Ministers issued their Principles of Charging statement in February 2005, for the current 2006-10 regulatory control period, and formalised it in September 2005 after extensive consultation and focus group research. The consultation, analysis of responses and focus group analysis are available here. The key principles are:
Stable charges - overall charge levels should increase by less than inflation over the regulatory period.
Financial strength - the level of borrowing by Scottish Water is to be consistent with a gradual and steady improvement in its long-term financial sustainability.
Full cost recovery - charges should be set to recover the full costs incurred by Scottish Water in providing public water and sewerage services.
Geographic harmonisation - charges for a customer group should be the same irrespective of location. This ensures for example that rural customers are charged the same as urban customers even though they are often more expensive to serve.
Cost reflectivity - charges for customer groups (e.g. households) should reflect the costs to Scottish Water of serving those customers across Scotland.
Phasing of adjustments - where adjustments to charges are necessary these should be phased in over the regulatory period, unless there is a more effective means to minimise the impact on customers.
Affordability - charges for households should be linked to their ability to pay.