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INTRODUCTION
1. Since its creation in 2002, Scottish Water has undergone, and will continue to undergo, substantial modernisation delivering much improved services more efficiently. These improvements include:
- the delivery of nearly £1bn of efficiency savings by 2006 with a further £500m savings targeted by 2010;
- over £2bn of investment in the water industry, delivering substantial improvements to services provided to customers - better drinking water quality and a cleaner environment;
- over 25,500 new housing connections made in 2006/07 - Scottish Water will provide new strategic capacity in every case where it is required, and;
- a 38% improvement in customer service performance in 2006-07.
2. These results have been achieved while:
- average household charges are £15 lower in Scotland for 2007-08 than in England and Wales and will rise by less than inflation. By 2010 Scottish Water's charges are expected to be the third lowest in the UK;
- non-household charges will reduce by over 6% in real terms by 2010, and;
- customers pay the same rate for the same service wherever they are in the country.
3. The Scottish water industry is being further improved by the introduction of a new competitive charging framework for business customers.
4. Fundamental to achieving these improvements has been the framework through which charge levels are determined by the Water Industry Commission. The period of the present determination ends in 2010.
5. This consultation paper seeks views on those binding principles of charging that the Scottish Government will require the Water Industry Commission for Scotland to apply to the determination of water and sewerage charges during the next regulatory period 2010-14. These principles will be used by the Commission as the framework for determining the amounts of charges that Scottish Water can levy to deliver the investment priorities for them as set down by Ministers in their Direction of September 2005.
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