What is the water price review?
Prices for water and sewerage services in England, Wales and Scotland are set by the economic regulator. Water prices in Northern Ireland are also under review.
The price review process takes about two years. It is led by the economic regulator and the water companies and involves government, customers, quality regulators, consumer groups and a wide range of other stakeholders.
Under UK law, the regulator has a duty to set price limits that protect the interests of customers by keeping prices as low as possible while allowing companies to carry out all their functions.
Water companies are highly accountable and consult widely with the public, customers and other groups when preparing for price setting.
| Economic regulators for water | |
| England & Wales | Ofwat (Water Services Regulatory Authority) |
| Scotland | Water Industry Commissioner for Scotland |
| N. Ireland | Northern Ireland Authority for Utility Regulation |
Water prices are currently set until 2010. Reviews have begun to set prices from 2010-15 in England & Wales (Price Review 2009 - PR09) and 2010-14 in Scotland (Strategic Review 2009 - SR09). Both will be set in November 2009. In Northern Ireland prices are being reviewed within a similar timeframe.
Prices limits are set at levels that the regulator thinks are necessary. Water companies are expected to be efficient in the way they operate – to deliver water and sewerage services cost-effectively. Performance in all areas is closely monitored and the regulators report on progress annually.
Through planned future investment the price review helps to ensure that water companies are able to continue to meet stringent drinking water quality, customer service and environmental standards. They must also maintain and develop essential assets (including treatment plants, storage facilities and network infrastructure) while delivering strong financial performance in order to attract investment.
The price review also takes account of the long term nature of the water industry – water supply and sewerage services require long-term planning and investment, over at least the next 25 years, to ensure that services are delivered now and into the future.
To perform effectively, the companies must be regulated in a way that encourages innovation across the water sector and contributes to the development of a dynamic and efficient industry and a strong, competitive economy.
A better understanding of water
Over the two-year period of preparation for price-setting, the review is a thorough and wide-ranging analysis of all the issues affecting the water industry.
The views of consumers of water services are at the heart of the process, which considers:
• improvements to services and assets
• the safeguarding of existing services and resources
• planning for growing demand
• and how to address the many challenges of climate change – from cutting emissions of greenhouse gases to adapting to a future with drier summers and wetter winters.
