Firms to pay less for water as price cap set below inflation

Published on Tuesday 30 June 2009 21:36

A BELOW-INFLATION rise in water bills for businesses next year was promised yesterday by the industry regulator.

The Water Industry Commission for Scotland (WICS) ruled that the five retail water suppliers north of the Border would only be able to increase their annual charges by 2.2 percentage points below inflation from next April.

Customers needing to dispose of trade effluent water will see their charges rise at 1 point above inflation, in a bid to encourage less discharge and protect the environment.

The move, known as "draft determination", will mean that almost all companies will actually pay less for their water in real terms than they do currently.

Business groups yesterday welcomed the announcement, which they said would provide more certainty for companies in a time of economic turmoil.

The limits would be in force for four years – until April 2014 – although WICS also proposed to add an extra year on to the control period, which would see the cap extended to 2015.

WICS chief executive Alan Sutherland said: "This draft determination represents a good deal for customers, our environment and our economy.

"Businesses and public-sector organisations should expect more tailored and improved services from their chosen retailer and lower prices."

The report, which was unveiled to the water industry yesterday, also stated that retail water companies would see their charges from wholesale supplier Scottish Water reduced as they take on responsibility for services such as new connections and meter ownership.

A spokesman for CBI Scotland said: "The published price limits that will apply from next April will be warmly welcomed by the business community. Scottish businesses will ultimately experience a reduction in real terms in their annual water charges over the next five years, if the control period is extended.

"This extended period of certainty, at a time of considerable uncertainty for many Scots firms, will be appreciated and was the right decision."

Yesterday's report also acknowledged that Scottish Water may not be able to have as much "flexibility" in its borrowing from the Scottish Government as it previously had.

The report said the body would only be able to carry out its planned improvements if it borrowed 140 million a year for the next five years from the government – or the controversial Scottish Futures Trust.

Sutherland added: "If the Scottish Government is unable to make available the required level of borrowing, the commission believes it could consider using the Scottish Futures Trust as a vehicle for providing finance to Scottish Water or allowing Scottish Water to borrow commercially."