Water bills set to rise on average by 7%

Household budgets are set to be stretched even further when planned increases to water bills come into effect on 1st April, taking the average household bill for 2007 to £312, according to uSwitch.com. Water customers in England and Wales will see their bills rise by an average of 7% in April.

The increases are being implemented despite profits of £2.6 billion enjoyed by the water companies in 2005/2006 - a year that consumers will best remember for water shortages, drought warnings and hosepipe bans.

A number of water restrictions were in place throughout 2006. Since 3rd April 2006 almost 6.2 million households – or 13 million people, have been subject to water restrictions by water companies. Yet this limited service was not enough to prevent companies to expect consumers to pay more. Ofwat, the regulator, sanctioned the proposed prices increases in 2005 and now 23 of the 24 water companies across the UK are opting to implement them.

South West Water is taking full advantage by increasing its prices by over 10%. This means that it will continue to be the most expensive supplier with an annual water and sewerage bill of £483 - £208 more expensive than the cheapest supplier, Thames Water. Only Tendring Hundred is choosing to lower its prices, by 2.8%.

But there is worse news ahead for Thames Water customers. Their bills could increase by up to 50% in the next decade if plans for a new £2 billion sewerage system for London go ahead. According to Thames Water, bills could go up by £37 a year to pay for the new system. However Ofwat has expressed doubts over these figures, indicating that the cost to Londoners could be higher.

Despite the current increase in prices, 4 out of 22 companies failed to meet or out-perform their leakage targets, the worst culprit being Thames Water who failed to meet its leakage targets for the 3rd year in succession last year, and accounted for almost a quarter of all water lost across England and Wales in 2005-06.

Even with a vastly disrupted service throughout 2006 - water companies were deemed by Ofwat to have delivered an acceptable or good level of service in line with the expectations set out within price limits in 2005-06.

Ann Robinson, Director of Consumer Policy at uSwitch.com says: “Householders across the UK will quite rightly be wondering why they are being expected to pay even more for a service that is clearly substandard. The average household in England and Wales is now looking at having to spend, on average, over £100 a month just to provide the essentials of heating, light and water.

“The water companies have known for years that they are sailing a leaky ship, but have done little more than plug the holes with their fingers. Now customers are being forced to bail them out – if this isn’t to be good money after bad then the water industry needs to make a concerted and cohesive effort to get shipshape, watertight and to plug the leaks once and for all.”

“If the additional revenue is to be invested alongside the companies’ profits in patching together our antiquated pipes and plugging the leaks then consumers would probably be fairly supportive, but while they can see their money going down the drain they will resent paying more.

“Water companies are currently wasting approximately 3.6 billion litres of water every day and regularly fall short of meeting their leakage targets. According to Ofwat it will cost in excess of £17 billion over four years to patch up the pipes that currently transport our water supply.

“The water companies have made full use of the price rise limits set by Ofwat, with only 1 out of the 24 water companies choosing not to impose the maximum increase available to them. While this may be good news for their shareholders, who can look forward to an increase in last year’s industry profits of over £2 billion, consumers will have every right to feel aggrieved. “

The good news is that all hosepipe and sprinkler bans have been lifted, according to the Environment Agency. The last water company to lift its ban was Mid Kent Water on 28th February 2007. Overall, as at January this year, water storage in England and Wales rose by 3% to 95%. Nine out of 28 reservoirs are full, with a further 10 at 95% to 99% of full capacity.

Water meter usage in England and Wales is still highly variable across the regions. Approximately 30% of homes in the UK are currently on a water meter, but take up falls as low as 6% of Portsmouth Water customers and rises to as high as 63% of Tendring Hundred Water customers.

In 2006 the number of properties suffering inadequate water pressure fell from 7,400 to 6,100, mainly due to the operational or asset improvements by those companies with the poorest service. Thames water currently has the highest number of properties with inadequate pressure – 1,338 – while Bournemouth and West Hampshire and Tendring Hundred both have the least – with zero households experiencing problems.

Robinson concludes: “The water companies response to those people concerned about how they can reduce their water bill is to encourage them to switch to a metered supply, so that they only pay for the water they actually use. While water meters may not result in cheaper bills for everyone, there are many households who would benefit by having one installed. We would encourage anyone who is unsure about whether they would be better off with a water meter to use the uSwitch.com water calculator. They could find themselves saving up to £125 a year by switching.

“One thing is certain for all customers, regardless of whether their water supply is metered or not – they should think about the water they use, and look to conserve water wherever possible. It is no longer a resource that we should take for granted.”

Pros and cons of installing water meters:

If you are not on a water meter there is no way of reducing your bills. You pay a set amount depending on the rateable value of your property. If you switch to a meter then by reducing your water consumption you could save money.

If you switch to a water meter and find that you are not saving money or are not happy 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, it may be difficult to regulate water consumption and therefore, a meter may not save the family money. Customers living in compulsory metering areas will need support in regulating and reducing consumption.