasons for changes in indicative access prices year on year. This will only apply to reports submitted from 2006 onwards;
For information in table A3.1 the reporter should review and confirm whether lines R1-R6, and R8-R10, reconcile to the value of June return table 21 line 13, and line 7 reconciles to table 21 line 18, and comment on the reasons for any variation.

On 28 July 2005, we will be holding a technical workshop on our access code guidance, which will explain how undertakers should calculate indicative and actual access prices. We will be inviting your reporter to this workshop. Copies of our
access code guidance are available at http://www.ofwat.gov.uk/aptrix/ofwat/publish.nsf/AttachmentsByTitle/AccessCodeGuidance0605.pdf/$FILE/AccessCodeGuidance0605.pdf

I have copied this letter to your reporter. Enquiries on this guidance should be referred initially to Mike Jarema on (0121) 625 1304.

Yours sincerely

Beryl Brown
Head of Competition Policy

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