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OFWAT FINAL PRICE DETERMINATION

2 DECEMBER 2004

The Office of Water Services (Ofwat) have today released their Final Determination of price limits which will apply from April 2005 to March 2010.

 

2004/05

2005/06

2006/07

2007/08

2008/09

2009/10

Price Limits %

-0.7%

-0.6%

+1.5%

+2.5%

+1.0%

Average Annual Household Bill £

£77

£76

£76

£77

£79

£80

 

Actual bills will increase by inflation adjusted by the Ofwat limits shown above. The Average Annual Household Bill is the bill before adding inflation as measured by the RPI.

The price changes will first take effect from July 2005, Portsmouth Water customers will still be paying the lowest prices in England and Wales . The price limits also mean that in real terms the cost of water for our customers in 2010 will be less than in 1995.

Despite the modest increase in prices over the five year period Portsmouth Water will still be undertaking a capital investment programme amounting to £45.3m over the five year period.

 

£m

Renewals and Replacement of the Existing Mains Infrastructure

19.0

Further Improvements to Maintain Water Quality Standards

18.1

Renewal and Replacement of Supply Equipment and Plant

7.1

Development of New Water Resources and Water Mains to Maintain Adequate Supplies

1.1

Total

45.3

 

We are pleased that in the Final Determination, Ofwat have allowed for the Company to undertake a major programme of work in the city of Portsmouth to improve the trunk water mains network which, we believe, will provide an improvement in service to our customers. The work is intended to reduce the risk of the discoloured water which has occasionally occurred following network maintenance.

The Company has to plan a long way ahead to be able to meet future public water requirements in the next five years and will be undertaking the preparatory work leading ultimately to the construction of a new winter storage reservoir at Havant Thicket. The reservoir will be needed by 2020 and is expected will cost a total of approximately £30m.

Managing Director Nick Roadnight said that "The Company has been set very challenging price limits, but remains committed to providing drinking water of the highest quality at the most cost effective price."

The Company now has two months to either accept the Ofwat Determination or to challenge the decision by a referral to the Competition Commission. During that time the Company will be looking at the detail accompanying the Final Determination.