RD 20/00
TO THE REGULATORY DIRECTORS OF ALL
WATER AND SEWERAGE COMPANIES AND
WATER COMPANIES
AND SEWERAGE COMPANIES
8 September 2000
Dear Regulatory Director
TIMETABLE AND PROCESS FOR SUBMISSION OF DRAFT CHARGES SCHEMES AND DRAFT PRINCIPAL STATEMENTS FOR 2001-02
This letter sets out the process and timetable for submission of draft Charges Schemes and draft Principal Statements for 2001-02.
Arrangements for Receipt
Your draft Charges Scheme and Principal Statement for 2001-02 should be received by Ofwat by no later than 5pm on 6 October 2000. It would be helpful if you could provide six copies (at least one unbound) of the Charges Scheme and three copies of the Principal Statement. Please address your submissions to Bianca Mahoney, Executive Support Manager.
Written comments from Ofwat on your draft submission will be provided by no later than 8 December 2000 and earlier if possible.
The Additional Information Section of the Principal Statement, Special Agreement Information Capture System and Large User Information Capture System are not required at the draft stage. Further, we do not require either an Auditor's or Reporter's Report on the draft Principal Statement.
In addition to three hard copies of your draft Principal Statement, an electronic version is also required. Companies should use last year's Information Capture System to prepare their submission. Parts of the Information Capture System are password protected in order to prevent changes. In order to enter the relevant K and RPI details for 2001-02 you will need to remove the protection (File – Protect – Remove Seal) by entering last year's password – LASTLOTUS.
If companies no longer hold an electronic copy of the Information Capture System they should contact Anna Hayes on 0121 625 1388 who will supply a blank template on diskette by return post.
Transmission to CSCs
At the same time as companies submit their Charges Scheme to Ofwat, a copy should be sent to the Regional Manager of the relevant Customer Service Committee. In RD 15/00, the Director said that he does not consider that companies' draft Charges Schemes should be treated by the CSCs as confidential, other than proposals for large user tariffs. If companies wish their proposals for large user tariffs to be treated as confidential this should be highlighted in the covering letter to the CSCs. Ofwat expects CSCs to take appropriate steps to meet such requests.
Retail Price Index – Assumption for November 2000
Draft Principal Statements should be based on Ofwat's estimate of the annual change in the Retail Price Index to November 2000. To ensure consistency, all companies should use an assumption for inflation of 3.0%.
Revisions to Text of Draft Charges Scheme for 2000-01
It would be helpful if companies could indicate clearly either in an attached schedule or in the Scheme itself, where any textual changes have been made to the Charges Scheme approved by Ofwat for 2000-01. If this is not possible, due to a restructuring of the Charges Scheme, companies should indicate where there have been any changes in policy.
Key Tariff Policy Indicators
Companies should set out in an Annex to their draft Charges Scheme Submission the calculated or implied values for key charging policy indicators for the charging year 2001-02 (in November 2000 prices). The attached proforma (Annex 1) should be used.
The maximum level and basis of calculation for the measured / unmeasured tariff differential will be set out in the Director's letter to companies to be issued on 15 September.
A separate letter to companies will set out how the sewerage/trade effluent differential should be calculated.
Take-up of New Tariffs Introduced in 2000-01
Information on the levels of take-up of the vulnerable group tariff, assessed charge and surface water drainage rebate scheme should accompany your draft submission. a. Vulnerable Group Tariff For the vulnerable group tariff, companies should complete the attached table (Annex 2) which provides a breakdown of take-up by eligibility criteria as at 30 September 2000.
The charge multipliers in the Principal Statement should be based on a forecast of take-up for 2000-01. This forecast should be based on experience to date. Where this take-up estimate is significantly different to that agreed for the 2000-01 Principal Statement companies should re-enter the tariff as described in Annex C(ii) to RD 25/99. b. Surface Water Rebate (Households and Non-households) For companies that introduced a surface water drainage rebate scheme in 2000-01, the level of take up as at 30 September 2000 should be provided. A split should be provided for measured, unmeasured, households and non-households where appropriate.
In the measured basket, the charge multiplier for the draft Principal Statement should be based on a forecast of take-up for 2000-01. In the unmeasured basket a forecast of take-up as at 1 December 2000 should be used. These should be based on experience to date. Where the take-up estimate for the year for measured customers is significantly different to that assumed for the 2000-01 Principal Statement companies should re-enter the tariff as set out in Annex C(ii) to RD 25/99. c. Assessed Charge (Households and Non-households)
The draft Principal Statement should be based on a forecast of take-up as at 1 December 2000. This forecast should be based on experience to date. In addition, please provide details of the actual take-up of the assessed charge as at 30 September 2000.
In all cases, a brief explanation of the basis for companies' forecast take-up numbers should be provided in a supporting schedule.
Additional Guidance on Vulnerable Group Tariffa. Level of Tariff
The level of the vulnerable group tariff should be set at the forecast average household bill for 2001-02.
b. Average Level of Saving
It is unlikely that companies will yet have information on the level of savings achieved by customers paying on the basis of the vulnerable group tariff. Companies should therefore continue to apply the average saving assumptions set out in Ofwat's December 1999 feedback letters.
c) Supplementary Information
A supplementary note providing the following information is also required: - Which medical conditions predominate in applications?
- Have applications been increasing, tailing off, or steady as the year progresses?
- Have companies encountered any particular problems in the implementation and operation of the tariff in the first six months of the charging year?
Conclusions to the Summer 2000 Tariffs Consultation
An MD letter setting out Ofwat's conclusions to the Summer 2000 Tariffs Consultation Paper will be sent to companies on 15 September 2000.
Additional Queries
It would be helpful if companies included in the covering letter to its draft submission an e-mail contact for any queries.
If you have any queries on the timetable or process for submission of draft Charges Schemes or Principal Statements for 2001-02 please contact David Musco on 0121 625 3621 or Anna Hayes on 0121 625 1388.
Yours sincerely
Charles H Whitworth
Head of Tariffs
Encs
Annex 1
Key Tariff Policy Indicators: Draft Charges Schemes for 2001-02 - weighted average charges increase (WACI), %
- weighted average charges increase – water, %*
- weighted average charges increase – sewerage, %*
- measured/unmeasured differential – water, £
- measured/unmeasured differential – sewerage, £*
- household standing charge – water, £ (and % change on 2000-01)
- household standing charge – sewerage, £ (and % change on 2000-01)*
- trade effluent/sewerage differential (average treatment basis), p/m3*
- household surface water rebate offered (where applicable), £ per property (or property band)*
* required from water and sewerage companies only
Annex 2
Applications for Vulnerable Customer Status
| | Description | Units | 2000-01 |
| | | | |
| 1 | Applications: large families | Nr | |
| 2 | Successful applications – large families | Nr | |
| 3 | Applications: medical conditions | Nr | |
| 4 | Successful applications – medical conditions | Nr | |
| 5 | Total number of applications | Nr | |
| 6 | Total number of successful applications | Nr | |
Application is defined as the submission of a completed application form to the company.
Relevant benefit or tax credit is defined as one of the benefits or tax credits specified in The Water Industry (Charges) (Vulnerable Groups) Regulations 1999.
Relevant medical condition is defined as one of the medical conditions specified in The Water Industry (Charges) (Vulnerable Groups) Regulations 1999.
Line definitions
1 | Applications: large families | nr |
Definition: The number of applications for vulnerable customer status in the financial year on the basis of receipt of a relevant benefit or tax credit and large family size.
2 | Successful applications – large families | nr |
Definition: The number of successful applications for vulnerable customer status in the financial year on the basis of receipt of a relevant benefit or tax credit and large family size.
3 | Applications: medical conditions | nr |
Definition: The number of applications for vulnerable customer status in the financial year on the basis of receipt of a relevant benefit or tax credit and of being affected by one of the relevant medical conditions.
4 | Successful applications – medical conditions | nr |
Definition: The number of successful applications for vulnerable customer status in the financial year on the basis of receipt of a relevant benefit or tax credit and of being affected by one of the relevant medical conditions.
5 | Total number of applications | nr |
Definition: The total number of applications for vulnerable customer status in the financial year.
6 | Total number of successful applications | nr |
Definition: The total number of successful applications for vulnerable customer status in the financial year.
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Letters to Regulatory Directors
