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Water Companies

Volume 448: debated on Thursday 6 July 2006

To ask the Secretary of State for Environment, Food and Rural Affairs (1) what assessment he has made of whether each of the regulated water companies is making a reasonable rate of return on capital as defined in the relevant legislation; and if he will make a statement; (81085)

(2) what assessment he has made of whether water companies are making excessive rates of return.

The Government recognise that companies have to earn a return on their capital and Ofwat has a duty to enable them to reasonably do so. At each price review, Ofwat must make a judgment about what is a reasonable return on capital to be allowed in price limits. If companies outperform Ofwat's assumptions at the last price review, then customers will share the benefit in their bills from 2010.

Rates of return earned by water companies in 2000-05 were lower than 1990-95.