RD 21/05: Forward Programme letter

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Ofwat home > Publications > Letters to Regulatory Directors

RD 21/05

TO THE REGULATORY DIRECTORS OF ALL
WATER AND SEWERAGE COMPANIES AND
WATER COMPANIES

13 December 2005

Dear Regulatory Director

FORWARD PROGRAMME LETTER

Background

Normally in the autumn we consult on our forward programme. However, the Water Services Regulation Authority (WSRA) takes office in April 2006.

The Director General is committed to ensuring a smooth transition to the WSRA and will not pre-empt decisions which are appropriately for the WSRA. This letter and appendix explain to our stakeholders the annual outputs and projects in progress, those which are currently planned for 2006-07, and our estimate of the resources required. We recognise the need to assist stakeholders to plan their own programmes for the coming year and provide some degree of certainty and stability during the transition period.

In January this year we held our workshop on our forward programme for 2005-06 to 2007-08. One of the sessions sought stakeholders' views on what the initial priorities of the WSRA should be. Their feedback focused on the maintenance of current services to customers, and a smooth transition from the Director General to the WSRA. We should maintain our in-house expertise and experience to develop further the well-established methodologies and approaches to regulation and to be ready for further change.

The overall message from stakeholders was that they wanted continuity of approach and stability during the transition.

Planning assumptions

The duties of the WSRA are exactly the same as those which have applied to the Director General of Water Services since April 2005. The programme set out below for 2006-07 is based on updating the main outputs covered in last year's forward programme. These include:

Water Act 2003

Establishment of the WSRA.
Development of links with the new Consumer Council for Water (CCWater).
New duties, including promotion of competition and contributing to the achievement of sustainable development.

Company performance and structure

Monitoring and reporting company performance.
Taking regulatory action as required in response to performance issues, mergers or restructuring proposals.

Water Framework Directive (WFD)

Developing policy relating to the economics of the WFD implementation and its impact on companies and consumers.

Setting price limits

Follow up of the independent Steering Group review of PR04 chaired by John Baker and preliminary work on the next price review.
Deal with any interim determination applications received in 2006-07 in line with our stated approach.

Communication and resources

Expenditure forecast and licence fees.

Subject to any revision by the WSRA, we expect that the plan of work and resource estimates outlined in appendix A will form the basis for our activities in the coming financial year.

Defra expects to announce the appointment of the WSRA Chairman by the end of 2005, with the appointment of members by the end of February. Once the shadow WSRA has formulated its plans for 2006-07 to 2008-09, we expect that it will publish its draft forward programme for consultation and hold a workshop for stakeholders. The WSRA is required to publish its final plan by 30 June 2006.

This letter is not a formal consultation. But if you consider that any major area of work has not been covered, then please write to me.

Yours sincerely

Roger Dunshea
Director of Operations

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