Water Industry (Hansard, 22 June 1994)

§ Mrs. Helen Jackson
To ask the Secretary of State for the Environment what is the assumption of reasonable return on capital as defined in the Water Industry Act 1991 for(a) the water supply companies and (b) the water service companies.

§ Mr. Atkins
When price limits were set by the Secretaries of State in 1989 they assumed that a reasonable return on capital would be:(a) a real return of 8 per cent. for most of the water supply companies, 8.5 per cent. for the smallest companies, and (b) a real return of 7 per cent. for the water service companies.
The Director General of Water Services is currently considering the appropriate return on capital as part of his periodic review of price limits. In the consultation paper "Cost of Capital", published in 1991, he suggested that the appropriate range was between 5 and 6 per cent. He will announce the outcome of his review on 28 July 1994.

§ Mrs. Helen Jackson
To ask the Secretary of State for the Environment if he will list the land sale transactions he has approved by each water company,(a) since the Water Act 1989 and (b) since 1 February 1992.

§ Mr. Atkins
Details of such land sales are not registered with the Secretary of State.

§ Mr. Chris Smith
To ask the Secretary of State for the Environment what guidance he has issued to water companies as to the proper procedures under section 10 of the Reservoirs Act 1975 for the appointment of an independent qualified civil engineer; and whether consideration can be given under these procedures to the appointment of former employees of the water company in question.

§ Mr. Atkins
DOE circular 5/85 set out general guidance on the operation of the Reservoirs Act 1975, including the appointment of qualified engineers. Section 10(9) of the Act requires that independent qualified engineers

(a) shall not be in the employment of the reservoir undertaker otherwise than in a consultant capacity; and

(b) shall not have been the engineer responsible for the reservoir or any addition to it as construction engineer, and shall not be connected with such an engineer as his partner, employer, employee or fellow employee in a civil engineering business.