Bristol Wtr.8t% Regulatory News (BWRA)

17 Sep 2007 11:09

Bristol Water PLC17 September 2007 Bristol Water plc 17 September 2007 Application to Ofwat for Review of Price Limits Bristol Water plc announces that today it has applied to Ofwat for an increasein its price limits for the next two years. BRISTOL WATER SEEKS PRICE LIMITS CHANGE Bristol Water is asking the water industry regulator Ofwat to review its pricelimits for the next two years. Ofwat set price limits for all English and Welsh water companies for the fiveyears 2005-2010 back in 2004. These price limits are expressed as 'K' values andallow Bristol Water to increase (or decrease) its charges to customers eachApril by inflation +/- K. The price limits are based on a very detailed analysisof the costs and investments that companies are expected to incur to deliverservices to customers. Bristol Water is currently investing approximately £150m in capital projects tomeet the outputs set by Ofwat as part of the price limit process. These projectsare to maintain and enhance the company's assets over the five-year period toensure the maintenance of high levels of service to customers. One such major project, now nearing completion, is the Northern StrategicSupport Scheme, to improve the security of supply for a large number ofcustomers in northern Bristol. This scheme would have helped deal with the typeof problems experienced by Severn Trent in supplying water to its customers inGloucestershire during this summer's flooding. When setting price limits, Ofwat identified a number of uncertainties where, ifthe original assumptions proved to be wrong, price limits could be reviewed byan interim determination. In three of these areas Bristol Water is experiencing significant increases incosts: •the soaring number of domestic customers opting for a free meter •the level of bad debts i.e. customers not paying their bills •and water abstraction charges levied by the Environment Agency Bristol Water has therefore applied to Ofwat for a change to the original pricelimits for the next two years. Bristol Water's current average annual domestic water supply bill is just £141.This is some 6% lower than the average bill for English and Welsh companies of£150 and significantly lower than the average bills of some of Bristol Water'snearest neighbours. The original price limits provide for a real increase (before inflation) in 2008/09 of 0.7% and a real reduction in 2009/10 of 2.3% - a net real reduction ofaround £2pa in the average bill by 2009/10. The value of the change that Bristol Water has requested amounts to a total ofapproximately £15 for the average domestic customer spread over the next twoyears. Ofwat will now consider this application and will issue a draft determination byearly November. Following this there will be a period of public consultation anddiscussion between Ofwat and the company. Ofwat will then issue itsdetermination by no later than 14 December. "The Bristol Water Board has considered carefully whether or not we shouldproceed with this application and concluded we must," said Managing DirectorAlan Parsons. "Factors we have taken into account are that we are delivering theservice and investment required of us but have experienced increased costs in anumber of areas including those items for which the increase in prices issought. Relative to other companies' levels of charges, we will still beproviding an excellent service to customers at excellent value." --------------------------------------------------------------------------------For further information about this release, please call Jeremy Williams or PaulKelson on 0117 9536470 (office hours) or 07831 453924 or 07831 518964 (outsideoffice hours)-------------------------------------------------------------------------------- This information is provided by RNS The company news service from the London Stock Exchange