Water industry thwarted over rise in bills

Click to follow
The Independent Online

Water bills in England and Wales should rise by an average 13 per cent over the next five years - less than half what the industry wanted, the water regulator announced today.

Water bills in England and Wales should rise by an average 13 per cent over the next five years - less than half what the industry wanted, the water regulator announced today.

Ofwat said average household bills should increase by £33 between 2005 and 2010, from £249 to £282.

Water companies had wanted to raise bills by an average of 29 per cent - or £70 - to fund almost £22 billion of maintenance and improvement work.

Ofwat's proposed price limits restrict increases to 3.1% a year before inflation -half the figure sought by water companies.

It says bills should be allowed to rise by 7.6% in the first 12 months, starting on April 1 next year, to reflect a build-up of costs for companies. Suppliers had asked for a rise of 13.4%.

Philip Fletcher, director general of water services, said: "We believe these decisions are fair to customers and the companies, and will benefit the environment.

"They will enable efficient companies to carry out and finance their services and meet new obligations.

"After close scrutiny of the companies' plans, we consider that they can carry out their essential functions over the next five years for around half the average increase in cost to customers which the companies proposed."

The draft price limits announced today will now go to consultation.

The Government will then have an input before Ofwat gives its final answer in December.

Maurice Terry, chairman of WaterVoice, the watchdog for water customers, said: "This is much better news than we had expected and certainly better news than we had feared.

"It is much lower than the industry had asked for but the devil will be in the detail.

"We will need to look carefully to see that customer priorities in market research have been met. These are safe, reliable and continuous supply of drinking water, reliable removal of sewage and a system that doesn't result in houses flooding.

"Even with price rises lower than companies had sought, they are still very big numbers.

"There is a big debt problem in the industry and affordability for customers on lower incomes and that will not be helped by increases of 13% over five years."



Comments