Draft proposals for water and sewerage price controls

Ofwat consultation (136 pages, PDF) on draft proposals for water and sewerage price controls in England and Wales to apply from 1 April 2010 to 31 March 2015. Some related documents have also been published.

This proposes an allowed rate of return on capital for most companies of 4.5 per cent (net of RPI, corporation tax and debt tax shield), lower than in past reviews. This was derived from a gearing ratio of 57.5 per cent (debt/RAV), an estimated cost of debt of 3.6 per cent (net of RPI) and an estimated cost of equity of 7.1 per cent (net of RPI). The proposed premiums on the rate of return for smaller companies are only 0.2-0.4 per cent.

Responses by Friday 2 October 2009 (except for the regulated companies, which are asked to make representations by Thursday 10 September 2009).

For further information or advice please contact Franck Latrémolière.

Filed under Ofwat, Price controls, Water.

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