BWRA Bristol Wtr.8t%

RNS Number:9460D
Bristol Water PLC
17 September 2007


Bristol Water plc

17 September 2007

                 Application to Ofwat for Review of Price Limits

Bristol Water plc announces that today it has applied to Ofwat for an increase
in its price limits for the next two years.


                     BRISTOL WATER SEEKS PRICE LIMITS CHANGE

Bristol Water is asking the water industry regulator Ofwat to review its price
limits for the next two years.

Ofwat set price limits for all English and Welsh water companies for the five
years 2005-2010 back in 2004. These price limits are expressed as 'K' values and
allow Bristol Water to increase (or decrease) its charges to customers each
April by inflation +/- K. The price limits are based on a very detailed analysis
of the costs and investments that companies are expected to incur to deliver
services to customers.

Bristol Water is currently investing approximately #150m in capital projects to
meet the outputs set by Ofwat as part of the price limit process. These projects
are to maintain and enhance the company's assets over the five-year period to
ensure the maintenance of high levels of service to customers.

One such major project, now nearing completion, is the Northern Strategic
Support Scheme, to improve the security of supply for a large number of
customers in northern Bristol. This scheme would have helped deal with the type
of problems experienced by Severn Trent in supplying water to its customers in
Gloucestershire during this summer's flooding.

When setting price limits, Ofwat identified a number of uncertainties where, if
the original assumptions proved to be wrong, price limits could be reviewed by
an interim determination.

In three of these areas Bristol Water is experiencing significant increases in
costs:

   *the soaring number of domestic customers opting for a free meter
   *the level of bad debts i.e. customers not paying their bills
   *and water abstraction charges levied by the Environment Agency

Bristol Water has therefore applied to Ofwat for a change to the original price
limits for the next two years.

Bristol Water's current average annual domestic water supply bill is just #141.
This is some 6% lower than the average bill for English and Welsh companies of
#150 and significantly lower than the average bills of some of Bristol Water's
nearest neighbours.

The original price limits provide for a real increase (before inflation) in 2008
/09 of 0.7% and a real reduction in 2009/10 of 2.3% - a net real reduction of
around #2pa in the average bill by 2009/10.

The value of the change that Bristol Water has requested amounts to a total of
approximately #15 for the average domestic customer spread over the next two
years.

Ofwat will now consider this application and will issue a draft determination by
early November. Following this there will be a period of public consultation and
discussion between Ofwat and the company. Ofwat will then issue its
determination by no later than 14 December.

"The Bristol Water Board has considered carefully whether or not we should
proceed with this application and concluded we must," said Managing Director
Alan Parsons. "Factors we have taken into account are that we are delivering the
service and investment required of us but have experienced increased costs in a
number of areas including those items for which the increase in prices is
sought.  Relative to other companies' levels of charges, we will still be
providing an excellent service to customers at excellent value."


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For further information about this release, please call Jeremy Williams or Paul
Kelson on 0117 9536470 (office hours) or 07831 453924 or 07831 518964 (outside
office hours)
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