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CHANGES IN PROGRESS
35. A number of changes are in progress to the current basis of charging non-household customers.
Introduction of metering and surface drainage charges for non-household customers
36. In February 2005, the former Executive announced its commitment in principle to introduce changes to the basis on which Scottish Water and the Commission set charge levels for water services to non-household customers. This followed an extensive period of public consultation and recognised customers' concerns that the existing link between non-household premises and their rateable values bore little relation to the cost of providing these services.
37. In November 2006, the former Executive consulted further on the detailed proposals which were developed in discussion with Scottish Water and the Commission for achieving this change. The change includes the introduction of general metering for all currently un-metered non-household premises and the creation of a system that would place all non-household premises and their surrounding surface areas into one of a number of charge bands intended to reflect the area of roof, car parking etc. that discharges to the public sewers.
38. This is a more cost-reflective means of charging non-household customers for their water services. The changes to the surface area drainage element will ensure that charges for this element reflect more closely the cost to Scottish Water of draining and treating run-off from car parks etc. Similarly, those proposals related to water usage will mean that those customers who use less should attract a smaller charge. Customers who place the least burden on the water system should pay the least which is a fairer approach for all customers.
39. The Commission and Scottish Water have agreed a programme of meter installation for all currently un-metered non-household premises where it is practicable to do so. The majority of meters should be installed by April 2008, with the programme finally complete by April 2009. Changes to the charging basis for surface drainage will not be introduced until 2010 given the level of preparatory work required.
40. The former Executive confirmed in February 2007 that the introduction of measured wholesale charges would be phased in over four years, extending into the 2010-14 period. This approach is consistent with the current principles of charging. Subject to views received on this consultation, the Scottish Government would expect Scottish Water and the Commission to ensure a similar phased approach for the introduction of banded surface drainage wholesale charges.
Retail competition
41. As this paper has previously described, retail competition is being introduced in the non-household sector from 1 April 2008.
42. The only part of Scottish Water's activities that the 2005 Act does not reserve exclusively to it are those connected with retail water and sewerage services (i.e. those customer facing activities such as billing, meter reading and complaints handling) to the 130,000 or so business customers served by the public systems. The 2005 Act required Scottish Water to establish a retail undertaking as a separate business licensed by the Commission to provide these services. Consequently, Scottish Water Business Stream was established in 2006 and has been initially licensed by the Commission to provide these services in competition with any private sector firms which the Commission may licence from 1 April 2008.
43. Retail competition will mean that licensed retailers (including Scottish Water Business Stream) will compete to provide retail services to non-household customers in a similar manner to other utility industries e.g. gas or electricity. The introduction of competition in the non-household sector means that the principles of charging that Scottish Water and the Commission will apply when setting charge levels for 2010-14 for non-household customers will apply only to Scottish Water's wholesale charges.
44. Licensed retailers will offer their own tariffs to customers. They will be subject to a licence condition requiring them also to offer alternative default tariffs. The Government agrees with the Commission that the application of default tariffs should act as a safety net to protect customers from any unexpected increases in bills.
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