Byatt faces big fight over water bill cuts

The Environment Agency is proposing to block big cuts in water bills planned by the industry regulator and press instead for a sharp increase in spending on clean-up measures.

The move could reignite a dispute between Ian Byatt, the regulator, and the Environment Agency over how much discretionary environmental investment could be included in the water price regime.

Mr Byatt last week announced plans to make a substantial one-off cut in water bills when the five-year price control starts in 2000, following the lead of the gas and electricity regulators. Bills in the following years would also increase by no more than inflation, compared with the current controversial price formula which allows for above-inflation increases to pay for statutory investment in sewerage treatment schemes.

In soon-to-be-published evidence for the new price review, the Environment Agency will release a shopping list of discretionary improvements, on top of legal obligations, which were left out of the current price formula. The agency said the additional investment could reduce or replace the one-off price cut, a move which could damage Mr Byatt's reputation with consumers.

"Instead of having such a big one-off reduction you could have a better environment with not such a big drop in bills. These are political judgements, but there are a great many environmental improvements which need to be made," said an Environment Agency source.

The demands will form one of the first serious tests of the Government's environmental policy. John Prescott, Deputy Prime Minister, is reviewing the industry's environmental obligations and has suggested a tougher approach to clean-up measures. The price review is a four-sided process involving the regulator, the companies, the Environment Agency and the Government. The Environment Agency source said: "Ian Byatt must take into account the advice of the Secretary of State. He has to take notice of that guidance on environmental measures."

High on the list of improvements would be the Environment Agency's long- standing demand to see better control over sewerage overflows, which discharge effluent into rivers during flooding. Another measure would be to cut the amount of drinking water the companies can legally extract from rivers, a policy which the Environment Agency said had threatened river wildlife.

Similar demands during the previous price review in early 1990s led Lord Crickhowell, former chairman of the Rivers' Authority, the agency's former incarnation, to appeal to the then environment secretary, Michael Howard. At the time Mr Byatt had hoped to curb increases in bills.

The regulator won most of the battle, largely because the improvements which had to be made by law were already so large. European drinking water and bathing water directives added billions of pounds to the companies' investment plans, leaving just pounds 500m for discretionary improvements between 1995 and 2000. Some companies were given no room at all for extra improvements.

Ofwat said there would be some space for additional spending in the next price formula, though figures were still being calculated: "Our objective is to get the one-off cut in bills and a flat profile thereafter. Ultimately this is a decision for the Secretary of State."

Robert Miller-Bakewell, water analyst at NatWest Markets, said the Environment Agency had more chance of persuading Labour than the previous government. His research suggested the water companies could have to make one-off cuts of up to 19 per cent in one case to bring down rates of return to Ofwat's target level of 8 per cent.

Start your day with The Independent, sign up for daily news emails
ebooks
ebooksA celebration of British elections
  • Get to the point
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs Money & Business

SThree: Trainee Recruitment Consultant - Swiss Banking and Finance

£20000 - £25000 per annum + Uncapped commission: SThree: Can you speak German,...

Ashdown Group: Marketing Executive - 6 month FTC - Central London

£25000 - £30000 per annum + benefits: Ashdown Group: An exciting opportunity f...

Ashdown Group: Junior Project Manager (website, web application) - Agile

£215 per day: Ashdown Group: Junior Project Manager (website, web application ...

Guru Careers: Software Engineer / Software Developer

£40-50K: Guru Careers: We are seeking an experienced Software Engineer / Softw...

Day In a Page

Fishing for votes with Nigel Farage: The Ukip leader shows how he can work an audience as he casts his line to the disaffected of Grimsby

Fishing is on Nigel Farage's mind

Ukip leader casts a line to the disaffected
Who is bombing whom in the Middle East? It's amazing they don't all hit each other

Who is bombing whom in the Middle East?

Robert Fisk untangles the countries and factions
China's influence on fashion: At the top of the game both creatively and commercially

China's influence on fashion

At the top of the game both creatively and commercially
Lord O’Donnell: Former cabinet secretary on the election and life away from the levers of power

The man known as GOD has a reputation for getting the job done

Lord O'Donnell's three principles of rule
Rainbow shades: It's all bright on the night

Rainbow shades

It's all bright on the night
'It was first time I had ever tasted chocolate. I kept a piece, and when Amsterdam was liberated, I gave it to the first Allied soldier I saw'

Bread from heaven

Dutch survivors thank RAF for World War II drop that saved millions
Britain will be 'run for the wealthy and powerful' if Tories retain power - Labour

How 'the Axe' helped Labour

UK will be 'run for the wealthy and powerful' if Tories retain power
Rare and exclusive video shows the horrific price paid by activists for challenging the rule of jihadist extremists in Syria

The price to be paid for challenging the rule of extremists

A revolution now 'consuming its own children'
Welcome to the world of Megagames

Welcome to the world of Megagames

300 players take part in Watch the Skies! board game in London
'Nymphomaniac' actress reveals what it was really like to star in one of the most explicit films ever

Charlotte Gainsbourg on 'Nymphomaniac'

Starring in one of the most explicit films ever
Robert Fisk in Abu Dhabi: The Emirates' out-of-sight migrant workers helping to build the dream projects of its rulers

Robert Fisk in Abu Dhabi

The Emirates' out-of-sight migrant workers helping to build the dream projects of its rulers
Vince Cable interview: Charging fees for employment tribunals was 'a very bad move'

Vince Cable exclusive interview

Charging fees for employment tribunals was 'a very bad move'
Iwan Rheon interview: Game of Thrones star returns to his Welsh roots to record debut album

Iwan Rheon is returning to his Welsh roots

Rheon is best known for his role as the Bastard of Bolton. It's gruelling playing a sadistic torturer, he tells Craig McLean, but it hasn't stopped him recording an album of Welsh psychedelia
Morne Hardenberg interview: Cameraman for BBC's upcoming show Shark on filming the ocean's most dangerous predator

It's time for my close-up

Meet the man who films great whites for a living
Increasing numbers of homeless people in America keep their mobile phones on the streets

Homeless people keep mobile phones

A homeless person with a smartphone is a common sight in the US. And that's creating a network where the 'hobo' community can share information - and fight stigma - like never before