CC rejects water price appeal

The Competition Commission (CC) has rejected an appeal from Sutton and East Surrey Water (SES) to increases its prices to customers for 2009/10.

Peter Davis, Chairman of the reference Group and a Deputy Chairman of the CC, said: "The reference Group has carefully considered SES's case and concluded that although the company's financial performance is below that forecast when the current price controls were set, this has not affected its ability to finance the proper carrying out of its functions.

In terms of the consumer objective, in the short term there is a clear consumer interest in keeping prices lower, and while we took very seriously a range of concerns that consumers would in fact be best served in the longer run if current prices were allowed to rise, on the facts of this particular case, we were not persuaded that it was appropriate for there to be a price increase."

This confirms the CC's provisional determination, which was published in June.

Ofwat referred the appeal to the CC in March this year, following its decision to reject the company's request to increase prices by 10.2 per cent in real terms. SES had argued that it should be able to increase its price because of unexpected shortfalls in revenue and an increase in energy charges. The existing price limit for 2009/10 was set by Ofwat in 2004 as part of a five-year price control, of which 2009/10 is the final year.