MD133

TO MANAGING DIRECTORS OF ALL

WATER AND SEWERAGE COMPANIES

AND WATER ONLY COMPANIES

30 March 1998

A PROPOSED APPROACH TO ASSESSING OVERALL SERVICE TO CUSTOMERS

In February this year, I published Setting price limits for water and sewerage services, which described the approach I propose to follow in reviewing price limits in 1999. As part of that approach I propose to make an explicit adjustment in price limits to reflect the overall service customers have experienced during the current period. Such an adjustment would give companies further incentive to continue improving the service they offer.

The attached technical paper,A proposed approach to assessing overall service to customers, describes the methodology I am minded to use in assessing the relative performance of companies. The approach is illustrated using data that is currently available, not necessarily that on which any final assessment for price limits would be based.

I now invite your views and comments on the methodology described, both the measures used and the way they are combined. I would be grateful for any suggestions for improvement. Unless otherwise requested, responses will be placed in the Ofwat library and made available to the public.

If you require any further clarification on issues in this paper please contact Mark Hann, Service and Performance Team (0121 625 1410). Please would you ensure that all written comments are submitted to Mark Hann by Friday 22 May 1998.

I C R Byatt