Retail Competition
Competition, in the provision of retail water services (that is, customer facing activities such as billing, charge collection, meter reading and complaints handling etc.) to non-household customers served by the public systems was introduced on April 1 2008. In preparation for this change, Scottish Water established a separate retail arm, Business Stream, which was licensed by the Water Industry Commission for Scotland to provide these services in competition with private sector firms which the Commission has also licensed. Scottish Water remains responsible for the physical supply and maintenance of the public water and sewerage systems.
In light of these changes, Scottish Water now produces a non-household wholesale charges scheme each year and submits it to the Commission for approval. Scottish Water then charges retailers, including Business Stream, the appropriate wholesale charge for each of the services the retailers' customers receive. The specific charges that apply to non-household customers, and the manner in which these apply, are largely matters for licensed retailers. Subject to any relevant licence conditions set by the Commission, retailers are largely free to set their own retail charges in the manner that they consider most likely to attract customers.
Metering
Scottish Water intends to install meters to the majority of non-domestic premises by April 2009. This followed a Government public consultation in November 2006 about future charging proposals for non-household customers. Ministers have also stated that metered charges for customers who are currently un-metered should be phased in from 2008.
The implications of this change are that Scottish Water's wholesale charges, which it will apply to licensed retailers, will be set on a measured basis, for both the fixed and volumetric elements of paying for water services, in order that these can be varied to reflect the demand that the customer places on the system. Thus a standing charge should take account of the size of the meter (and the size of the pipe) serving a particular premises; and a volumetric charge should reflect the unit cost to Scottish Water of providing particular volumes of water to a customer in any given period.
This will enable the wholesale charges scheme to divide customers into groups ranging from the relatively small number that are served by the largest pipes and which consume the greatest volumes of water, through to those with more moderate consumption and to those served by pipes that are the same size as household pipes and whose annual consumption may be no greater than that of an ordinary household. The result is that those customers who place a greater demand on the system will pay more for their water services.
Surface Drainage
As a result of the 2006 non-household charging consultation Ministers have announced that from 2010 surface drainage charges should be based on a banded system corresponding with the drained area of the property. This system of charging for this service will replace the current method, which is based on the existing rateable values of a property. This change is to be phased in from 2010. Public roads drainage will continue to be charged by reference to the rateable value of premises.