Some bills could rise by up to 75%

WATER COMPANIES are warning of large rises in bills by the end of the decade so that they can meet legal, environmental and quality standards, and improve their services.

The warnings come in leaflets being sent to customers after concern by Ofwat, the industry's watchdog, that ever- improving standards are too costly and may be unjustified.

Yorkshire Water said that, by 2000, average household bills will rise by between 40 per cent and 75 per cent in real terms from today's level of pounds 182. The minimum 40 per cent rise is needed to meet current regulations set by the European Commission. But the rules are expected to be tightened, so bills may increase even more.

Tony Ward, managing director of Yorkshire's Water Services, said: 'Over the past two years we have made significant improvements in quality . . . Standards are now at a high level and I believe that we are reaching the point of diminishing returns.'

Yesterday, Anglian Water predicted increases in water charges of at least 20 per cent and increases in sewage charges of at least 35 per cent by 2000. Meanwhile, Thames Water has calculated that bills could almost treble to an average pounds 440 by the end of the decade, from pounds 152 today, and that even meeting minimum legal regulations would force average bills up to pounds 200.

Ofwat has demanded that the companies canvass customers on their views as to whether increases are wanted or justified. Ian Byatt, director- general of Ofwat, believes quality standards for water and sewage have sometimes been set in Brussels without being properly costed. He also questions whether they are always scientifically justified.

Taking the UK as a whole, Ofwat believes water bills could rise to pounds 250 by the end of the decade, compared with pounds 169 last year. It also questions the entire basis of quality and environmental standards in setting new price control formulae for the water companies, to take effect in 1995.

Under the current regime, water companies can increase their prices every year by inflation plus a factor - called K - which differs for each company and depends on the investment required to meet standards. The average K is five percentage points. Mr Byatt said: 'I do not believe 5 per cent real growth (in bills) is sustainable. It is not an escalator that the public is prepared to ride.'