An easy to use A to Z of some of the most commonly used terms used throughout the water industry.
rate of return
Company profits divided by the regulatory capital value (RCV - see below) or sometimes the modern equivalent asset (MEA) value.
Inland and coastal water receiving treated effluent to which pollution control legislation applies generally.
List of potentially dangerous substances whose discharge to watercourses is controlled under integrated pollution control.
Accounts of the regulated business submitted by the companies for the direct consideration of Ofwat. Regulatory accounts are separate from the PLC accounts.
regulatory capital value (RCV)
The capital base used in setting price limits. For the ten companies that were privatised in 1989, the formula used in the water industry is the initial market value (200-day average) including debt, plus subsequent net new capital expenditure (net of depreciation and the infrastructure renewals charge).
Licence conditions and accounting rules that allow the regulated business to be viewed and treated as an independent company. Ring fencing segregates assets and resources of the appointed business from other activities of its group.