Sutton and East Surrey Water plc interim price determination, final determination

On 5 March, The Water Services Regulation Authority (Ofwat) made a reference to the Competition Commission to determine a substantial adverse effect (SAE) claim by Sutton and East Surrey Water plc (SES).

This is the Competition Commission's final report of this SAE claim.

The SAE claim was made by Sutton and East Surrey Water, seeking an increase in its price limits for the supply of water in its area.

This request was the result of an increase in power costs and the loss of income due to the consumption of water being lower than forecast in the 2004 regulatory settlement.

The Competition Commission considered whether a circumstance had occurred which had or would have a substantial adverse effect on SES's business and, if so, what change should be made to the company's price limits.

This final determination considers whether the adverse effect would have been avoided by prudent management action and whether it satisfies a materiality test. It goes on to consider what adjustment to the price control is appropriate, having regard to Ofwat's duties, including, in particular, the duty to secure that the company can finance the carrying out of its functions and the duty to further the consumer objective.

The report includes sections on: the background to the reference; assessment of SES's claim; the appropriate adjustment to price limits for water supply; and conclusions.