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Water rate 'postcode lottery' hangs consumers out to dry

1st April 2010 Print

Cash strapped consumers will today be breathing a small sigh of relief after news that water bills will be falling this year by 0.76% or £2.58 on average. The amount may seem like a drop in the ocean, but will still be a welcome respite for stretched household budgets. However, not all consumers will be getting a reduction, warns uSwitch.com, the independent price comparison and switching service - in some areas people will be seeing their bills going up instead.

This postcode lottery on water prices means that while some households will effectively be enjoying a price cut this year, others will be seeing a price hike. Households served by Northumbrian Water are set to be hit hardest with a £11 or 3.5% increase. In contrast, United Utilities customers will get to enjoy the biggest reduction of £16 or 4.3%.

The average unmetered bill will now be £361 a year, while the average metered bill will work out at £305 a year. This means that households switching to a water meter could save £56 a year on average as a result. According to Ofwat, 35% of households are now on a meter and it expects this to increase to 38% by March 2011. Unlike other utilities such as energy, consumers can not choose water and sewerage companies so moving to a water meter offers the only opportunity to cut costs.

Ann Robinson, Director of Consumer Policy at uSwitch.com, says: "The small drop in average water bills masks the fact that in some areas bills are actually going to go up. Consumers face a postcode lottery and this means that there will be winners and losers depending on what their local water supplier has agreed with Ofwat. Unfortunately, because consumers are obliged to be with their local supplier they can be held to ransom in this way - they cannot switch to a company offering better value in their area.

"One way that households can keep their bills down is by installing a water meter. On average, unmetered households are paying £361 a year for water and sewerage compared with just £305 for those on a meter. This is a £56 a year saving, but currently just 35% of households have a water meter.

"As a rule of thumb, a water meter should save money if there are more bedrooms than people in a household. But if you do switch to a meter and then find it doesn't save you money you can always come back off it again, as long as you do so within a year. More importantly, households that have been advised by their water company that they can't have a meter installed can still request to have their charges assessed at a metered rate, which again means that they should see a reduction in their bill. Consumers can also use the free uSwitch.com water calculator to find out whether switching to a water meter could save them money."

Pros and cons of installing water meters:

If you are not on a water meter there is no way of reducing your bills as you pay a set amount depending on the rateable value of your property. If you are on a meter you pay for what you use, therefore cutting back on the amount you use will save you money.

If you switch to a water meter and find that you are not saving money or are unhappy with the change, you can switch back to unmeasured charging within 12 months.

The general rule of thumb: if there are less people in your house than bedrooms (e.g. two people living in a four bedroom family home) then you could save money by switching to a water meter.

For larger families, being on a water meter may not be cost effective as your water consumption may be high. Customers living in compulsory metering areas will need support in regulating and reducing consumption.