The Board of the Water Industry Commission for Scotland (the Commission), is pleased to introduce its draft determination for the regulatory control period 2021-27.
This draft determination sets out our view of the maximum amount that Scottish Water can charge its customers during the forthcoming regulatory control period. Our role is to ensure that customer charges are no more than is necessary to deliver the Objectives that the Scottish Ministers have set for Scottish Water.
These Objectives, which include the long-term vision for the water sector in Scotland, are ambitious and far-sighted, not least in setting an industry-leading target to achieve (both on an operational and an embodied basis) net zero emissions by 2040.
In reaching our view of the maximum amount of charges that Scottish Water will require in the years ahead, we have analysed carefully the investment necessary to achieve the Objectives of the Scottish Ministers, including the industry vision. We recognise the challenges Scottish Water will face as it transforms its business to achieve net zero emissions and address an ageing asset base. But customers will rightly expect Scottish Water, as it makes this transformation, to continue its drive to become more effective and efficient – and we have set our targets accordingly.
The draft determination represents the culmination of more than three years of work on the Strategic Review of Charges. As with every aspect of life, the Covid-19 pandemic has impacted on our approach to the Strategic Review. In the same way that household and business finances have been impacted by the pandemic, it has caused us to reassess carefully Scottish Water’s future finances. What remains clear, however, is that the sector will require more investment if the Ministers’ Objectives are to be achieved. We have sought to maximise Scottish Water’s scope for flexibility in preparing its annual Scheme of Charges. We welcome Scottish Water’s commitment to engage directly with customers through a national engagement programme as part of its annual Scheme of Charges proposals.
We would like to express our thanks to the stakeholders who have supported our work throughout the Strategic Review process. Our approach has been significantly different to previous regulatory periods. It has involved a much higher degree of collaborative working – as part of the transition to Ethical Business Regulation and Practice – and a number of innovative approaches: for example, in relation to identifying investment priorities. This has required much greater involvement from stakeholders in the process but, we believe, has resulted in a significantly better outcome for customers and communities. We are particularly pleased to see that the Customer Forum has reached an agreement with Scottish Water, which will ensure that customer and community views are at the heart of future decision making.
We would welcome any comments on our proposals by 19 November 2020. This will allow us to publish our final decisions on the maximum amount of charges by 10 December 2020.
Finally, we would like to thank our staff very much for their hard work in providing the analysis and innovative thinking that underpins our proposals.
Professor Donald MacRae,
Alan D A Sutherland,