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Mr P W Darby
Chairman
Tendring Hundred Water Services Limited
Mill Hill
Manningtree
Essex
CO11 2AZ

15 November 2000

INTERIM DETERMINATION – provisional response

On 28 September you made an application for an interim determination of your company's price limits under Part IV of Condition B of the licence. You have made this application in respect of the Notified Item for meter optants, citing greater numbers of customers taking up the free meter option than was allowed for in the Final Determination. Your estimates of the effect of these changes on your costs and revenues were set down in your application and are summarised in Annex A. The Reporter, Colin Page of Montgomery Watson submitted his report on your application on 6 October.

We have completed our initial assessment of your application in the light of all the information available to us. Our approach and our initial findings, judgements and conclusions are summarised in Annex B attached to this letter. We will provide you with some explanatory notes expanding on Annex B in the next few days. Our provisional views on the impact of the changes on your costs and revenues are set down in the summary table (Annex A).

We find that our initial assessment of the total impact of the notified item on your costs and revenues is sufficient to exceed the materiality threshold set down in Condition B of your licence. The revised price limits set out on the attached table would apply from April 2001 with the result that the average household bill in 2004-05 would increase by a further £1.

We are assuming that the symmetrical notified item model used by the Competition Commission, together with the new projections of optional meters will be incorporated into the interim determination.

We are inviting written representations from you on this draft determination of your application. Please could these be with us by the close of Monday 27 November. We shall be meeting you on Tuesday 5 December to hear first hand your representations.

We would be grateful for written representations from other interested parties by the close of Wednesday 6 December.

We shall make our final determination of your application by no later than the end of December consistent with the timetable set out in Condition B.

We are placing this draft determination in the Ofwat library at the same time as announcing our decision to the London Stock Exchange.

This letter and enclosures has been copied to Alan Davis (DETR), Michael Rouse (DWI), Robert Runcie (Environment Agency), Roger Corbett, (Chairman of Eastern CSC), Ivan Henderson MP, Bernard Jenkin MP, Richard Howitt MEP, Bashir Khanbhai MEP, Jeffrey Titford MEP.

PHILIP FLETCHER