End of the drought for the UK

March 16, 2007 at 4:06 pm

Mid Kent Water lifted its hosepipe ban on the 28th February meaning that there are no longer any active water restrictions in the UK. Last year saw the UK experience the worst drought in 100 years resulting in hosepipe bans and drought orders nationwide, but with rainfall at above average in many areas it looks like the UK drought has finally come to an end.

The Environment Agency classed February as a wet month with the Thames Valley receiving twice the average amount of rainfall and south-east England showing 80% above average. Rivers and groundwater levels are back to normal everywhere except for Oxfordshire and north-west Kent where they are recuperating fast. Reservoirs are either full or nearly full, with the London supplies stabilising at 94%. This is all due to the fact that we have now had a wetter than average winter, following on from two dry ones in the years previous.

It seems that savvy homeowners are keen to take advantage of the freak rainfall, as home improvements retailer B&Q report record sales of water butts. Apparently sales are three times what they were at the same time last year, showing an admirable increase in consumer water usage awareness.

Preparing for the future by taking advantage of the present seems to be a wise maxim to follow, as several separate official entities have issued conflicting statements about this years water prospects in the last few weeks. While Industry body Water UK cast doubt on the need for any water restriction in 2007, quoting the current high levels of underground aquifiers and reservoirs as reason, the GMB union, pressing for re-nationalisation of the water services said that summer drought was inevitable unless the Government took decisive action. Meanwhile the official line from the Environment Agency was tentative, suggesting that water restrictions should not be necessary as long as healthy rainfall continues towards summer. They pointed out however, that should the rest of winter dry up and the start of spring follow suit, then water restrictions may have to be re-introduced, so we all need to be aware of our wastage. Finally the Met office are playing their cards to close to their chest and will not be issuing a summer forecast until April.

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Water bills set to rise!

March 10, 2007 at 4:05 am

The Water Services Regulation Authority (Ofwat) is the economic regulator of the water and sewerage industry in England and Wales. “Our role is to seek value for consumers” the Ofwat website states boldly, placing itself firmly in the role of mediator between water companies and their customers. Ofwat functions in various capacities: regulating prices, improving water and sewerage services and seeking to encourage healthy competition between providers. So far so good. However, the announcement on the 1st March that average domestic bills will rise again this year by more than twice the inflation rate, coupled with last years comparable double-digit rise, has many critics talking.

As a collective, water companies made an estimated £3bn last year, but consumer groups have argued that promised improvements in services and infrastructure have seen little of this massive profit. The rate of return which water companies could make was set by Ofwat at 5.1pc as part of their five-yearly review for 2004-2009, a figure much higher than many other regulated sectors. As a direct result of this, shares in water companies rose considerably, with investors viewing the industry as a stable and low-risk option for the following few years. However critics have pointed out that the massive profits thus incurred were not spent where they were most needed. An official at the Consumer Council for water is quoted as admitting “The water companies are demonstrably not doing what they should be doing, in that they have invested a lot less in the infrastructure than Ofwat actually allowed. They haven’t actually been doing what they should have done in return for the money that customers have provided.” In short, the customers are paying more, the water companies are making more, but service and standards have seen little improvement.

Between 2005 and 2006 water companies were expected to invest £4.3bn under the Ofwat settlement, but in fact the figure was closer to £3.4bn. While some investment delay was legitimate and unavoidable (Thames Water’s spending included finance for new plant at Beckton, for which planning permission was delayed) in other cases Ofwat was obliged to force Thames to complete extra work in order to meet leakage repair targets, while Severn Trent and southern were fined for failures in customer service standards. With prices rising year on year and little significant improvement of service or standards, customers may naturally question the legitimacy of their rising water bills.

Colin Skellett, chairman of Wessex Water, is however adamant that recent rises in price are legitimate and necessary. “The sole reason for the price increase is to pay for the investment programmes” he explained “As long as there are these large investment programmes, particularly the requirements coming out of Europe for higher and higher [environmental] standards, bills will continue to rise.” All the evidence suggests that customers shouldn’t expect the price of water to plateau, much less fall in the future, with the latest rise in bills set to indicate a trend for the coming years.

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