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Ofwat keeps five-year spending limits

Ofwat has outlined its regulatory approach for the future - five-year spending plans will remain, but companies will have to write 25-year plans to help form a coherent long-term view.
The new approach was outlined to the City in a statement by chairman Philip Fletcher and chief executive Regina Finn.Fletcher warned the City that attitudes to cost of capital or financial indicators should not be assumed to continue after the next price review in 2009.Finn said that the next price review would keep the five-year limits, but would ask companies to assemble 25-year plans. 'We need to take a long-term approach to the way we regulate and expect the companies to do the same in their planning. This will ensure that we safeguard not only the interests of today's customers but also those in the future,' she said.Fletcher said that competition had been stifled by the water supply licensing regime and small market size, and that Ofwat would be working with the government to encourage greater competition.

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