OFW – 0009281
Summary of case
We investigated a complaint we received from Millwood Homes about the charges made by Thames Water for the requisition of a water main, and the making of service connections from new properties at a development of 12 houses in Brasted, Kent to Thames Water’s water main.
We determined the reasonableness of the charges and undertakings required by Thames Water in providing the requisitioned water main and for making the service connections.
Summary of Ofwat’s final decision
We have determined that Thames Water’s charges for providing the requisitioned water main and service connections should be lower than the amounts that they have required Millwood Homes to pay. This means that Thames Water should:
- provide refunds in line with the calculations set out in the final determination document;
- pay interest on the amounts it has recovered before carrying out the work and on the relevant refund amounts; and
- apply interest rate(s) in accordance with IN11/05 ‘Interest rates relating to charges for new connections and relocation of mains and sewers’
Wider lessons for companies and customers
- All parties must provide robust evidence to support their arguments when making applications to us for a determination.
- In determining the reasonableness of the costs associated with a service connection, we will usually separate costs into the following two categories.
- Construction costs – This includes the total cost of the making a service connection (the physical pipe laying and actual connection of pipe to main) including labour, materials and reinstatement.
- Administration fees and overhead costs – This includes the administration fees and overheads incurred in providing a single new service connection.
- We will consider whether the construction costs incurred by a water company can be considered reasonably incurred using a comparative study of the cost of new water supply connections work. .
- We will consider the reasonableness of the administration and overhead costs incurred by a water company using an independent review of section 45 administration fee and overhead costs.
Sections 42 and 45 of the Water Industry Act 1991
Relevant Ofwat guidance
7 March 2014
29 December 2014
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