Question to the Department for Environment, Food and Rural Affairs:

To ask Her Majesty's Government, further to the Written Answer by Lord Gardiner of Kimble on 1 February (HL13061), what rationale was behind the decision to set the cost to serve allowance for smaller non-household water customers at its proposed levels.

Determining the appropriate price protections for non-household water customers, including the cost to serve allowance, is a matter for Ofwat, the economic regulator for the water industry. The current price protections for non-household water customers run until March 2020.

Ofwat has collected detailed cost data from all licensed water and sewerage retailers, to provide them with the evidence about the current cost to serve allowance.

In December 2018 Ofwat published a consultation on price protections to apply from April 2020. This included questions on the cost to serve allowance. Chapter 7 of the consultation published on GOV.UK sets out the proposed approach and Ofwat’s rationale for the proposal.

The consultation closed on 15 February. Ofwat is considering the responses received and will respond in due course.