ove, euer8 dm - Ofwat

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(ove, euer8 dm Anglian Water Services Limited Anglian House Ambury Road Huntingdon Cambs PE29 3NZ

angliany

Tel

01480 323000

Andrew Beaver Director of Strategy Ofwat Centre City Tower 7 Hill Street Birmingham B5 4UA 4THAugust 2014

Dear Andrew Statutory consultation under section 13 of the WIA 1991 to modify the licence of water and sewerage companies in England and Wales The Board of Anglian W ater Services Limited has agreed to changes to Condition N of the licence to enable the collection of fees to fund the programme of work for the implementation of retail market opening in 2017. In agreeing to the changes, however, the Board has asked me to make the following points: Firstly, as noted in your email of 24 July, we welcome the continued involvement of the advisory panel and look forward to further details that are promised regarding its possible evolution into the Code Change Panel once the market opens. Secondly, we expect that services procured from advisers and consultants, funded by the fees collected under this change of licence, will be subject to public body procurement rules. Thirdly, whilst the cap has been set on an annual basis at a maximum of £10.5m in any year, this could potentially equate to E42m overall (or £36.4m if 2014/5 is fixed at L4.9m). Given the fact that the funding to be made available under this Licence Condition is not intended to fund the Market Operator Running Costs, the high figures of the budget forecast provided in the section 13 notice would indicate a total maximum budget of £16.9m for the Open W ater Programme Delivery and a total maximum budget for the Market Operator Set Up Costs up to 2017 of £3.7m (or E5.5m if 2017/18 is included as well). Cont.. 4°E)( tift5.11 All of our printed stationery is made from completely recycled paper, and uses inks that are kinder to the environment. To see what else we ' re doing visit www,ang lianwater.c o.uk/lo ye eve rydrop

Registered Office: Anglian Water Services Ltd Anglian House Ambury Road Huntingdon Cambridgeshire PE29 3NZ Registered in England No 2366656 an AWG company

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anglian Accordingly, we consider that there should also be an overall cap on fees for the 4 years of £27m for Open W ater Programme Delivery - a contingency of just over 20% on the highest forecast budget figures. In any case, there should be an adjustment at the next price review in 2019 to reflect actual costs. It would also be helpful, and good governance, if Ofwat could commit to providing budget figures for the following year by say 31 January to allow companies to plan for the following year. W ith good programme management we would not expect this to be an issue. The document also highlights that Ofwat might re-forecast and invoice increased amounts during the year (January). W hile we recognise the possibility that this may happen we would expect it to be the exception. If you wish to discuss any of our comments please do not hesitate to contact me. Yours sincerely

Claire Russell Legal Director

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All of our printed stationery is made from completely recycled paper, and uses inks that are kinder to the environment, To see what else we ' re doing visit www.anglianwate r.co.uk/love everydrop

Registered Office: Anglian W ater Services Ltd Angli an House Arnbury Road Huntingdon Cambridgeshire PE29 3N Registered in England No 2366656

an AWG company