Inflation-busting water bill rises revealed

Households today learned of proposed above-inflation water bill hikes after firms submitted their draft business plans to regulator Ofwat.

The UK's largest water and wastewater services company, Thames Water, announced it expects to raise bills by around 3%, excluding annual inflation, each year between 2010 and 2015.

United Utilities, which manages water and wastewater distribution in the North West of England, said customers were set to see their average bills increase slightly more than 2% a year during the five-year period, with inflation also stripped out.

Severn Trent, which has more than eight million customers, said its bills would rise "only slightly above inflation".

The Consumer Council for Water warned that Thames Water had proposed an average bill increase of 16% above the rate of inflation by 2015.

David Bland, chairman of the Consumer Council for Water, London and South East, said: "The proposal of high price increases and more water meters, combined with the rising cost of energy bills, could hurt many households.

"London has some of the country's poorest areas, and the Government needs to seriously consider ways to help those who cannot afford to pay for their water."

All of the UK's water companies are required to submit their draft investment plans for Ofwat's scrutiny, including how much they expect customers to pay.

In February consumers across the country learned their water bills will increase by an average 5.8% this year, with households in some areas seeing their annual bills soar by an inflation-busting 8%.

Thames Water and United Utilities revealed the bill increases as they outlined aims for multi-billion pound investments in water and sewerage services as well as cost-cutting schemes to drive efficiency.

Thames Water 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."

Severn Trent said customer priorities were a more resilient water supply network, stable bills and a smaller carbon footprint.

Yorkshire Water said it would deliver a £1.9 billion investment in return for customers paying less than £2 more a year over the next five years.

But households in Wales are set to avoid above-inflation rises after Welsh Water said its customers would not see annual tariffs increase in "real" terms, when inflation is stripped out.

The group, which is the sixth largest water company in England and Wales, said bills would remain at around £390 a year before adding on inflation under its £1.5 billion investment programme.

However, the Glas Cymru-owned firm's typical household bill is already around 15% higher than the UK average.

Richard Laikin, a director in Ernst & Young's water team, said: "Consumers are likely to see significantly different bills depending on whether they are metered or not, with unmetered customers being harder hit than metered customers.

"Against this background and in line with general economic trends, increased problems with customer debt will emerge as an issue for the water industry.

"While we expect to see the many water companies increase their funding for schemes to assist vulnerable customers who will have difficulty meeting these proposed increases, they are also likely to increase their efforts to collect from customers who can pay but won't and to target unbilled properties."

The Government's conservation agency, Natural England, called on water companies to make a major shift in planning to protect the natural environment.

Natural England chief executive Helen Phillips said: "The review of water company prices presents a real opportunity for water companies to deliver environmental improvements to benefit people and wildlife.

"They need to do more to provide sustainable, high-quality water supplies that are more resilient to drought and that safeguard wildlife and the natural environment."