Page last updated at 17:45 GMT, Monday, 11 August 2008 18:45 UK

Water companies plan price rises

Thames Water pipes
Thames Water has a 6.5bn investment plan

Water companies in England and Wales have been telling the regulator Ofwat how much they want to increase bills for the five years from 2010.

Thames Water is expecting one of the highest rises of about 3% a year above inflation. United Utilities plans to raise prices by 2.7% above inflation.

Northumbrian's figure will be 1.3% and Anglian Water sees a 0.7% rise.

Severn Trent asked for rises "only slightly above inflation" while Welsh Water's will not rise above inflation.

Overall the firms aim to invest 27bn during the period to ensure the "right balance between supply and demand", said Water UK, which represents UK water and wastewater service providers.

The average bill in 2015 is expected to be 350, with bills increasing 30 over the five-year period, it said.

We have to make sure that our infrastructure, our networks, our treatment works are all ready to cope with [an] influx of people
Peter Antolik
Thames Water director of regulation

"The combined industry programme is a major and timely investment in national infrastructure that everyone depends on and we know will be severely challenged by climate change," said Pamela Taylor, Water UK's chief executive.

Major investments

Thames Water, the UK's biggest water company, said its 6.5bn investment plan would be the largest spending programme carried out by a UK water company.

The firm said its customers had "enjoyed the lowest bills in the industry for many years", and while there would be "an inevitable impact on bills", it would try to keep charges below the industry average.

Peter Antolik, Thames Water's director of regulation, told BBC Radio 4's Today programme that the money was vital to improve London's ageing water system.

Tap filling glass
All water firms are submitting draft plans to Ofwat

"We also have, it should be remembered, a growing population in London and the south east," he said.

"We have, we estimate, about 380,000 more people coming in to the region and we have to make sure that our infrastructure, our networks, our treatment works are all ready to cope with that influx of people."

Tackling floods

Welsh Water announced plans to invest 1.5bn, or 1,000 per household, on average during the period.

The money will be used to protect the quality of the water, support new infrastructure, improve water treatments and reduce the risk of repeat sewer flooding to properties.

The firm's average household bill will be 390 before inflation.

United Utilities said its capital investment for the period would be 4bn, of which 1.6bn would be for water services and 2.4bn would be for water waste services.

While the firm said it would increase prices by 2.7%, bills were tipped to rise by 2.1% on average thanks to greater use of water meters.

ANNUAL WATER PRICE RISES 2010-2015

Thames Water - 3% above inflation
United Utilities - 2.7% above inflation
Northumbrian Water - 1.3% above inflation
Severn Trent - "slightly above inflation"
Anglian Water - 0.7% above inflation
Welsh Water - at inflation only

However it added that it would reassess its costs when it submits its final plan to Ofwat in 2009 "in light of financial market conditions at that time".

Severn Trent said it would invest 3.2bn to deliver improved services, reinforce the network following last summer's flooding and reduce sewer flooding. It also said the money would be used for environmental improvements.

Tony Ballance, the firm's director of regulation and competition, said: "We believe our draft plan provides the best balance between improved services, the needs of the water environment and a cost that customers are willing to pay".

Anglian Water said it would increase the average household bill from 360 in 2010 to 373 in 2015, an annual rise of 0.7%.

Customer concerns

Tony Smith, chief executive of the Consumer Council for Water said the customers were giving the message that they want the service to be maintained.

"They want a safe, reliable water supply, they want an effective sewerage system but above all, they want prices not to go above inflation."

The watchdog will decide whether to allow above-inflation price rises at a time when customers are being hit by other rising bills.

"This is the start of the process of making decisions on how each company proposes to provide value-for-money, long-term, high-quality water services to its customers," said Ofwat chief executive Regina Finn.

"We will now examine draft business plans in detail, checking the proposed level of service and investment.

"We will make sure each plan includes everything we expect, takes account of concerns expressed by customers, and does so as efficiently as possible."

Ofwat is due to make its final decision by November 2009.

Ofwat said in February that average bills across England and Wales would rise by 5.8% this year, with increases of 8% in some areas.

The regulator has said increases in bills are projected to be 42% in real terms by 2010 since the privatisation of the water industry in England and Wales in 1989.

PROPOSED WATER BILL INCREASES

Total rise over period 2010-15

Company Avge bill 2009-10 Avge bill 2014-15 Increase above inflation
Water and sewerage companies
Anglian 360 373 3.7%
Dwr Cymru/ Welsh Water 376 376 0.0%
Northumbrian 282 290 2.8%
Severn Trent 289 292 0.9%
South West 462 496 7.4%
Southern 352 426 21.1%
Thames 283 329 16.2%
United Utilities 351 390 11.0%
Wessex* 384 384 0.0%
Yorkshire 312 317 1.6%
Water-only companies
Bournemouth & W Hants 125 141 12.8%
Bristol 148 187 26.4%
Cambridge 114 137 20.2%
Dee Valley 121 127 5.2%
Essex & Suffolk 158 177 12.1%
Folkestone & Dover 168 205 21.6%
Hartlepool 120 131 9.7%
Portsmouth 88 94 7.1%
South East 160 192 20.2%
South Staffs 115 128 11.2%
Sutton & E Surrey 153 193 25.8%
Tendring Hundred 162 185 14.1%
Three Valleys 149 167 11.5%

*Weighted average of water and sewerage bills
All figures exclude inflation


BBC News website readers have been sending their reaction to the price rises:

That's what private companies do best. They put their shareholders before their customers and we all sit here and take it on the chin. Very British, a profiteers paradise. No doubt they will see record profits again as well as soaring shareholder dividends over the coming financial year. They all make enough profit now to start work on these problems immediately. I am not a Labourite by any stretch of the imagination but water should be a basic right for all of us and we should bring it back into public ownership and create some nationwide planning on the issues of supply and waste.
Terry, Lingfield, Surrey

Anyone else remember when privatisation was supposed to reduce utility bills? Instead it's led to some naked profiteering and market manipulation, particularly in the rail, power & water sectors.
Bob Frigo, Bristol

We want to continue to receive a safe reliable water supply do we? Shame we're not really getting that now. I'd like to be charged less for my water each year for a change and see these private companies that provide us with essential services become non-profit making organisations with the high paid executives etc being held accountable if they fail to do their duty. Too much to ask? Privatisation was supposed to drive down prices and increase standards by introducing competition - neither of these things are really happening.
Pip, Corby

Cut the dividends. This is a service industry NOT an investment bank.
Tom Handley, Birmingham

All bills are rising above inflation, and yet salaries are lucky if they hit inflation - all this is going to do is make more people homeless and cost the government more money, stretching the people who are already paying for everyone else.
Amanda Noad, Bath

It used to be the norm that companies looked at their margin and decided how much to re-invest and how much to take as profit. Utility companies just take profit and pass on the cost of re-investment to their customers. How much longer is this do-nothing government going to wait before acting against these greedy fuel, power and utility companies?
Terry Marriott, Waterlooville, Hampshire

The privatised utility companies should obtain investment money from their own shareholders as they will reap the dividend benefit, NOT their customers!
Lawrence Kenny, Poole, Dorset

Whilst I understand all the points mentioned as reasons to increase bills, the fact is that shareholders in these privatised firms and the directors are awarding themselves huge dividends and bonuses which are all paid for by us. If a small portion of that money had been put back into maintaining the infrastructure then the rises would be unnecessary. In any other business replacing ageing equipment and maintaining networks is a necessary cost. I think Ofwat should hand each company a copy of 'running a business for dummies' - they clearly need it.
Adrian Whitehurst, Congleton, Cheshire

It comes as no surprise to me that Thames Water propose the biggest, above inflation rises of the water businesses. Last time we had a "drought" they imposed hosepipe bans and were fined by OFWAT for missing various maintenance targets yet still announced record profits. Their shareholders will be laughing all the way to the bank! Such organisations should not be running our essential services.
Mark McClemont, Reading

It seems to me the water companies are jumping on the bandwagon of other utility firms by hiking up prices to whatever they like, without any consideration to the customer. I would also add that the lack of competion of water companies to the customer makes the situation unfair in choosing an alternative.
Phil Haslem, Liverpool

I'm single and on a water meter with Thames Water. I don't use a garden hose and don't wash my car at home but my yearly bill is over 400. Either Thames is expensive, or I have a leak! Or perhaps I'm subsidising all those families who are not on water meters? Makes you think....
Andy Evan, Oxfordshire

I am angry at OFWAT. They are certainly not protecting the consumer. And if the water companies do not keep their pledges to protect the infrastructure - do we get a rebate? I bet not. Same old excuses for putting the bills up. Same old rubbish from the so-called regulator. Some old punishment for the customer.
Diane Hain, Bath

Just can't believe that another utility can go up above inflation - how do they think that most of us can afford all the rises? There is no way our salaries are going to rise to keep up with all the constant price rises, in the current climate we are lucky if we will have jobs! Soon it will be only the rich who can afford to live in England!
Sharon, Bicester, Oxfordshire

Dwr Cymru (Welsh Water) are to be congratulated on not jumping on the bandwagon with their "at inflation only" price rise.
Yachydda, Wrexham, Wales




SEE ALSO
Ofwat confirms Severn Trent fine
02 Jul 08 |  Business
Severn Trent sees profits sink
05 Jun 08 |  Business
Water sector competition proposed
15 May 08 |  Business
Ofwat cuts fine for Thames Water
17 Apr 08 |  Business
Average water bill rising by 5.8%
26 Feb 08 |  Business

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