Ofwat to review price limits of two water companies
Posted: Wednesday 19th September 2007
Two water companies have asked Ofwat to consider increasing the limits on the prices they can charge their customers.
Bristol Water and Dee Valley Water say they have experienced significant changes to certain specific costs and revenues that were excluded by Ofwat because they were too uncertain when it set price limits for 2005-10.
Regina Finn, Ofwat's Chief Executive, said:
"We set price limits at a level that is designed to protect customers and allow efficient companies to finance their functions so that they can continue to deliver high quality services to customers at a fair price.
"Both companies have come forward with proposals that would lead to increased prices to customers. We will challenge these proposals and question the companies strongly on their reasons. Proposed increases will only be allowed if they are fully justified."
Both Bristol Water and Dee Valley Water say they are facing significant changes in their costs and revenues because of:
· Greater take-up of free meters by customers;· Rises in the levels of household bad debt and debt management costs; and
· Increases in the charges they pay to abstract water from rivers, streams and canals.
Dee Valley Water says it is also facing extra costs to increase the security of its assets, and the amount it pays for discharging into rivers, streams and canals.
Ofwat will publish its draft decisions for consultation at the beginning of November 2007, and final decisions in mid-December 2007. Any revisions to price limits will apply to customers' bills from April 2008.
