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Letters to Regulatory Directors
RD 19/07 5 November 2007 Dear Regulatory Director INTEREST RATES FOR REQUISITIONS AND INFRASTRUCTURE CHARGES – SIX MONTHLY REVIEW We set out the basis on which Ofwat approves interest rates for requisitions and infrastructure charges in a letter to companies on 9 April 1990 (FD4). The latest published value of the reference rate (10 year gross redemption gilt yield) is 4.96% (October 2007). The rates that companies must adopt from 12 November 2007 will therefore change from those set out in our letter of 24 April 2007 (RD 09/07). They are, for borrowing, 6.5% (water and sewerage companies) or 6.75% (water only companies) and, for deposits, 4.25% (see annex 1). The borrowing rate is applicable where, for example, companies calculate relevant deficit payments for requisitions. The rate for deposits is applicable where, for example, companies are required to pay interest on an amount held as security under a requisition agreement. Any queries on the content of this letter should be addressed to Samuel Okyere on 0121 625 1485. I am copying this letter to Richard Wood (DEFRA), Matthew Quinn (Welsh Assembly Government) and Pamela Taylor (Water UK). Yours sincerely Lynne Currie Head of Customer Charges Annex 1 GIR for October 2007 = 4.9570 (1) GIR rounded to the nearest 0.25 = 5.00 Deposit rate = GIR (rounded to the nearest 0.25) – 0.75 = 4.25 Borrowing rate for WoCs = GIR (rounded to the nearest 0.25) + 1.75 = 6.75 Borrowing rate for WaSCs = GIR (rounded to the nearest 0.25) + 1.5 =6.5 (1) Bank of England statistic  |
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