Setting price limits
Our job is to protect consumers' interests. Most customers cannot choose their supplier, so one of the ways we do this is to decide the price and service package (‘price controls’) that monopoly water and sewerage and water only companies must deliver. These price controls affect the bills that customers pay and the water and sewerage services consumers receive – so they are very important.
We currently set wholesale price controls for the water and sewerage companies every five years and we will last set them in 2014. These price controls apply to customers' bills and the services they receive between 2015 and 2020.
When setting price control, we have a duty to:
- make sure that each company has enough money to finance its functions
- protect consumers' interests.
This means that we must balance the interests of consumers with the need to make sure the sectors can finance the delivery of water and sewerage services. We also need to make sure they are able to meet their other legal obligations, including their environmental and social duties.
We realise that there needs to be a balance between required investment and keeping bills down. Our price setting process challenges companies to
- improve their efficiency
- deliver the outcomes their customers want and need
- work hard to keep customers' bills down
We will use our future price limits statement of principles to guide our price setting process.
The price limits set affect the charges in the tariff basket.
There are two ways in which price limits can be changed between price reviews: