Further misery for householders as water firms plan 22 per cent bill rise

Consumers face year after year of inflation busting rises in water bills after companies submitted plans for increases of up to 22 per cent over a five-year period to 2015.

As households face higher bills for mortgages, food, energy and petrol, the water companies intend to hike bills by up to £100 a year to pay for new pipes to reduce leakage.

Southern Water is planning the steepest hike, with average bills rising by 21 per cent from £352 to £426. Thames Water is seeking to raise bills by 16 per cent after inflation, from £280 to £329 a year. In the North-west, United Utilities customers face having to pay £390 a year by 2015, a rise of 11 per cent above inflation.

Other companies planning rises include Anglian (3.6 per cent above inflation), Northumbrian (2.8 per cent above inflation) and Yorkshire (1.6 per cent above inflation).

There was relief for customers of Wessex and Welsh Water, where bills will rise in line with inflation.

The water companies in England and Wales submitted the rises to the regulator Ofwat as part of their five-year business plans for 2010-2015. Over the coming year, Ofwat will study the proposals before deciding whether to cap the rises in November 2009. The companies say the hikes will fund billions of pounds of investment as well as covering higher energy costs, tighter environmental and water quality standards, and work needed to protect assets from natural disasters such as flooding.

Consumer groups fear that some customers will be unable to afford such large bills during a squeeze on household budgets.

In the past year, energy bills have risen by 40 per cent and further rises are expected this winter. Mortgage rates have also risen, while water and council tax bills have jumped by four and six per cent respectively. Unleaded petrol is up 19 per cent. Shopping website mysupermarket.co.uk's basket of 24 grocery items has jumped by 27 per cent in the past 12 months, it said yesterday.

Ofwat figures show that water bills have almost trebled since privatisation in 1989, up 260 per cent from £120 to £312. At the same time, the profits of the companies have leapt – up by 28 per cent in the past five years alone, from £1.95bn in 2002/03 for the top 10 companies to £2.59bn in 2006/07.

Thames Water, which supplies 13 million customers across London and south east England, plans to pump £6.5bn into water and sewerage services. Justifying the price rises, chief executive, David Owens, said: "Thames' customers have enjoyed the lowest bills in the industry for many years, but we now need to make essential investment to secure their services for the future."

The Consumer Council for Water said that research showed most customers were not willing to pay inflation-busting price increases, while also seeking reduced leakage.

In a statement, the watchdog said: "At first glance, some water companies, such as Dwr Cymru Welsh Water, Wessex Water, Severn Trent Water, and Yorkshire Water seem to have taken this to heart and said that they can continue to meet their obligations to deliver a safe, reliable service, provide further benefits to consumers, and do this without raising prices much above the rate of inflation, if at all.

"Other water companies such as Southern Water, Sutton and East Surrey, Bristol Water, South East Water, Folkestone and Dover, and Cambridge Water, have proposed bill increases of over 20 per cent above the rate of inflation."

The statement added: "The Consumer Council for Water believes that many customers will be concerned with price rises on this scale, especially in light of other household bill increases. Customers will want to see the justification for any proposed price increases, to understand exactly what they will get for the extra money."

Ofwat has said customers with low water usage would save money by having a meter fitted.

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