Scottish water prices set for next 5 years

LONDON (Reuters) - Water prices in Scotland will rise at 5 percent below inflation over the next five years, the Water Industry Commission for Scotland (WICS) said on Thursday.

Scottish water consumers have also been guaranteed a one-year price freeze from April 2010, followed by a likely second the year after, the regulator said in a statement.

"We are pleased that our final determination offers some good news to customers during continued global economic uncertainty but, at the same time, allows for a sustainable future for the Scottish water industry," said Alan Sutherland, chief executive of WICS.

"Scottish consumers will ... see a marked improvement in customer service and the public health and environmental improvements which will benefit Scotland for many years to come."

Initiatives also outlined by WICS to encourage a greener water industry, included household metering trials and work with landowners to manage water catchments.

Scottish Water is required to reduce its leakage by at least a third by 2014 and to investigate reducing the volume of ground water unnecessarily entering the sewage system.

In a draft five-year plan published in July, UK water regulator Ofwat surprised water providers by calling on them to cut bills, rather than permitting increases.

Every five years Ofwat sets the amount by which water companies can increase customer bills, and will make its ruling on Thursday.

(Reporting by Michael Taylor; editing by Leslie Gevirtz)