Since privatisation, every five years we have set limits on the prices the water companies can charge their customers. We make sure that these charges represent the best value for consumers and allow efficient companies to provide a sustainable service.
Price review 2009
In 2009 we set price limits for customers’ bills for each year between 2010 and 2015.
Methodology
Our methodology for the 2009 price review was set out in Setting price limits for 2010-15: Framework and approach. We adopted broadly the same approach as in previous price reviews. However this time there was a greater focus on setting price limits within the context of the long-term future of the water and sewerage sectors.
We carried out the price review in four phases. You can find the documents published in each phase from the links below:
- Phase 1: Preparation
- Phase 2: Setting the scene
- Phase 3: Decisions and determinations
- Phase 4: Implementation of price limits and evaluation of review
The final determinations set out our proposals for the price limits for the water companies for the period 2010 to 2015 based on the final business plans that the companies submitted to us in April 2009, and representations in response to our draft determinations published on 23 July 2009.
Information submissions
For the 2009 price review we asked companies to:
- set down and explain in a consistent and fair way their applications for price limits;
- take account of all the known issues that they face in 2010-15 and beyond; and
- inform us of all the relevant factors that we need to review the challenges facing the company and determine fair and reasonable price limits for the customer and the company consistent with our statutory duties.
The companies’ main information submissions were their strategic direction statements, and their draft and final business plans. The strategic direction statements described the companies’ long-term plans, while the draft and final business plans set out their immediate plans for the period 2010-15.
Consumer research
Consumer research was commissioned jointly with several other organisations at different stages in the 2009 price review. The research was used to inform companies’ draft business plans and also to explore customers’ views on companies’ proposals and their impacts on bills and outputs.
Competition Commission referral
When we set price limits, companies can choose either to accept their determination or refer it to the Competition Commission. One company, Bristol Water, chose to refer its determination. The Competition Commission re-determined its price limit in August 2010.
Price review 2004
In 2004 we set prices that applied between 2005-06 and 2009-10.
The main changes from the 1999 review included jointly commissioned customer research, graduating the adjustments for the better and worse performers, and requiring companies to complete certain outputs earlier in the five-year period. They are described further in annex 1 of the methodology document.
The review took place in four stages:
- Framework and issues
- Assessment of draft business plans and market research
- Decisions and determinations
- Implementation of price limits and evaluation of periodic review 2004
Each company could choose whether to accept our determination or refer it to the Competition Commission. All companies accepted our determinations.
Our 2004 final determinations document is available to download
Price review 1999
In 1999 we set price limits that applied between 2000 and 2005. The review took place in three stages:
- developing the framework – we consulted on our approach to the price review and our information requirements
- decisions and determinations – the Secretaries of State issued guidance to us, companies submitted their draft business plans to us, and we published our determinations
- implementation – companies published their monitoring plans and the new price limits came into force
The 1999 price review was the first time we published our draft determinations into the public domain for comment.
Companies were able to refer our decision to the Competition Commission, and two did so – Mid Kent Water and Sutton & East Surrey Water.
Our 1999 final determinations document is available to download.
Price review 1994
The first review of prices took place in 1994 – five years after privatisation. This was the earliest opportunity that the then Director General of the Office of Water Services had to set price limits.
Companies could choose to accept the price limits set, or refer the decision to the Monopolies and Mergers Commission (the forerunner of the Competition Commission).
Our 1994 final determinations document is available to download.