Water regulation: the periodic review — a response

There is a whiff of ‘investment is a good thing’ in the article. Those who pay the bills to finance it may expect it to be appraised in respect of both costs and benefits. I took this up with Lord Crickhowell, Chairman of the National Rivers Authority (NRA), back in 1989 when we were first appointed. We now agree that this is the right approach. OFWAT has contributed by estimating the consequences of investment for customers’ bills and in encouraging water companies to research the views of their customers. I know the NRA is working on the assessment of environmental benefits. Meanwhile customers’ bills continue to rise. Thirty per cent of the 15,000 complaints a year received by OFWAT are about the level of or, more often, the increase in bills. I have statutory duties to protect the interests of customers and in pursuit of this need to ensure that investment in a monopoly sector — either to improve the environment or to sustain the serviceability of water company assets — is fully justified. I am not convinced that this is always the case. Some of the standards set on quality grounds are extremely stringent and it is not obvious that all customers want to pay for them.