Scottish Government

The price limits that Scottish Water can set are determined through a process called the Strategic Review of Charges run by the Water Industry Commission for Scotland (WICS), in which all the stakeholders of the Scottish water industry are involved. WICS' aim is to establish the lowest reasonable overall cost to meet the objectives Ministers want (as set out in the Ministerial Directions) and determine price levels that are consistent with Ministers' Principles of Charging. The process determines the level of charges customers must pay.

Ministers initiate the Review process and determine the length of the next regulatory period (the period for which prices are set). Following consultation with the customers, regulators and Scottish Water, they also set the service standards (in the Ministerial Directions) Scottish Water is to achieve and the principles by which customers should pay for the services they receive from Scottish Water ( Principles of Charging). Scottish Water submits a Business Plan to WICS which sets out how it would achieve the required service standards and the resources it needs to do so. WICS considers this and issues a determination of the charges Scottish Water can levy. Scottish Water can either accept this determination or appeal it to the Competition Commission.

Each year, Scottish Water submits a detailed charging statement to WICS for approval. This must be within the price limits set out in WICS' Final Determination of charges. Both Scottish Water's detailed charging statement and the price limits must be consistent with the Principles of Charging Statement issued by Scottish Ministers.