Water UK

The 2004 Periodic Review of water prices

11/08/05

A Steering Group chaired by John Baker has published a valuable overview of the price setting process. All parties to the price-setting process will want to study its recommendations as they prepare for the next review in 2009.

Water UK shares the general opinion in the Baker report that 2004 was an improvement on previous price reviews. It supports the positive comments on Ofwat's management of the process, but also agrees that more work is needed in clarifying the roles of different parties and creating a better long-term framework for the industry.

In particular the industry is pleased to see the Group propose attention to some technical aspects of the regulation process, notably the methodologies relating to capital maintenance and efficiency and to the collection and use of information. In these and other areas there are clear similarities with the industry's own proposals for future regulation published for consultation in July.

There is also a wise emphasis in the report on the value of working together. Group members highlight the need for close liaison between different regulators, but also at several points recommend joint working with the industry to ensure practical policy decisions.

Pamela Taylor, Chief Executive, said:

"Ofwat should be congratulated on commissioning a fully independent report.

"We were impressed with the thoroughness of the Steering Group's investigations and we are pleased that they have represented our views and concerns accurately.

"We hope that all our regulators and the government will consider these recommendations. The framework for water industry regulation is to change significantly in the coming year, as the Steering Group points out, but the messages in their report will remain relevant and help us all to deliver a stronger industry in the future."

Ends

For more information please contact:

Barrie Clarke, Director of Communication
020 7344 1804 (out of hours pager 07623 960573) or

Joanne Turner, Policy Coordinator
020 7344 1824