The Water Industry Commission for Scotland has reaffirmed its view that charges will likely have to increase above the rate of CPI inflation during the next two regulatory control periods.
This was set out in one of three more Decision Papers relating to the Strategic Review of Charges for Scottish Water for 2021-27 (SRC21-27), published last week. The Commission explained capital expenditure looks likely to have to increase significantly over the next several regulatory control periods, reflecting “continuing water quality, environmental and growth expenditure but also an increased need for expenditure on the planned repair, refurbishment and replacement of assets”.
Its view is that “the level of growth, planned replacement and enhancement expenditure will likely exceed £650 million in 2012/13 prices and may be as high as £850 million”. This looks set to translate as inflation busting price rises. The three papers published last week dealt with reporting performance, financial tramlines and prospects for prices. They follow five others already published in two stages since July, and 13 initial view papers published last year. The regulator has also published a paper setting out SRC21-27 methodology refinements and clarifications.