Ofwat has launched a consultation about its future charging strategy for the water industry. The consultation examines the charging issues that the water industry faces and sets out its proposed strategy for future charges, as well as its updated charging principles.
The water sector in England and Wales faces significant challenges in the future. It is becoming increasingly important for companies to encompass the risks and uncertainties of challenges such as evolving customer choice, affordability issues and increasing levels of metering in their long-term plans.
Ofwat said it recognises that companies' future charges and charging mechanisms will become more important in meeting the demands and needs of customers and addressing the challenges of sustainability and climate change.
Some of the issues discussed within the consultation (notably metering and the use of RV based charging) are policy issues for the Government. The consultation is intended to inform Ofwat’s opinions and input into any future work on these issues.
Ofwat has also revised and updated the principles that underpin its decisions on charges by water companies to their customers. The principles are:
1. Fairness and equity
2. Affordability
3. Incentives to consumers and companies
4. Simplicity and transparency
Ofwat’s strategy for customer charges recognises a number of evolving strategic themes that include encouraging the development of innovative tariffs and approaches to charging that increase customer choice, facilitating effective competition and reflect the circumstances in which water companies operate, support for a faster transition towards high levels of meter penetration and encouraging technological innovation that should develop as a result.
Responses to the consultation should be sent to Ofwat by 15 April 2008. Ofwat’s final strategy will be published in summer 2008.
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