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Water firms fear delayed guidance will drive down spending plans

WATER COMPANIES were this week anxiously waiting for vital government guidance on their 2005 to 2010 work programmes, fearing it could be used to drive down their spending plans.

Environment secretary Margaret Beckett was due to issue the guidance document today but publication is now understood to have been delayed until at least next month.

There are fears that the document could be used to curb spending plans to keep water bills down.

The government has to tell water regulator Ofwat and the water companies of the legal requirements and policies that will apply in the next five-year review period.

These directly affect work the water companies will have to undertake and price limits that the regulator will set.

Last week Ofwat director general Philip Fletcher proposed that water company capital expenditure be limited to a total of £15bn between 2005 and 2010.

'Fifteen billion pounds is roughly in line with current expenditure. Ofwat is saying: 'is this possible if everyone tightens their belts?' ', said Fletcher.

But water companies have already told Ofwat they need to spend £21bn over the five years in draft business plans, submitted to the regulator in August 2003.

They say they need the money so they can meet environmental standards, secure supply, maintain and replace existing assets and service company debt.

As NCE went to press the Department for Food & Rural Affairs was unable to say exactly when its guidance document would be ready.

'A lot of people in the government have to sign off the principal guidance document and be happy with it. I guess that is the reason for the delay, ' said a spokesman.

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