The Water Industry Commission for Scotland (WICS) has published its draft determination on the prices Scottish Water will be allowed to charge customers for its upcoming 2021-27 investment programme.

Launching its consultation on the Strategic Review of Charges 2021-27, WICS said its decisions had been taken in the context of the need to transition to a net zero industry by 2040 and to ensure the sustainable long-term future of the water industry in Scotland.

The determination allows Scottish Water to deliver £4.5 billion in investment, an increase of more than £1 billion from the investment allowed in the current 2015-21 regulatory period.

The increase in the maximum amount of charges that Scottish Water can levy on its customers each year is set at 2% above inflation on average over the period, equivalent to around an extra £9 a year in real terms on the average household bill.

According to the regulator, as Scottish Water is publicly owned, every pound it raises will benefit the customers and communities it serves. While the additional investment means that bills will go up over the next six years, in 2027 people will still be paying broadly the same in real terms as they were in 2002.

The charges cap represents WICS’ analysis of the lowest reasonable overall cost that Scottish Water will incur in meeting the Objectives set by Scottish Ministers, including the target to achieve net zero emissions by 2040. WICS said that as part of the draft determination, Scottish Water is being set very demanding efficiency targets to deliver more for less.

WICS’ Chief Executive, Alan Sutherland said:

“We understand that many customers are facing financial difficulties and that the economy is under pressure, particularly in light of the Covid-19 pandemic. But this pandemic has underlined just how important a reliable and high-quality water system is.

“Our draft determination will future-proof these services for current and future generations. This also reflects the priorities of customers that were identified through wide-ranging research.

“To delay increased investment would put water quality, reliability and the 2040 net zero target at significant risk, with the likelihood of even higher bills to fix those problems in future. That would be poor value for both current and future customers.

“WICS expects that Scottish Water will engage with and listen to its customers as it develops its proposals for charges each year.”

Following consultation WICS will consider responses and publish its final determination. It is anticipated that the final determination will be published on 10 December 2020. Following the Commission’s final determination, Scottish Water will then have 60 days to accept the Commission’s proposals or refer them to the Competition and Markets Authority.

The Scottish Government will set out its proposals for financial reliefs and discounts for customers as part of its final Principles of Charging, due later this year.

Commenting on the Draft Determination, Scottish Water Chief Executive Douglas Millican said:

“We’ve have worked closely with the WICS over the last few years on the future of our sector and the essential services we provide our customers and communities and so we welcome the publication of the Draft Determination.

“We face significant challenges in the future, not least as a result of climate change and our ageing infrastructure, to maintain the level of service we provide to customers and communities.

“Further investment over the long-term will be needed to secure the service we currently provide and to allow us to transform into an organization that achieves net zero emissions.”

He added:

“This is a very important milestone in our regulatory process and so we will study it carefully before responding fully.

“I would also encourage other stakeholders and interested parties to take this opportunity to respond to the consultation on the draft determination.

"Scotland’s water and waste water services belong to all of us and it is vital that everyone gets the opportunity to input to our future.”

Deadline to submit responses to the consultation is 19 November 2020 – click here to download WICS Draft Determination