§ Mr. David Nicholson
To ask the Secretary of State for the Environment what discussions he has had with the Office of Water Services in respect of changes to the regulatory regime to take account of recent profit and dividend announcements by the water companies; and if he will make a statement. 
§ Mr. Clappison
The functioning of the regulatory regime frequently arises in day-to-day contacts between officials and the Director General of Water Services and his staff. The present system of price cap regulation provides powerful incentives for companies to reduce their costs and improve their performance, and enables the Director General of Water Services to take account of company profitability at the next price review. The director general has said that the benefits of improved efficiency should be shared between customers and shareholders.