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National policy is determined by the Scottish Government, to whom the authority reports. Scottish Water is bench marked against the performance of private water companies in England and Wales (however in Wales it is run by a 'not for profit' company). It has over the last 4 years (2002–2006) delivered significant improvements in service and nearly £1 billion of operational and capital efficiencies. In 2006-2007 its average household charge was lower than in England and Wales (£287 compared with £294).
Scottish Water operates under a regulatory framework established by the Water Services etc. (Scotland) Act 2005 allowing an economic regulator, the Water Industry Commission for Scotland, to set the cost of the service independently. The Water Industry Commission for Scotland establishes the "lowest overall reasonable cost" through a benchmarking exercise with private water companies operating in England and Wales. Scottish Water has a right of appeal against this price setting process through a reference to the UK Competition Commission.
The Drinking Water Quality Regulator for Scotland and the Scottish Environment Protection Agency also regulate Scottish Water. The Scottish Public Services Ombudsman represents the interest of Scottish Water's customers and has powers to investigate complaints
The authority was founded in 2002 by a merger of West of Scotland Water Authority, East of Scotland Water Authority and North of Scotland Water Authority under the Water Industry (Scotland) Act 2002, an Act of the Scottish Parliament.Scottish Water provides drinking water to 2.2 million households and 130,000 business customers in Scotland. Every day it supplies 2.3 billion litres of treated drinking water and takes away nearly one billion litres of waste water from customers' properties and treats it before returning it to the environment. It has an annual turnover of around £1bn and is funded by charges paid by its customers. Part of its long term capital expenditure is funded by long term loans from the Scottish Government.
The Scottish Government has consulted as to how Scottish Water can work together with Scottish Canals and Caledonian Maritime Assets to achieve additional public benefit from all Scotland's water-related infrastructure, both inland and maritime. 
- The Committee Office, House of Commons. "House of Commons - Public Accounts - Forty-Second Report". Parliament.the-stationery-office.co.uk. Retrieved 2013-05-28.
- Water Industry Commission (2007) Cost and Performance Report 2003-2006
- Information available from the Scottish Government Website at http://www.scottishexecutive.gov.uk/Topics/Business-Industry/waterindustryscot/help or from Scottish Water's independent economic regulator - the Water Imdustry Commission for Scotland website
- Building a Hydro Nation - a Consultation
- Scottish Water
- The Scottish Government
- The Water Industry Commission for Scotland (Scottish Water's economic regulator)
- The Drinking Water Quality Regulator for Scotland (Scottish Water's water quality regulator)
- The Scottish Environment Protection Agency (Scottish Water's environmental regulator)
- Scottish Public Services Ombudsman (SPSO) (the final stage for complaints about most water and sewerage services)
- Full text of the Water Industry (Scotland) Act 2002 (OPSI website)
- Full text of the Water Services etc. (Scotland) Act 2005 (OPSI website)