OFFICE OF WATER SERVICES

Water Industry Act 1991, Sections 8 and 13

Notice of proposals by the Director General of Water Services

(1) That Chester Water Company replace Wrexham Water Plc as the water undertaker for the latter’s area of Appointment; and

(2) That the Conditions of Appointment of Chester Water Company be modified

The process:   This notice begins a period of public consultation. Any representations or objections about any of the matters described below should be in writing and sent to the Director General of Water Services, Centre City Tower, 7 Hill Street, Birmingham B5 4UA (fax 0121-625 3606), to be received not later than Monday, 23rd March 1998, at 5 p.m.

Proposal 1

That Chester Water Company replace Wrexham Water Plc as water undertaker for the latter’s area

  Chester Water Company (“Chester”) and Wrexham Water Plc (“Wrexham”) are water undertakers. Each holds an Appointment from the Secretary of State and is controlled by Dee Valley Group plc.   The Director General of Water Services (“the Director”) considers that, when two or more Appointees are in the same ownership and management control, their separate licences should be replaced by a single one.   Therefore, the Director proposes that Chester’s Appointment should be varied so that it applies also to the area currently served by Wrexham. If that happens, Wrexham’s Appointment will be terminated. Chester and Wrexham have agreed these proposals.   (Chester is a statutory water company which is currently being converted into a public limited company under the name Chester Waterworks Plc. The Director understands that, when that process is complete, the company will be renamed Dee Valley Water Plc.)

Proposal 2

Price reductions and modifications of Chester’s Appointment

Chester’s conditions of appointment provide for an increase in average prices for water services, based upon changes in the index of retail prices and a factor (called K) expressed as a percentage. Whenever separate Appointees come under common ownership, the Director expects that the benefit of reduced costs should be passed on to customers.   Chester has agreed that with effect in the charging year commencing 1st April 1998, its K factor (for its enlarged area) will be 1.7 per cent lower than the combined K factor which would result from those which the Director determined for Chester and Wrexham in July 1994.   Chester has also agreed that, with effect in the charging year commencing 1st April 2001, its K factor (for its enlarged area) will be 1.4 per cent lower than the K factor which the Director would otherwise determine for that charging year, when he announces the results of the periodic review of all Appointees’ K factors, in December 1999.   The Director believes that these adjustments will return to customers the cost savings arising from the single Appointment.   However, Chester will be required to ensure that, until 1st April 2000, no class of customers currently served by either Wrexham or Chester pays any more for water services provided by Chester than it would have paid if Wrexham and Chester had continued to hold separate Appointments.