This item was published during the term of a previous administration that ended in April 2007
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Proposals to minimise water charges
23/04/2004
Proposed changes to the structure of the Scottish water industry could boost efficiencies and minimise future charge increases, Environment Minister Ross Finnie said today.
Speaking following the publication of the report by the Parliament's Finance Committee on Scottish Water, Mr Finnie outlined his own proposals and their commitment to retain the industry under public control and ensure a strong sustainable future.
The Minister said:
"The Executive considers that improving the efficiency of Scottish Water is the only sustainable means of raising standards and keeping charges for customers as low as possible. This is why we set up Scottish water as a public corporation and why we have set challenging objectives for its first four years.
"We agree with the committee that robust, transparent and economic regulation has a crucial role to play in ensuring that Scottish Water becomes more efficient. We recognise that this requires a number of changes to the current regulatory regime. The Executive proposes to make these through the forthcoming Water Services Bill."
The changes proposed by the Executive will:
- Provide Ministers with clear statutory duties to set publicly the standards and objectives that Scottish Water should achieve and the principles to be applied in setting charges for customers
- Transfer the functions of the Water Industry Commissioner from an individual to a small board of non executive experts and a chief executive to be known as the Water Industry Commission for Scotland
- Empower the new Commission to set limits on Scottish Water's charges at the lowest efficient cost to customers
- Increase transparency and public consultation on proposed charge limits
Mr Finnie added:
"The changes I propose will provide for greater continuity and consistency in economic regulation.
"They make a clear distinction between Ministers' responsibility for setting Scottish Water's objectives and the economic regulator's duty to ensure that the objectives are delivered as efficiently as possible.
"The finance committee's report is an important contribution to the debate on the water industry. I welcome its conclusion, on the basis of evidence received, that the hypothesis put forward by Analytical Consulting Ltd was wrong. We will consider the full report and respond in detail in due course."
The Finance Committee Report on Scottish Water was published by the Finance Committee and is available on the Scottish Parliament website.
The Finance Committee Report confirmed that the Executive applied the Resource Accounting and Budgeting rules correctly and did not wrongly double count depreciation as was previously alleged. Water charges were not affected.
Scottish Water was formed on April 1, 2002 from the three former Water Authorities covering East West and North Scotland.
The company was set objectives for its first four years of delivering a substantial capital investment programme to improve drinking water quality and enhance the environment, and improving efficiency by reducing operating costs by around one-third and procuring its capital for one-fifth less that originally estimated.
The Executive will produce a full response to the Finance Committee Report by the end of June.