Costs principle
Water Bill, Glossary: water terms, published by the Department for Environment, Food and Rural Affairs in November 2013, defines the costs principle as: ‘The basis for setting wholesale charges and charges for use of the system under the existing Water Supply Licensing regime. These charges are based on the end retail price to the customer under the current arrangement minus any costs ‘avoided’ by the incumbent water company as a result of the customer switching suppliers, but the incumbent can add on any costs of serving the licensee. An example would be the costs avoided if the company no longer has to send bills. The costs principle has been widely criticised for creating only a small margin on which a licensee can compete when setting prices. The charging guidance, in combination with Ofwat’s charging rules, will replace the costs principle with a more flexible charging regime.’
[edit] Related articles on Designing Buildings
- Cost.
- Incumbent.
- Mains water.
- Ofwat.
- Public water supply.
- Sewerage.
- Statutory undertaker.
- Types of water.
- Water Act 2014.
- Water.
Featured articles
Check out some of the best features and news from Designing Buildings as well as key stories from around the web.
Recognition, influence and growth
SocEnv identifies three strategic pillars in new strategy to 2045.
Discover the future of roofing, cladding and insulation.
New guidance for professional practice, cultural change and regulation in social housing.
The heritage of nuclear and conventional power stations.
New measures to stop people being ripped off
Government to protect families from cowboy builders and aggressive bailiffs.
New Futurebuild showcase brings an innovation-first approach.
National Planning Policy Framework
Understanding the 2026 changes.
ECA's public affairs priorities
Member consultation opens to shape priorities for 2027 to 2030.
Dutyholder responsibilities from 1 July 2026.
Where performance meets practice
The Building Envelope Stage at UKCW Birmingham.
CIAT publishes briefing on planning reforms.
Leaders in Learning for Practice Network
Call for conservation leaders in learning to register interest in new network.