RD20/99

TO REGULATORY DIRECTORS OF ALL

WATER AND SEWERAGE COMPANIES AND

WATER ONLY COMPANIES

9 September 1999

Dear Regulatory Director

PERIODIC REVIEW 1999 – DRAFT DETERMINATIONS

QUALITY ENHANCEMENT PROGRAMME – PROPOSALS REQUIRING REAPPRAISAL

Draft Determinations – Future Water and Sewerage Charges 2000-05 (published 27 July 1999) sets out the extent of the quality enhancement programme incorporated into the draft price limits. Page 106 also explains that for some companies' it was not appropriate to include all their proposals in draft price limits. These unprovided for improvements require reappraisal to identify whether there are more cost-effective ways of delivering the prescribed outcomes.

Since then there have been a number of enquiries concerning the proposals requiring reappraisal. These comprise the six schemes proposed to alleviate the environmental impact of water abstraction and the work associated with 300km of river improvements.

A list of the affected schemes has been placed in the Ofwat library.

Of course, this does not preclude the schemes from being carried out before March 2005. The statutory element associated with some schemes will need to be carried out by the required date and the other improvements may need to go forward after reappraisal. If such reappraisals are completed very quickly it is possible that at least some of these proposals could be incorporated into the Final Determination. As explained lower down on page 106, if not included in the final price limits then the proper net additional costs will be taken into account at the next Periodic Review of prices in 2004, or if material at an interim determination before then.

Yours sincerely

BILL EMERY
Assistant Director & Chief Engineer