North Surrey Water Ltd A summary of our Business Plan Submission to Ofwat - April 1999

OVERALL STRATEGY FOR THE AMP3 PERIOD AND TOP STRATEGIC OBJECTIVES 1) To balance customer wishes for stable prices alongside the need for essential improvements. 2) To supply an excellent quality of water. 3) To provide a high quality service to customers centered on choice. 4 )To meet customer expectations of reliability. 5) To conserve water and adopt a caring approach to the environment. Detailed proposals are made to ; * improve security of supplies and minimise the risk of widespread interruptions from pollution incidents, * reduce the risk of cryptosporidium in treated water supplies, * reduce levels of iron and lead in water delivered to customers, * increase asset maintenance to avoid substantial backlogs developing, * meet a substantial demand for metering arising from government proposals, * reinforce supplies to the southern rural parts of the company's area.

PROPOSED PRICE LIMITS & EFFECT ON AVERAGE BILLS								TOP 5 QUALITY IMPROVEMENTS IN 2000-2005 PERIOD
		2000-01	2001-02	2002-03	2003-04	2004-05
1	Proposed Price Limit (Water Service)	-1.2	1.4	1.4	1.4	1.4		1. Compliance with new lead standard through chemical dosing and replacement of lead pipes (2000-2005).
2	Average Household Bill (today's prices)	124	125	126	126	127		2. Provision of additional barriers against cryptosporidia at treatment works, (2000-2001).
3	Average Household Bill paid	127	131	136	139	144		3. Improve aesthetic quality of water through work on the distribution system (2000-2007).
1	Proposed Price Limit (Sewerage Service)							4. Provide measures to protect the integrity of supply to customers in the event of an extended pollution incident on the River Thames, and improve the security of supply to customers in rural areas under high demand conditions (2000-2005).
2	Average Household Bill (today's prices)							5. Provide adequate maintenance to ensure serviceable assets for future generations (2000-2005).
3	Average Household Bill paid

	PROJECTED EXPENDITURE NEEDS	Annual average for the AMP3 period (£/property/annum)		WHAT IS DRIVING THE CHANGES IN BILLS		£
1	Total Operating Expenditure - annual average	75		Average household bill in 1999-2000		118
2	Total Capital Maintenance Expenditure - annual average	23		Less	(1) passing on past out-performance	-16
3	Total Capital Enhancement Expenditure - annual average	38			(2) challenging targets for future efficiency improvements	-2
				Plus	(3) the impact of improvements in water quality	8
RETURN CAPITAL		Annual average for the AMP3 period			(4) improvements in service performance	7
Return on capital - (post tax) (%)		6.54%			(5) Maintaining security of supplies to all customers	5
				Average household bill in 2004-2005		120

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