Water UK questions Ofwat’s cost of quality figures

A £1.5 to £2 billion question mark hangs over the cost of the environmental and quality improvements required by the Government as part of the 1999 Periodic Review according to Water UK.

While Water UK’s price tag for the work is £10 billion, Ofwat calculates the programme to fall into the range

of £8 to £8.5 billion.

The question was in response to Ian Byatt’s Open Letter to the Secretaries of State of the Environment, Transport and the Regions and for Wales detailing the likely costs and implications for customers’ bills of achieving the environmental improvement programme.

Ofwat has already provided the DETR, Environment Agency and Drinking Water Inspectorate detailed costs of the quality obligations, which were based on the water companies’ own updated estimates. Although Mr Byatt admits there is still some uncertainty over costs, he claims that the present estimates have been robustly challenged and analysed by Ofwat. As a result of this process, the final estimates are 20 per cent, or £1.8 billion, less than

previously thought.

“Ofwat’s figures seem to ignore the results of the detailed work done by the companies,” claimed Pamela Taylor, chief executive of Water UK. “The result conveniently reduced industry estimates to match the figure of £8 billion

previously quoted by the Government.

“We’re still facing concerns over uncertainties in terms of future prices on other quality obligations life the revised Drinking Water Directive. While Ofwat has made some allowance for these, it is far from certain that this

will be enough.”

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