The Water Industry Commission for Scotland (WICS), the economic regulator for Scottish Water, has issued its annual report for 2007-8. WICS has indicated that customers’ bills are likely to rise by less than inflation in each of the next several years

The report outlines the Water Industry Commission for Scotland’s main activities during a significant year for the water industry in Scotland, which saw non-household customers get the right to choose their supplier of water and sewerage services. The WICS annual report explains how customers can expect to continue benefitting from improved levels of service and better prices at a time when other utility prices across the UK are rising. Business Stream, Scottish Water’s new retail arm, has already achieved substantial savings. This has led to it offering lower prices to businesses than those set by WICS.

Scottish Water is tasked with delivering a £2.15bn investment programme during the 2006-10 regulatory control period. Scottish Water’s annual costs are around £5 million lower than WICS had expected when it set charges in 2005. If this progress is maintained, Scottish customers could see continued moderation in their bills, which are already an average of £15 lower than in England and Wales.

WICS commented that it was especially pleased to recognise that while prices are rising by less than inflation, Scottish Water has improved its level of service to customers by 7%. It has already nearly matched the target that was set for it to achieve by 2010.

Sir Ian Byatt, Chairman of WICS said:

“We’re pleased customers have benefited in the last twelve months from better service. We welcome how determinedly Scottish Water has sought to meet the demanding challenges that we set it. Moreover, if Scottish Water sustains its current good performance in reducing costs, we expect that household water bills could continue to rise by less than inflation during 2010-14.”

“We continue to monitor carefully the delivery of Scottish Water’s investment programme. After a slow start last year, Scottish Water has significantly increased its investment expenditure. But we will continue to put critical emphasis on the sign-off of completed investment projects by the drinking water (DWQR) and environmental (SEPA) regulators to ensure customers receive the improvements they have paid for.”

Alan Sutherland, Chief Executive of WICS said: “The introduction of choice for businesses and public sector customers has brought a new era of improved services and competitive pricing.”

"I am pleased to see that Business Stream is responding to this competitive threat and has upped its game considerably. For example, Tesco estimates that it achieved savings of £1 million more quickly in the past year across its Scottish operations, and has improved its environmental performance, because of the improved service it received. This is clearly a success of the new competition framework. Prospects are even better with new entrants to the market preparing to compete both on prices and in offering more tailored services.”