Ofwat confirms rising water bills

Wednesday, 5 November 2003 12:00 AM

The water industry regulator, Ofwat, has confirmed that the bills of customers of Northumbrian and United Utilities are to rise next year.

The Office of Water Services confirmed that the bills of Northumbrian's customers would rise by £26 next year and United Utilities' bills would rise by £9 next year.

The average water bill for Northumbrian's customers is expected to stand at £325 in April 2004. For United Utilities' customers, their average water bill will be £272.

In August, the companies presented draft business plans to the regulator claiming they needed to increase customers bills to cover their increased costs.

The companies claimed that increasing customer debt, which has led to higher-debt collection costs and loss of revenue; changes to requirements for monitoring water quality; and measures to ensure the continued protection of assets led to higher costs. United Utilities also claimed that it was facing higher construction costs and required extra revenues.

Director General of Water Services, Philip Fletcher, stated: "After looking very closely at the two companies' claims, we have concluded that we need to raise their price limits. The extra costs they face are substantial enough to require an increase in bills.

"I regret the need for an increase, but I have a responsibility to ensure that efficient water companies can finance the services they provide to customers."

However, Ofwat stressed that, despite the increases, the companies' customers would be paying less than a few years ago. The regulator highlighted that Northumbrian's customers would be paying on average £38 less in their bills in April 2004, before inflation, than they were paying five years ago. Whilst United Utilities' customers would be paying, on average, the same as they were in 1999.

United Utilities Chief Executive, John Roberts commented: "We welcome Ofwat's decision to recognise additional costs which were unforeseen when prices were set at the last Periodic Review.

"Allowing for this determination, average prices in the North West, in real terms, will still be 7 per cent lower on average per annum during 2000-05 compared to 1999/2000. This is despite the £3 billion capital investment programme to improve environmental and water quality standards that we have been required to deliver."

Ofwat is to run a consultation on the proposed price increases and this gives groups such as consumer organisations the opportunity to protest about the rises. Complaints have been levied at water companies in the past that they seek to develop the most expensive investment plans to justify price increases to consumers and improve their standing among shareholders.

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