Competition Commission reports on prices for Sutton & East Surrey Water

The Competition Commission has announced that it is to significantly relax the price limits applying to Sutton & East Surrey Water (SESW) for the period 2000/01 to 2004/05. SESW had appealed to the Competition Commission over the limits set by Ofwat in November 1999. Frontier led SESW's team of advisers for the enquiry. The basis of the case was that Ofwat had made inadequate provision for the costs of asset maintenance and installing new meters, and that Ofwat's regulatory methodology had been flawed in a number of respects. In Ofwat's original determination SESW was required to reduce its prices by 17% in real terms in 2000/01 and by a further 7.4% in the following two years. The Commission fundamentally disagreed with Ofwat's conclusion and determined that SESW could raise its prices by 3.8% in 2001/02 in real terms and by a further 2.1% in 2002/03, increasing SESW's overall price limits by more than 13% in real terms. More details are available here.