Water company challenges price curb

NORTH West Water yesterday threw out a demand by Ofwat, the water industry watchdog, to curb its price increases for next year.

The company is the first to challenge Ofwat, which has asked 19 utilities to restrict their price rises next year. Under a price formula set before privatisation, North West was allowed to increase prices by 5 per cent above inflation annually.

But earlier this month, it was asked to raise them by just 3 per cent above inflation. Ofwat's move was prompted by a substantial savings made by the companies in their capital spending due to a fall in construction costs.

However, North West has made a counter proposal to Ofwat in which it wants the full increase because it faces additional pounds 430m costs not envisaged before its sell- off. The extra spending will go on the clean-up of the Mersey estuary and beaches along the Fylde and Cumbrian coasts, it said. Ofwat will examine the counter proposal over the next few weeks.