RD 04/01

TO THE REGULATORY DIRECTORS OF ALL
WATER AND SEWERAGE COMPANIES AND
WATER COMPANIES

9 April 2001

Dear Regulatory Director

INTEREST RATES FOR REQUISITIONS AND INFRASTRUCTURE CHARGES - SIX MONTHLY REVIEW

The basis for Ofwat's approval of interest rates for requisitions and infrastructure charges was set out in the letter to companies of 9 April 1990 (FD4).

The latest published value of the reference rate (10 year gross redemption gilt yield) is 4.73% (March 2001). Rates to be adopted from 1 April 2001 will therefore be decreased from those set out in my letter of 7 November 2000 (RD 23/00). They will be, for borrowing, 6.25% (water and sewerage companies) or 6.50% (water only companies) and, for deposits, 4.00%.

Any queries on the content of this letter should be addressed to Peter Jordan on 0121 625 1312.

I am copying this letter to Rodney Anderson (DETR), Bob Macey (National Assembly for Wales) and Pamela Taylor (Water UK).

Yours sincerely

Charles H Whitworth

Head of Tariffs