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Ofwat has accepted reductions in customer bills for South West Water and Affinity Water in draft determinations for PR14 published today.
South West’s customers’ bills will fall an average of 7 per cent before inflation in 2015-2020, while it will invest approximately £1.7 billion. Affinity’s customers’ bills will fall an average of 11 per cent before inflation, with investment of approximately £1.2 billion over the period.
In its original business plan published in December, South West proposed an average reduction in bills of 4.5 per cent while Affinity proposed a fall of 3.5 per cent.
However, Ofwat says that by accepting a lower cost of capital of 3.85 per cent, down from 5.1 per cent in the current cycle, the companies can reduce their bills further.
The two companies are the first to have their draft determinations published as part of the 2014 price review, having been given enhanced status earlier in the month by Ofwat for publishing “high-quality” business plans.
Cathryn Ross, Ofwat’s chief executive, said: “It is our duty to protect customers’ interests and ensure that companies focus on delivering the best service to their customers at a fair price. This is essential if the sector is to retain public confidence and trust. I’m pleased to see that both South West Water and Affinity Water have proposed lower bills for their customers while maintaining essential investment for the future.”
Consultation on the draft determinations will close on 4 June and the remaining companies will receive their draft determinations in either June or August. Ofwat is currently considering requests for companies to receive June draft determinations which will be published on 25 June.
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