WICS takes a long-term view
19 February 2020
WICS TAKES A LONG-TERM VIEW IN DETERMINING PRICE LIMITS FOR 2021-27 AND BEYOND
The Water Industry Commission for Scotland (WICS) today publishes the last in a series of Decision Papers that outlines its views on the key elements of the Strategic Review of Charges for the 2021-27. This paper sets out the Commission’s views on an appropriate range for prices that should apply for water and sewerage services in 2021-27 and beyond.
Scottish Water’s recently published Strategic Plan set out the substantial challenge it faces to achieve the Scottish Ministers’ expectations for the water industry in Scotland, including its net zero emissions target by 2040 and the need to replace its assets on a sustainable basis. The Commission has come to its view on the level of prices required in 2021-27 in the context of these long-term challenges and the extent of transformation required to meet these challenges.
The Commission has concluded that average annual charges will have to increase by between 1.5% and 2% above the rate of consumer price inflation (CPI). The Commission currently expects that similar charge increases will be required in the period beyond 2027.
The Commission’s Chief Executive, Alan Sutherland said:
“The Commission’s approach to economic regulation is firmly rooted in doing what is right for both current and future customers. Our decisions have been taken in the context of the need to transition to a net-zero industry and ensure the sustainable long-term future of the water industry in Scotland. It is not in customers’ interests to minimise prices now only to store up higher bills for the future. We must protect service levels for current and future customers.”
Scottish Water and the Customer Forum – the independent body that speaks on behalf of customers and communities – will now seek to discuss and agree a profile of prices (within the CPI+1.5% and CPI+2% range set by the Commission). Providing the agreement is consistent with the Objectives of the Scottish Ministers and the Commission’s Decision Papers, the Commission will be minded to accept this agreement as its Draft Determination.
The Commission will publish its Draft Determination in May 2020, followed by its Final Determination in September 2020.
Notes to editors:
1. WICS is the economic regulator of the Scottish water industry. It works with Scottish Water and others in the water sector to provide assurance and oversight that customers receive high-quality service and value for money.
2. WICS is one of the stakeholders that together are delivering an agreed, common vision for the water sector. The vision is owned by all sector stakeholders and marks a new collaborative way of working between Scottish Water, its regulators and others.
3. The Strategic Review of Charges is the process by which WICS set price limits for water and sewerage charges, currently, for a six-year period.
4. The Customer Forum acts as a conduit for the views of customers and communities. It is charged with reaching an agreement with Scottish Water on the price profile required to deliver Scottish Water’s Strategic Plan within the ranges set by the Commission.
5. The Commission’s final decision paper on prospects for prices is available at https://www.watercommission.co.uk/view_Decision_Papers.aspx
6. The Commission’s other decision papers for the Strategic Review of Charges 2021-27 are available at https://www.watercommission.co.uk/view_Decision_Papers.aspx
7. Scottish Water’s Strategic Plan ‘Our Future Together’ is available at https://www.scottishwater.co.uk/en/About-Us/What-We-Do/Our-Future-Together
8. The Scottish Government has issued its final consultation on Scottish Ministers’ Objectives and Principles of Charging for 2021-27. This is available at https://www.gov.scot/publications/investing-paying-water-services-2021-final-consultation/pages/3/