Wessex to abolish standing charges

Click to follow
The Independent Online
Wessex Water yesterday become the first water company to announce the phased abolition of standing charges for domestic customers in an attempt to encourage use of water meters. But the company refused to follow others in the sector in making direct payments to customers as it announced an effective buy-back of 17 per cent of its shares and a 12 per cent rise in dividends.

In the next five years, standing charges amounting to pounds 25 for water services and pounds 24 for sewerage will end for about 900,000 customers currently charged on the basis of rateable values of their properties - 90 per cent of those in the Wessex area. Instead, the approximately 40 per cent of customers in large properties face rises in bills of up to 6 per cent above inflation, making it cheaper for them to switch to meters, according to Wessex's chief executive, Colin Skellett.

Abolition of fixed charges would leave the remainder better off, he said, with their bills expected to rise at less than the rate of inflation.

The news came as Wessex announced that dividends for last year would rise from 11.75p to 13.2p, and hinted that future payments could be accelerated by the buy-back plans. Using a similar mechanism to that proposed by Welsh Water and the East Midlands and Yorkshire regional electricity companies, Bristol-based Wessex is planning a five-for-six consolidation of its existing ordinary share capital following a one-for-one issue of preference shares redeemablefrom 1998 at a total cost of pounds 154m.

That figure compares with an estimated pounds 25m the company plans to spend on customer improvements. Mr Skellett defended the decision not to make direct payments to customers, saying last year's price review by the water regulator, Ian Byatt, took account of efficiency savings on Wessex's capital programme.

Pre-tax profits for the year to March rose from pounds 103m to pounds 117m, with earnings per share coming in at 39.4p.