BWRA Bristol Wtr.8t%

RNS Number:0577H
Bristol Water PLC
05 November 2007


Bristol Water plc
5 November 2007

                Application to Ofwat for Review of Price Limits

Bristol Water plc announces that today Ofwat has issued its Draft Determination
in respect of the application for a review of price limits made by Bristol Water
plc on 17 September 2007.

Latest On Price Limits Change:

                  Bristol Water Considers Ofwat Draft Decision

          'Pleased Ofwat have recognised we are genuinely experiencing
                     extra costs in specific areas'- BW MD.

Bristol Water now has three weeks to consider today's draft decision by
regulator Ofwat on how much prices can rise over the next two years.

In September, Bristol Water asked Ofwat to review its charges for the next two
years. This is allowed under rules that review price limits, up or down, if
certain specified factors move significantly out of line from when the limits
were originally set three years ago.

Ofwat's draft determination issued today provides for a real increase in average
prices from April 2008 of 4.6% followed by a real decrease of 2.0% in 2009/10.
The effect of this would be average domestic bills for a year's water supply of
around #145 in 2008/09 and #143 in 2009/10.

Bristol Water's current average annual domestic water bill is some 6% lower than
the average bill for English and Welsh companies and significantly lower than
the average bills of some of Bristol Water's nearest neighbours. Even with these
revised price limits the average charge will remain below the national average.

"We are pleased that Ofwat have recognised that we are genuinely experiencing
additional costs in specific areas and that the interim determination price
review mechanism should be applied," said managing director Alan Parsons.

"We are continuing to deliver excellent service levels to customers and by the
time of these price rises next year we expect to meet in full the challenging
obligations required of us when Ofwat set the original price limits.

"This year we will complete the largest ever investment programme in the
company's 160+ year history.

"We now need to study and reply to Ofwat's draft decision."

Background -

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.

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 water supply problems in Gloucester and Tewkesbury during this summer's
flooding.

There will now 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. If confirmed the new price limits will take effect from 1st April 2008
and April 2009.

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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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