05.02.10 Thames Water backs out of Ofwat confrontation
Thames Water, the biggest water company in the UK, has agreed to a settlement from Ofwat to which it had put up strong resistance over the last few months. It involves the amount by which it is able to increase customer bills over the next five years.
Initially, Thames Water was asking to be allowed to raise bills by 17% before inflation from the period between 2010 and 2015. Ofwat rejected this, stating that it would have to freeze the bills over this period.
This was unacceptable for Thames Water, and a period of lobbying followed where it attempted to get the limit increased. Finally, Ofwat relented slightly in November, but still limited the bill increases to 3%, much lower than Thames Water had hoped for.
Thames Water then had to decide whether to take its case to the Competition Commission to try and get the limits increased further. However, the recent announcement confirms that it will not be taking this measure and will accept the 3% rise in bills.
Thames Water serves 8.5 million customers in London and the Thames Valley. It is keen to improve its network over the next five years, including making huge improvements to the ancient and broken pipes, and it is planning to spend about £5 billion on this, even though it had originally planned £5.5 billion.
Other works that it is planning are the construction of a tunnel which will reduce the overflow from the sewerage system and lead to lower levels of pollution in the Thames. It is also planning to make improvements to five sewage works in London, and wants to install 370,000 water meters in its customers’ homes.
Although Thames Water will not be contesting the limits, Bristol Water has not accepted Ofwat’s decision and has appealed to the Competition Commission. It wants a big hike in prices but has been limited to 7%.
29.01.10 Jobs could go at United Utilities
United Utilities, one of the major water firms in the country, has announced that it could be getting rid of between 10% and 20% of its workforce in the near future. This would lead to up to 1,800 job cuts, as reported by The Sunday Telegraph.
This news comes following new pricing guidelines that have been introduced by the regulator, Ofwat. It has decided that water companies must reduce their customer bills by 0.4% between 2011 and 2015, leading United Utilities to consider a cost-cutting programme.
The Warrington-based company currently employs 9,000 staff, but if it needs to cut costs then it is not afraid to reduce its workforce in order to meet its targets. It had previously asked Ofwat for an investment programme of £4 billion, but the regulator only agreed to £3.6 billion in the end.
Ofwat says that its plans will see average bills of 10% lower than those proposed by the water companies, which is certainly good news for customers but will unfortunately lead to job cuts.
It is not the first time that the water company has been linked with job cuts in recent months. Last year, unions claimed that it was going to cut up to 260 jobs from the water pipes staff sector.
The Sunday Telegraph quotes Barry Clarke from Water UK as saying that the Ofwat report was a “tough settlement”, even though it was more lenient than originally thought. He said that the plan would lead to companies taking “tough choices”.
United Utilities is expected to agree to Ofwat’s terms very shortly.
08.01.10 Thames Water turns human waste into energy
Renewable energy is all the rage at the moment, and now Thames Water has revealed a surprising strategy for saving the environment. It has just announced that it has managed to save £15 million on its annual fuel bills through converting human waste into energy.
The figures are quite extraordinary, especially as many people are unaware that energy can even be generated in such a way. The huge amount of the energy source that Thames Water has at its disposal makes it particularly well suited to take advantage of it. Indeed, it managed to generate 14% of its energy needs for the last year through human waste alone.
The water company deals with the disposal of waste from its 13.6 million customers. One method of generating power involves drying the sewage to form blocks and then burning them. The other method involves breaking the waste down using anaerobic digestion, producing methane which can then be burnt.
Once it has been used for producing power, the sewage sludge can then be used by farmers and developers as fertiliser and landscaping material, so nothing goes to waste. Last year 100% of its sewage sludge was put to use and nothing was sent to landfill.
The practice of turning waste into power is taking place at a number of its plants, and the company is aiming to cut its greenhouse gas emissions by 20% by 2020.
The climate change strategy manager at Thames Water, Dr Keith Colquhoun, said that they have cut emissions “by 5% in the past two years, despite grid energy becoming more carbon-intensive”.
18.12.09 Report recommends more homeowners use water meters
A new approach to reducing the amount of water that England uses has been recommended in a report for the Department of the Environment and Welsh Assembly. It suggests that many more homes should have water meters installed, as they make homeowners more aware of how much water they are really using, and therefore better at saving it.
35% of people already use water meters, but the majority use the rateable value (RV) method of charging. The report asserted that the RV system was “out of date” and did not encourage homeowners to save water.
Typically 10% to 15% less water is used in houses with water meters than in those without. Because they only measure the volume of water used, it is seen as a fair approach to charging. Like gas meters, the charge is worked out by checking the reading on the meter.
It is recommended that by 2020 80% of homeowners in England use water meters. It is not recommended that they be made mandatory, however.
The meters are currently provided free of charge by the water companies, but cost approximately £200 to fit.
According to the Environment Agency, water shortages are a serious issue in many areas across England. Around 25 million people live in a region where there is less obtainable water per person than in Morocco or Spain. The UK also has fewer water meters than the majority of other economically developed countries.
The report also recommends that the Government helps low-income households to decide whether or not to switch over, as bills are often higher in homes with meters.
While the environmental benefits of water meters are clear, there are potential drawbacks for the individual. The Government is therefore being cautious. Huw Irranca-Davies, Environment Minister, said that the suggestions would be considered “carefully”, and that there would be “full public consultation".
Meanwhile, there are many simple ways in which we can lower the amount of water we use. We can mend dripping taps, forego our garden hoses, choose to have a shower (not a bath) for a maximum of five minutes, and use a standard shower rather than a less cost-effective power shower.
11.12.09 Water bill reduction smaller than expected
As part of its five-yearly price review, the water industry regulator, Ofwat, has announced that the average reduction in household water bills in England and Wales for the next five years will be £3 (a one per cent reduction) rather than its previous estimate of £14. The average annual water bill for the period 2010 to 2015 will be £340.
Not all parts of the country will see a reduction in their water bills and there are large regional differences between water suppliers. Customers of Essex and Suffolk Water, Bristol Water, Southern Water and Thames Water will all see their bills rise. The worst hit households will be those without a water meter. Some of these bills will rise by as much as 29 per cent. By the time the current five-year review period comes to an end in 2015 Wessex Water will have the highest bills with an average of £424 per home per year. Severn Trent Water will be the cheapest at £292 on average.
The water companies had lobbied to put up bills by 3 per cent and they say that they may be forced now to reduce the work on maintenance of the water supply. The GMB Union is concerned that the new price structure may mean that some water companies will look to outsource jobs and cut the UK workforce. The Consumer Council for Water, on the other hand, is concerned that some customers will now face higher bills. The Council also plans to challenge Ofwat over what it sees as unfair increases to households that have an unmetered water supply.
