Watchdog rules out new cuts in water charges

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The Independent Online

Industrial Correspondent

Fresh cuts in water bills over the next five years have been ruled out by the industry watchdog, Ofwat, in spite of the furore over supply problems in the hot spell. Ofwat said that there was "no question of revisiting" price controls agreed last year but that it may seek compensation for customers over the drought.

Ian Byatt, director general of Ofwat, is taking evidence from his regional customer services committees about levels of service during the hot spell and is expected to report in the autumn. Many people have faced hosepipe bans and falling water pressure. The companies have also come under fire over levels of leakage, which can be as high as 30 per cent.

Ofwat said it would investigate what the companies have done to manage demand, stem leaks and invest in metering. But a spokeswoman said that Ofwat is more interested in results than in what the companies have spent. She said that where they have failed to meet their obligations and refuse to do so, Mr Byatt can issue an enforcement order. Ultimately, he can ask the High Court to appoint an administrator to replace the management board.

The controversy continued yesterday with South West Water seeking permission for "drought orders" allowing it to ban use of water for non-essential purposes. A hearing on the orders, which could stop car washing, filling of swimming pools and watering by hosepipe, began in Penzance, Cornwall, yesterday.

So far only Yorkshire Water has been granted drought orders by the Department of the Environment. Yorkshire triggered off another row by suggesting to large customers that they might cut production or shift it to other factories to reduce demand. Ofwat said that as far as non-domestic supplies were concerned, the issue was between the water companies and their customers. If a firm feels that a contract has been breached it can appeal.

Brian Wilson, Labour's trade and industry spokesman, said that the drought is showing up ever more weaknesses in the regime governing the industry. "Excess profit has been taken out at the expense of necessary investment. That must now be considered intolerable in the light of the summer experience," he said.

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