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Bristol Water is rejecting its PR14 price determination and seeking a review with the Competition and Markets Authority (CMA).
Chief executive Luis Garcia said the determination, which proposes a 23 per cent reduction in household bills over the five year period, would make it difficult for the water company to deliver on service and make sufficient investment for the future.
He said: “Throughout this process we have engaged fully with Ofwat and we have consulted with our customers to ensure that their views and priorities have shaped our business plan. We are very confident that our proposals for 2015-2020, combining service improvements and price reductions, meet our customers’ requirements and expectations.
“We do not believe that the determination Ofwat has set is in the long term interest of our customers and stakeholders and we believe that a review by the CMA will result in a better outcome. There is clearly a discrepancy in calculations because of the size of the gap and the CMA is the only fair way to resolve this.”
Ofwat had set the allowed level of total wholesale expenditure for Bristol Water at £409 million and reduced the average household bill from £197 to £162 in the first year followed by four years of £152; this amounts to a 23 per cent reduction (figures are based 2012/13 price base).
Bristol Water’s business plan for 2015 to 2020 had proposed wholesale expenditure of £541 million and a reduction in average household bills of 4.5 per cent, or £9 in real terms, to £188.
The CMA, formed as a merger of the Competition Commission and the Office of Fair Trading, is an independent non-ministerial department with responsibility for appeals and promoting competition for the benefit of consumers. The CMA will appoint a panel of members to adjudicate this case. Bristol Water will then submit a statement of case to the panel which will be reviewed along with responses from Ofwat as well as statements from industry and regulatory stakeholders. The process is expected to last six months in accordance with the statutory timetable.
The other water companies have until February 12 to accept Ofwat’s price determination. A number of companies, including Anglian Water and United Utilities, have already done so.
Ofwat declined to comment ahead of the 12 February deadline.
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