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Price review 2004
Periodic Review 2004 (PR04) On Thursday 2 December 2004 we published the price limits for water companies in England & Wales. These will affect the water and sewerage bills that companies will be able to charge customers for the next five years from 1st April 2005.
Background on Periodic Review 2004 Setting price limits for the water and sewerage companies is our main task. It is our duty to enable companies to finance their functions. At the same time we protect customers' interests by making sure that they receive reliable services and value for money. We review price limits every five years. We have now set prices for the five years from April 2005. We have organised the review in four phases, starting in October 2002: Phase 1 - Framework and issues Phase 2 - Assessment of draft business plans and market research Phase 3 - Decisions and determinations Phase 4 - Implementation of price limits and evaluation of periodic review 2004 We are making steady progress and have now completed phases 1 and 2. We have now reached phase 3 where companies have submitted their final business plans for us to scrutinise. We announced draft price limits on 5 August for consultation. We announced the final price limits on 2 December 2004. How does price setting work? We set price limits for each company by forecasting the revenue that it is likely to need to run its business efficiently. We then compare this with the revenue the company is expected to receive and calculate the percentage change needed after allowing for inflation. Our price limits will be no higher than they need to be to allow efficient companies to run their businesses. As part of our determinations we also set out the minimum services we expect companies to deliver, but the companies decide how they will meet our targets. What are Ofwat's objectives for the 2004 review? We aim to set price limits that provide best value to customers now and in the future. We intend to:
Periodic Review 2004 milestones - still to come
We have set out the timetable for the review in the Ofwat Forward Programme 2004-05 to 2006-07 [page 8]. The last review took place in 1999, for information on PR99 Click Here  |
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