John Swinney announced Rice will start her new role on 1 June, replacing Ronnie mercer, who has served two full terms as chair.
He praised Rice’s “unparalleled skills and experience at the highest level” but warned she will have to lead Scottish Water through “a very challenging period in the next few years”.
Swinney added: “Her demonstrable leadership qualities bode well for Scottish Water in striving to continue to build on the success so far achieved in delivering a first class public water service in Scotland.”
He also praised outgoing chair Mercer, saying he has played a “significant role” in putting Scottish Water on par with the top privatise water companies in England and Wales.
Scottish Water chief executive Douglas Millican also welcomed Rice’s appointment saying: “It continues to be an exciting time for Scottish Water, as we look ahead to the start of our new investment programme and building on the many customer service improvements of recent years, with charges which continue to be among the lowest in Great Britain.”
On being appointed, Rice said: “This role will leverage my experience on the boards of energy, retail and finance companies, my interest in resources and environmental matters, and a keen understanding that there’s little that can be more important to the people of any country than plentiful and safe water.
“I look forward to playing my part in such an important enterprise.”
Rice is chair of the Scottish Fiscal Commission and is a non-executive director of Sainsbury’s. She also has served a seven year term as a non-executive director of the Bank of England, and 11 years as a non-executive director of SSE.