Ofwat has ordered Southern Water to refund more than £530,000 in a developer services dispute with Linden Homes.
The water sector regulator has issued its final determination in relation to a sewer requisition dispute between the two parties referred to Ofwat under sections 99 and 30A of the Water Industry Act 1991.
The dispute was first referred to Ofwat by Linden Homes on 23 June 2015, relates to the requisition charge Southern Water has been seeking to recover for works provided to drain a development in Horsham, West Sussex.
Southern Water required a security payment of £534,500 from Linden Homes for the requisition, with Southern Water incurring final costs of £1,168,637.80 for the works it undertook.
The regulator’s role has been to determine whether the costs Southern Water charged Linden Homes were reasonable.
Ofwat has previously issued two draft determinations and a revised position paper to both parties in the long-running dispute for comment.
The determination decision that the costs were not reasonable is final and enforceable as if it were a court judgment.
In reaching its final determination, Ofwat has concluded that the extent of the reinforcement works Southern Water provided was not required to serve the development.
The regulator concluded that some reinforcement works would have been required to serve the development. However, with this in mind, Ofwat said it had developed an alternative (more cost-effective) solution as a benchmark for calculating what would be reasonable costs for Southern Water to use for calculating its charge to Linden Homes.
The alternative solution provides some improvements in service for existing customers - Ofwat has determined that the costs of the solution should be apportioned between Linden Homes (£77,851) and existing customers (£292,869).
Ofwat’s final determination states:
“Factoring the estimated revenue from customers on the development into the method for calculating requisition charges at this time, this results in there being no payment due from Linden Homes.”
Southern Water is now therefore required to refund Linden Homes £534,500 (the security payment Linden Homes paid ahead of the calculation of the final requisition charge), plus interest for the period this amount has been held.
The refund needs to be paid within 20 working days of the determination being published.
Click here to read Ofwat’s final determination in full.
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