Scotland’s Approach to Regulating Water Charges

Timeline

Since its launch in early 2017, SRC21 has progressed in the context of an evolving policy environment. The points below highlight key developments in and alongside the SRC process.

 

Events related to the OECD peer review are highlighted in grey
January 2017	Ministers issue their Commissioning Letter to WICS, specifying the deadline for the Final Determination of Charges and outlining Ministers’ expectations for the SRC21 arrangements.
March 2017	WICS, Scottish Water and CAS sign a co-operation agreement creating the Customer Forum for SRC21. The agreement also provides for a research programme and operational arrangements to coordinate research activities; the Research Coordination Group is created pursuant to these provisions.
April 2017	WICS releases the methodology for SRC21, outlining their approach to the SRC21 process. WICS shared refinements to the methodology in autumn 2018 following feedback from stakeholders.
September 2017	The OECD peer review team visits Scotland to map the start of the SRC21.
October 2017	Water industry stakeholders hold the first stakeholder meeting to facilitate joint working for the SRC21, leading to the creation of the Stakeholder Advisory Group.
February 2018	Scottish Water releases its Strategic Projections, defining overarching ambitions to address future challenges and outlining planned actions to help deliver on these ambitions.
April 2018	The Capital Maintenance Advisory Group, convened to better understand the actual needs for an appropriate capital programme for SRC21 and further into the future, concludes its first phase of work.
July 2018	Consultation on draft Principles of Charging and Ministerial Objectives opens, running until September 2018.
September 2018	WICS exchanges letters with Scottish Water and the Customer Forum, laying out further information about the approach to SRC21 and the Strategic Plan.
October 2018	The OECD peer review team visits Scotland to map progress of SRC21.
December 2018	Scottish Water releases their Outline Strategic Plan, further defining fifteen strategic outcomes within its four overarching ambitions, captured in the ‘Strategic Wheel’.
February 2019	The Ethical Business Regulation (EBR) Support Group conducts its first assessment.
March 2019	Participants to the Stakeholder Advisory Group co-create a draft vision for the water industry: “Scotland's water sector will be admired for excellence, secure a sustainable future and inspire a Hydro Nation.”
May 2019	Working groups continue their activities and finalise some of their decisions. Research efforts continue with the conclusion of behaviourally-informed studies on trade-offs and launch of the deliberative research study aimed at understanding perceptions.
June 2019	The Cabinet Secretary’s keynote address recognises that a flourishing Scotland needs a flourishing water sector and officially invites stakeholders to propose a vision for the sector.
July 2019	The Scottish Government issues an updated Commissioning Letter with indicative price profiles, a stronger emphasis on climate change, and a requirement to create a vision for the sector. Detailed prioritisation workshops take place focusing on the ‘no regrets’ investment components that will make the development lists.
August 2019	WICS publishes their final Decision Paper on Asset Replacement, highlighting the likely required levels of investment in light of ageing assets and climate change challenges.
September 2019	The Scottish Government releases its Programme for Scotland 2019-2020, which commits Scottish Water to becoming a net-zero carbon user of electricity by 2040, ahead of the overall net-zero emissions commitment for Scotland as a whole in 2045. The Investment Planning and Prioritisation Group (IPPG) agrees on its Terms of Reference and meets for the first time. The Group is chaired by the Scottish Government and stakeholders agree that they will work together to endorse the process of investment selection.
November 2019	Following inputs from stakeholders at the Stakeholder Advisory Group and bilateral meetings, Scottish Water presents a Strategic Plan to its Board of Directors for approval.
	The OECD peer review team visits Scotland to map progress of SRC21.
January 2020	The government publishes the draft Ministerial Objectives and Principles of Charging for the water sector that incorporates the sector vision.
February 2020	Scottish Water publishes their Strategic Plan, Our Future Together. The Customer Forum and Scottish Water sign a Minute of Agreement on the Strategic Plan, agreeing that the plan reflects customer and community priorities and aspirations and outlining aspects for further development. WICS publishes its final decision paper Prospects for Prices with its conclusion that annual average charges must increase by between 1 and 2% above Consumer Price Inflation. The Customer Forum and Scottish Water enter discussions about prices for 2021-27.
March 2020	Lockdowns announced in Scotland and the UK as part of the response to the COVID-19 pandemic. The Customer Forum and Scottish Water reach a draft agreement on prices for 2021-27. However, given the uncertainty arising from COVID-19, it was decided to delay decisions on prices until the implications were clearer.
April 2020	At the request of the Scottish Government, WICS seeks input from industry stakeholders on how best to conclude the SRC21 process, given the impacts of the pandemic, and sets out a range of options.
April 2020	Chair of the Customer Forum resigns and is replaced by a new chair.
May 2020	WICS writes to the Cabinet Secretary regarding the Impact of COVID-19 on the Strategic Review of Charges 2021-27.
September 2020	The Customer Forum and Scottish Water enter into a minute of agreement on expectations for the transformation plan and the future of customer involvement.
October 2020	The Scottish Government sets out a revised timetable for SRC21 in light of the pandemic. WICS publishes its draft determination proposing annual average price increases of CPI+2% over the regulatory period, efficiency challenges, and a ring-fenced allowance to account for externalities in investment decisions, with a six-week comment period.
	The OECD peer review team is briefed on developments in the SRC21 process.
December 2020	The Scottish Government published its final Principles of Charging and Investment Objectives for the regulatory period, including extensions to the support available through the water charge reduction scheme. WICS publishes its final determination, making slight adjustments to the financial modelling but maintaining the key parameters of the draft determination.
February 2021	Scottish Water, accepts the final determination and announces its 2021-2022 household charges. Taking account of the extension to the charges reduction scheme, it includes an average charge increase across all customers of 0.9%, with a 2.5% increase for those paying full charge levels.
May/June 2021	The OECD Secretariat and peers hold the final OECD peer mission.
November 2021	The OECD peer review is discussed by the OECD Network Economic Regulators at its 17th November meeting.