WICS calls on Scottish Water to evidence long-term funding needs

The Water Industry Commission for Scotland has advised Scottish Water to provide robust evidence for the long-term cost estimates set out in its draft long-term strategy.

The company has forecast that the funding needed to deliver sustainable services over the next 25 years could be approximately double what it is today, with investment of around £50bn needed over that period, half of which will relate to maintaining the existing asset base.

In a letter responding to the draft strategy, the regulator said it recognised the “directional” nature of these cost estimates, but did not consider Scottish Water to have adequately addressed a series of questions previously posed by WICS to ensure “an analytically robust and logically consistent approach”.

It called on Scottish Water to demonstrate: 

• “How it has taken account of the affordability of proposed charge increases, particularly if it seeks to deviate from the indicative charge profile for SRC27 provided in SRC21;

• That it has explained the importance of the outcomes that customers will receive from the proposed investment, including the investment in asset maintenance; and 

• That the proposed investment programme is deliverable, taking account of Scottish Water’s internal capacity and external factors such as capacity of the supply chain recognising the large investment programmes underway in England and Wales as part of the Asset Management Period 8.” 

WICS said it was “actively assessing the efficient size of Scottish Water’s investment programme, taking account of these factors” and looked forward to the company’s business plan submission in June.