Ofwat has published the conclusions arising from its consultation earlier this year on future strategy for customer charges for water and sewerage services. Ofwat received detailed responses to the consultation from the water and sewerage sectors, consumer representatives and other stakeholders. The regulator said that the consultation and the responses had identified a number of important and strategic issues which would have significant impacts on customer charges in the medium term. These are:

• the speed of roll-out of metering and how charges should develop to deal with increased levels of metering, taking account of the fact that this will leave most of the "residual" customers whose bills are based on their property’s rateable value (RV) bearing higher costs unless there is some transition mechanism;

• the potential disaggregation of some charges, particularly in the business sector, to better reflect costs and send appropriate economic signals in relation to water use and water pollution; and

• how companies can tackle bad debt better, for example by incentivising customers who won’t pay to pay their bills, and continuously improving payment options and debt collection procedures.

Ofwat said that while some of these issues are purely regulatory matters, othes have policy implications for the Governments of England and Wales e.g. policy on metering. In August 2008, the Government announced its review of charging and metering which is designed to assist the Government by making recommendations on appropriate legislation for inclusion in the proposed Floods and Water Bill. The Bill is expected to be announced in the December 2008 Queen’s Speech, published in spring 2009 and introduced to Parliament in autumn 2009

The final charging principles Ofwat will adopt are that water and sewerage charges should:

• be fair and equitable;

• be as easy as possible for customers to pay;

• provide incentives to customers and companies; and

• be simple and transparent.

Ofwat’s position is that the price review process which fixes water companies’ investment expenditure has an overarching objective to ensure that charges to customers deliver value for money services for which most customers are both willing and able to pay. Ofwat now proposes to carry out more work on a number of key areas that were identified in the original paper and during the consultation. These include:

• social tariffs;

• the impact of changing levels of metering; and

• debt management.

The regulator has also reaffirmed its support for increased levels of metering and said it expects each company to justify its metering programme, including the timing and method of roll-out, within its business plan and water resource management plan submissions for the 2009 price review (PR09).  Ofwat will look at the structure of metered standing charges as it develops  proposals on competition and accounting separation and is also planning to  carry out more work on charging for non-potable supplies.