WICS supports price rises for 2027-33 – but only at a steady rate

(by Karma Loveday)

The Water Industry Commission for Scotland’s well-established support for steady investment and price increases continued as it announced its Draft Determination (DD) for the Strategic Review of Charges 2027-33 (SR27) last week. But attention to affordability – as evidenced by cost challenge, higher performance expectations, and new safeguards to protect customers from uncertainty and delivery risk – curtailed the allowances Scottish Water (SW) had requested.

The regulator limited charges to CPI+2% in the normal course of events (level with what was allowed in the last price review, SR21), rising to CPI+2.3% if higher costs outside of SW’s control (such as energy costs) materialise and if the £560m West Central Bioresources project proceeds (this is dependent on yet-to-come evidence). Scottish Water’s final business plan requested CPI+3.3%. This reduced the cumulative increase above inflation from SW’s 21.5% to 12.6%, or 13.6% if the uncertain costs materialise.

In cash terms, bills will rise by £12 a year before inflation, £7 less than Scottish Water proposed. Average household bills will increase from £537 in 2026-27, to £605 in 2032-33 (£610 with uncertain costs materialising). The package assumes £1bn of borrowing from the Scottish Government, which is consistent with SW’s assumption.

This is intended to support investment of £7.9bn, down from SW’s £8.1bn. The change incorporated: 

• A £260m operating cost challenge

• A £55m productivity improvement challenge

• £168m of additional investment to achieve improved outcomes.

  
  

In all, WICS removed £360m from SW’s proposed spending plans of £11.7bn for operating and capital expenditure (excluding wastewater PFI fees). It increased the efficiency challenge on operating and capital expenditure proposed by the company of 0.8% per annum to 1% per annum.

At the same time, WICS increased its expectations on performance in customer priority areas including drinking water quality, supply reliability, leakage and sewer flooding. For instance, the regulator said leakage should fall by 15.7%, up from Scottish Water’s 9.9% reduction, and that drinking water compliance should reach 99.97% by 2033, up from the Scottish Water position of 99.95%.

Consumer Scotland chief executive Sam Ghibaldan welcomed the Draft Determination. He said: “While we recognise that more investment is needed to protect water services from the consequences of climate change and ageing assets, the increase in charges must be kept as low as practical to limit the impact on consumers.” 

The consultation runs until 1 September. WICS will publish its Final Determination on 29 October 2026, with the new charges taking effect from 1 April 2027.