Ofwat has issued a final ruling in a dispute between Anglian Water and Barratt Homes over charges for the provision of water infrastructure to five development sites in the Anglian region.

The dispute about the reasonableness of the water company’s charge for providing water mains was referred to Ofwat back in January 2012 for determination under sections 42 and 30A of the Water Industry Act 1991.

Barratt Homes had disputed the amount Anglian Water had charged them for providing new water mains to serve five development sites and referred to Ofwat because it believed the charges were too high.

In the developer’s view, the charges should not include contributions to strategic schemes on the existing network. Barratt Homes also believed that Anglian Water’s calculation of the charges had not appropriately reflected the charges expected to be payable to Anglian Water from the premises to be served by the requisitioned mains.

Summing up its final decision, Ofwat has concluded that Anglian Water is able to include all but one of the disputed contributions towards strategic schemes on the existing network in its calculation of the requisition charges.

The remaining disputed contribution should not be included in the charges calculation because Anglian Water no longer believes the work to have been necessary in consequence of the requisitioned main.

Ofwat said the charges expected to be payable to Anglian Water from the premises served by the relevant requisitioned mains (used as the estimated revenue) should include the charges expected to be payable during the first year following the provision of the new main.

The estimated revenue for each year should also include charges expected to be payable from premises that became billable part-way through a year

Ofwat said it was reasonable for Anglian Water to use its average metered bill to estimate the charges expected to be payable by premises to be served by the requisitioned mains. For those of the development sites for which all final actual costs were available, the regulator has recalculated the final requisition charges on the basis of its decision.

For those of the development sites for which the final costs were not yet available Ofwat has determined the security payment Anglian Water can reasonably require from the developer on the basis of the fullest cost information available. As a result , Ofwat has determined that Anglian Water should refund the developer a total of £56,907.62.

Wider lessons for companies and customers

Ofwat has flagged up wider lessons for companies and customers which can be drawn from the dispute. The regulator said that when calculating a requisition charge, water companies can include costs associated with providing specific off-site or strategic reinforcement works, providing they can demonstrate that the costs were reasonably incurred and the works were necessary in consequence of the requisitioned main.

 Including contributions to off-site reinforcement when calculating a requisition charge, does not prevent the water companies from also requiring the payment of infrastructure charges for premises connected to the network for the first time.

Ofwat also said the water company should seek to use the most accurate information that is reasonably available, including for its estimate of the charges expected to be payable from premises to be served by the requisitioned main.

Click here to download Ofwat’s final determination on the dispute.