‘Striking the Right Balance’ - Water Price Review 2005 to 2010
South West Water has today published its final plans, submitted to Ofwat as part of the ongoing water industry price review for the period 2005 to 2010. It seeks to minimise the upward pressure on prices while meeting all stakeholder expectations at an appropriate level of risk. Ofwat will set customer charges in December 2004 to take effect from 1 April 2005.
Water mains renovated in efficient and courteous manner
The company's overall strategy is built on the following foundations:
• Major investment in completing the water mains improvement programme required by the Drinking Water Inspectorate to protect many thousands of customers from receiving discoloured tap water.
• Increased investment in maintaining water and sewerage systems. Many new sewage treatment works and sewage treatment systems have been constructed as part of the 'Clean Sweep' bathing waters improvement programme.
• Greater than expected investment in meeting higher environmental standards following Ministerial advice in March on the level of future requirements.
• Meeting customer expectations over sewage treatment works odours and flooding from sewers.
• Provision of increased capacity in water supply treatment and distribution to meet growing demand for water and the effects of climate change.
• Maintaining the level of leakage at or below 84 megalitres per day, some 10 to 15 megalitres below the economic level.
• Investment in new infrastructure requirements for two new towns in Devon as part of the Government's housing plans.
• Provision for higher levels of meter switching than envisaged by Ofwat before.
• Increasing security measures.
• Increased running costs including taxation, business rates, energy costs and Environment Agency charges.
• Provision for increased debt costs.
• Maintenance of financial stakeholder confidence through adequate returns on their investments and the continued efficient financing of the business.
Bob Baty, South West Water's Chief Executive, said: "We have done everything reasonably possible to keep possible future price increases to a minimum. However, we have many new obligations that we have to meet and there are new and higher costs that affect the business since the last price review when bills fell by an average of 12.2%. If accepted by Ofwat, our Plan for the next five years would mean an average increase of 6.2% a year excluding inflation.
"Customers and the environment will benefit from further improvements required of us in the next five years and customers have confirmed that they do not wish to see the high standards achieved since 1989 deteriorate. We must ensure therefore that we continue this progress and meet even higher standards in the future.
"New costs such as higher taxation, higher rates, climate change levy, Environment Agency charges and increased security measures also add significantly to the price of water and sewerage services and these are totally beyond our control.
"We welcome the Government's proposals to review the way in which lower income households are helped with their water and sewerage bills and we recognise that this will be particularly important in our region," added Mr Baty.
South West Water's Final Business Plan shows that the average daily charge for water and sewerage services over the next five years would rise as follows:
• 2005/06 - 8 pence.
• 2006/07 - 7 pence
• 2007/08 - 8 pence
• 2008/09 - 7 pence
• 2009/10 - 3 pence
This means the average daily charge for all water and sewerage services, excluding inflation, by 2010 would be £1.28 pence (currently 95 pence - just under the price of 3 pints of milk, or 5 cigarettes, or one and a quarter litres of petrol and less than a quarter of the charge for parking for over 4 hours in Exeter).
Ofwat is due to publish draft prices for all the water companies in early August and the final prices to take effect from April 2005 in early December.
For further information please contact Stephen Swain, Communications Manager or Hilary Weatherley, Corporate Communications Manager on 01392 443022 or 443035 respectively.
Published: 07 May 2004