MD 155

TO THE MANAGING DIRECTORS OF WATER AND SEWERAGE COMPANIES AND WATER ONLY COMPANIES

30 November 1999

MONITORING PLAN - 2000-2005

Earlier this year we invited comments on the proposed public document to be published by you following acceptance of my Final Determination. Most companies supported the production of the public document.

The purpose of the Monitoring Plan 2000-2005 is for you to set out your commitments to delivering the required levels of drinking water and environmental quality outputs and standards of service consistent with the price limits set by me. It will enable CSCs and other informed stakeholders to see for each company the improvements that will be delivered within the price limits set for your company. The Monitoring Plan 2000-2005 also contains information summarising your Asset Management Plan required under Licence Condition L.

You will decide how best to manage the delivery of the package set out in the Final Determination Supplementary Report. By March 2000 you will have agreed with the quality regulators a timetable for delivering the quality programme projects. It will then be for you to plan for innovative and cost effective options for delivering your commitments within the set timetable.

A common structure for the Monitoring Plan 2000-2005 is set out in the Periodic Review Submission N guidance at Annex A. Your Monitoring Plan should describe your company strategy for 2000-2005 and how it has evolved; your commitments on drinking water quality and environmental improvements; services to customers; maintaining serviceability to customers; and prices. It should also present tables of comparative, consistently prepared information, similar to the Business Plan Part C public document. Table N1 sets out price limits and bills, Table N2 sets out outputs and service levels and Table N3 sets out the indicative major works activity you plan to undertake on the network, and your expected metering activity. You should derive the average and typical measured bills for 2000-01 from the charges scheme approved by me in February 2000. You should also include a summary page in which you set out your overall strategy and strategic objectives, and the quality and service improvements you plan to achieve.

Your Monitoring Plan will be a public document that will be placed in the Ofwat Library. I expect the company to inform customers about the outcome of the Periodic Review, and what it means for them in terms of bills and services. You should decide how best to do this. Please consult your CSC about how you should present to customers your commitments to them.

Your Monitoring Plan 2000-2005 will be scrutinised by us in the light of the minimum outputs allowed for within the Final Determination. If your Monitoring Plan does not commit to achieving those minimum outputs I may judge that your company is at risk of not discharging its functions and I would take appropriate regulatory action. I do not expect your commitments to levels of service and outputs to be lower than those I set out in my Final Determination Supplementary Report for your company.

Companies have asked how we will monitor their progress in delivering their outputs.

Although we have retained the term 'monitoring plan' as set out in MD146, your progress year by year will be monitored through the July Returns and the separate reports from the Quality Regulators against the output requirements set out in the Final Determination Supplementary Report.

Price monitoring will focus on the annual Principal Statements and Charges Schemes which you will submit each January. We shall approve charges schemes in accordance with Regulations under the Water Industry Act, taking account of Ministerial guidance to us on social and environmental matters.

We shall of course review the scope and content of the current July Return. I expect to be able to consult on Information for Regulation in the summer of next year, so allowing for the June Return 2001 to be finalised by the end of 2000.

I look forward to receiving your Monitoring Plan for 2000-2005 by the end of March 2000, or earlier.

I C R Byatt

Annex A

1999 Periodic Review – Information Requirement N, MONITORING PLAN FOR 2000-2005,
(Covering Quality, Service, Serviceability & Prices (Public Domain)

Monitoring Plan for Period 2000-2005, Definintions

Company Monitoring Plan for 2000-2005, (Tables N1, N2W, N2S, N3W, N3S, NS-W)