Water suppliers push for increase in bills

More than 13 million households face the prospect of higher water bills after the industry regulator Ofwat said it was considering whether to allow three big suppliers to increase their charges.

North West Water, which is owned by United Utilities, Anglian Water and Northumbrian Water have applied for extra price rises from next April to cover cost increases in their businesses.

In the case of Anglian, which has 6 million customers, the average water bill for 2004-05 would rise by about 4 per cent, or £11, to £290 if Ofwat allows the cost increases to be passed on in full.

United Utilities, which has 4.3 million water customers and Northumbrian, which has 3 million customers, declined to say what level of price increases they were seeking.

However, Dresdner Kleinwort Wasserstein calculated North West Water's prices could rise by 4 per cent on top of the 4.5 per cent price hike in the pipeline from next April. This would lift the average North West Water bill from £245 to £266. Northumbrian's prices are due to remain frozen at an average of £206 under the regulator's current price controls. DKW said it was sceptical of Northumbrian getting a price increase.

In order to qualify for what is known as an "interim determination" from Ofwat, the increase in costs a supplier is facing must equal more than 10 per cent of turnover..

Anglian and North West Water say they have been hit by higher construction costs, increased bad debts, and higher expenditure on sewers.

Northumbrian, as well as seeking to cover increased bad debts, has applied for a further price review on the grounds that actual revenues have been lower than anticipated because of the closure of big industrial plants in the region by firms such as Siemens and Fujitsu.

Philip Fletcher, the director general of Ofwat, said any cost increases the regulator agreed to would have to be offset against additional cost savings they may have made.

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