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Water bills set to rise

December 15, 2008 at 5:07 pm

OFWAT, the water industry regulator, has announced plans by water companies across England and Wales to hike their bills by, on average, 9% above the predicted inflation rate between 2010 and 2015. That would bring the average household bill to approximately £350 per year.

Every five years, OFWAT sets price limits for water companies in England and Wales in its periodic review. Consultations for the next review (PR09), which is due in November 2009, are well underway and there is increasing pressure on OFWAT to allow early changes to the prices set for individual water companies in the 2004 periodic review (PR04).

OFWAT has just turned down a request from Sutton and East Surrey Water to hike bills by 10.2% above the inflation rate as early as next April. The utility company, which services the London boroughs of Merton, Sutton and Croydon, as well as parts of Kent, Surrey and Sussex, cited climatic events, such as the 2006 drought and the heavy rains the following year, as well as higher energy prices, to justify its request.

More generally, water companies blamed higher running costs, the effects of climate change and the necessary investments in infrastructure in the aftermath of floods for the need to raise prices. Bristol Water, for instance, is proposing in its draft business plan a rise in price of 26% above the predicted level of inflation.

In a time of soaring fuel bills and global economic uncertainty, this will come as yet another body blow for the average householder. The Consumer Council for Water, while calling on OFWAT to hold firm against the water companies, is urging consumers to take simple steps to save on water use, such as switching from baths to showers, installing dual flushes in toilets, ensuring dishwashers and washing machines are full before using them and recycling grey water for gardening.

According to the Environment Agency, generalising the use of water meters, which ensure that consumers only pay for the amount they actually use, remains the most efficient way to reduce water usage. Recent research shows that a metered household uses on average 10 to 15% less water than an unmetered one. With only one home in three fitted with a water meter at the present time, the margin for improvement and the potential savings are huge. The Environment Agency has set out to invert this tendency by 2015, particularly in water stressed areas.

Contrary to common belief, rainwater is much scarcer in the UK than in other European countries, in which the use of water meters is the norm. The UK only has 1334 m³ (cubic meters of water) per person per year compared to over 3000 m³ in France and 2700m³ in Spain and Italy. The South East is particularly water stressed, with hardly 263 m³ per person per year, due to the high density of population.

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