Our Final Business Plan is the best way to continue providing an effective and efficient service to you, our customers. It sets out proposed service and investment levels and price limits for the five years beginning in April 2010. You can read a much fuller version of the document attached here. Key points:

· We need to invest over £1 million each week through to 2015.

· Our plan results in doubling the current level of capital expenditure. Our proposals require investment of £319 million in the five years to March 2015. Our proposed investment programme will stop the supply system deteriorating and improve customer service.

· To help fund all this, by 2015 our average household water supply bill needs to rise -- but only by less than £1 a week by 2015 in real terms, up from £3 per week now.

· No increase in prices is ever welcome; there will be customers who find it hard to pay their bills. We are therefore bringing in additional measures to help those with genuine difficulties.

· We are planning to deliver precisely what customers tell us they want and what they are prepared to pay towards. Recent independent market research shows that a clear majority of customers support our proposals, even taking into account the current economic background.

· Our top priority is to provide a safe and reliable water supply on demand in an affordable and sustainable way. We are planning to:

INVEST further in water quality improvements.

CUT leakage by a further 10% by 2015

DELIVER sustainable levels of maintenance of our extensive assets to prevent any deterioration in service.

INVEST more in resilience schemes so we can continue to supply water in the event of a loss of a critical part of our system. We will ensure much greater resilience of service for another 230,000 people by 2015 and 400,000 by 2020.

ENSURE water is available to meet growth in demand at the lowest cost.

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BACKGROUND:

· Investment between 2005-2010 has already included: £18m water quality improvements at two treatment works; a £26m scheme to improve security of supply (resilience) for almost 200,000 customers; and £18m on water main replacements or refurbishment.

· We have operated with a restricted level of investment for as long as possible to keep prices as low as we can. More than 20% of our water mains (1,500 kilometres) are already over 100 years old -- amongst the oldest in the country; and over 30% of our pumping plant is over 25 years old.

· Customer reaction to the proposals in our plan

Our latest survey shows strong support for our proposals –

Bill increase of more than £4 per month and see wider improvements to service

14%

Bill increases of £4 per month and have service maintained and in some areas improved (as set out in our plan)

44%

Bill increases by the minimum of £2 per month but possibly see service deteriorate

18%

None of these – presumed as wanting less than £2 per month increase regardless of the impact on service

17%

Don’t know 6%

This survey is based on a fully representative sample of 867 household customers

· Our current levels of service: We were ranked 3^rd out of 22 companies in OFWAT’s 2007/8 Overall Performance Assessment. Examples of our standards include:

· 99.97% compliance with water quality standards

· no restrictions on customer use of water for 17 years

· consistently meeting the economic level of leakage target

· strong environmental performance

· 99.9% of metered customers’ bills based on actual readings

· 100% of billing contacts dealt with inside 5 working days

· All written complaints substantively replied to within 10 working days

· telephone calls answered on average in 5 seconds – by humans!

· customer satisfaction on telephone contact rated second highest in the industry for 2008/9

· 87% of our customers rank our service as good or very good.

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· OFWAT will now review our Final Business Plan carefully. They will issue a draft determination of price limits in July and then set final price limits for us in November 2009. The new price limits become effective in April 2010.

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For further information, please call Jeremy Williams, Paul Kelson or Janice Saunders on 0117 9536470 or e-mail corporate.affairs@bristolwater.co.uk