Ofwat Chief Executive Officer Regina Finn said “We understand times are hard and we have listened to what customers have told us. They want a safe, reliable water supply at a reasonable cost.

Benefits would include:

• Over 10,000 kilometres of water mains being improved or replaced.
• A reduction to national leakage levels of around 70 million litres a day by 2015.
• Addressing sewer flooding problems for more than 5,600 properties.
• Improve 130 water treatment works and 520 sewage treatment works to maintain and improve the environment and drinking water quality.
• Maintain or improve more than 2,700 kilometres of rivers to meet EU environmental standards.
• Investment in renewable energy sources to reduce carbon emissions and cut operational costs by around £8.5 million a year.

Ofwat’s challenge sees average bills around 12 per cent or £45 lower by 2015, compared to what companies wanted.

Wessex Water

Ofwat said that benefits for Wessex Water’s customers, in southwest England, would include;

• Investing around £163 million to replace or reline more than 300 kilometres of mains, and help reduce sewer collapses by replacing 18 kilometres of sewers, and renovating 91 kilometres.
• Investing around £190 million in improving the security of its water supplies by linking 63,000 properties to more than one source of water.
• Meeting environmental quality standards and deliver improvements in the quality of bathing waters, including work on 63 sewer overflows to improve the quality of watercourses in the Bristol area.

Ms Finn said “We’ve challenged Wessex’s plans hard. We believe our proposals will allow efficient, well-run companies to invest in the right place at the right time for the right price. This will allow them to build on the successes of the past.”

Severn Trent Water

Severn Trent Water Chief Executive Tony Wray said “The Draft Determination is a complex document and there is a lot of detail to consider. We will be carefully and thoroughly reviewing all of its content and conclusions before responding to Ofwat.”

Ofwat proposes the following for Severn Trent Water:

• A proposed AMP5 capital investment program of £2.2 billion.
• A proposed cost of capital of 4.5 per cent real, post tax.
• A proposed fall in average household bills of 8 per cent in real terms by 2015.

Thames Water

Chief Executive for Britain’s biggest water company, Thames Water, David Owens said “We’ve spent the past two years preparing our plan. We know our region better than anyone else and our proposals are based on sound evidence and, most importantly, what customers say they want. We’re not prepared to cut corners on essential work – but we’re not ‘gold-plating’ either.

“Thames customers have enjoyed the best-ever performance from their water company in recent years. For instance, we've hit leakage targets three years running and we achieved the highest-ever drinking water quality.

“It’s early days but initial indications suggest the Draft Determination may not allow us to deliver what our customers want in the future.

“There have been significant cuts to two areas – reducing leakage by replacing worn-out, cast-iron water mains and preventing sewer flooding in people’s homes. Ofwat has almost halved Thames Water’s proposed water mains replacement program.

“Even the most recent independent research shows Thames Water customers understand and support the need for price rises – even in these challenging economic times. We’re balancing the need for £5.5 billion of essential investment over the next five years with customers’ willingness and ability to pay,” said Mr Owens.

Yorkshire Water

Yorkshire Water said they will be holding discussions with Ofwat and other stakeholders over the coming months, before the final determination on prices and investment.

Chief Executive Kevin Whiteman said “We provide contracts and work to over 1,000 local businesses and support many thousands of local jobs. Our continued investment program plays a vital role in the economic wellbeing of the region.”

The companies, customers and interested parties now have the opportunity to present their views on Ofwat’s proposals. Final limits on the prices companies can charge will be published in November. New bills will then come into effect in April 2010.