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Water Week Friday, 27 March, 1998, 18:45 GMT
Ofwat boss talks back
water graphic
For the past week the BBC has been running a series of radio and TV programmes about water in the UK.

Ian Byatt
Ian Byatt: puts the case for Ofwat
Many of you have emailed the Water Week website and News Online's Talking Point with comments about the water industry.

We asked Ian Byatt, Director of Ofwat, the water industry's watchdog body, to answer a few of your questions.

Leak in Sheffield

Last night I witnessed a major water leak in Sheffield with a spout of over ten feet. The volume of water must have been 200 gallons a minute at least.

Yorkshire Water is, however, increasing bills and you can safely say that unless we get a lot more rain they will soon begin hose pipe bans again. Yorkshire Water is wasting the majority of the region's water - not the consumers.

Cut share dividends, keep prices down and customers might begin to think differently.
Robert Prior, UK

Mr Prior is obviously right that customers are very concerned about companies performance on leakage. Ofwat has set all the companies tough targets to reduce leakage quickly. Later this year we will set another target for March 2000.

Whatever the leakage levels, there will always be occasions when customers see mains burst like the one that Mr Prior witnessed. In terms of bills hopefully Mr Prior knows that I would like to see a cut in bills at the start of the next price period (from 2000-2005).

Welsh water 'monopoly'

Dwr Cymru has a complete monopoly, charges what it likes, and when challenged as to how it calculates the bills is extremely unhelpful. They said, well it's based on the old rates system.

We live in a 1-bed flat in a converted house now with 5 flats. When asked if they could confirm we were correctly assessed, they said "Well we can't assess you anyway as there is no rates system anymore. If you don't like it get a water meter. (Which they charge 75 to fit!).

If this was any other service provider you would take your business elsewhere, but what can you do here? Move??
Paul Morris, Wales

I understand Mr Morris' frustration. Water charges for many years have been based on the rateable value of property. These are in many cases rather out of date.

The main problem with rateable values is that they do not reflect the amount of water customers use, and can lead to situations where properties have the same rateable value but very different uses - such as a family of four living next to a single person.

It is not absolutely clear on what basis Mr Morris pays, and to ensure he has been treated correctly he might like to speak to our customer Service Committee for Wales whose telephone number is 0345 078267.

Incidentally Welsh Water can't charge customers whatever it pleases. Ofwat caps prices to protect customers from this happening.

Pricey bills in the South West

As a resident of the South West, I have one of the highest water bills in Britain. I feel that it is unfair that residents of this region should have to pay the highest bills in the country in order that those paying lower bills have clean seas, good quality drinking water and a good sewage system when they come on holiday, which is the main reason for the cost of our bills.

Would it not be more sensible and fairer if the water regulator regulated bills so that the same service and value was experienced in the whole country by simply making the way all bills are calculated the same?
Oliver Denne, England

Mr Denne makes a very fair point about costs in the South West. Having a third of our bathing waters but only 3% of the population of England and Wales the high costs of environmental clean up have driven bills up rapidly.

However it is a myth that average bills were going up only after privatisation: in the five years before privatisation bills in the Southwest went up by 56%.

To spread the costs of one region into the charges of another is political and would need to be decided by elected representatives. There are rules in the Water Industry Act that prevent me, in my role as Ofwat's director, from doing this.

But I will continue to make sure that price limits are as low as possible, but I am obliged by law to take account of the environmental demands on companies, many of which are becoming stronger.

To meter or not to meter?

The water companies would like the general public to agree to the installation of water meters. As I understand it, the rationale is that by having to pay for every drop of water, we will be more careful in our use of water, resulting in financial savings and in the better use of water as a nation. However, I, like others, fear that I will end up paying more after the installation.

So, how about this? The water companies guarantee that any household agreeing to the installation of a water meter will not be charged more than the amount the household is currently paying, providing that the household does not use sprinklers etc?

To safeguard the interests of both the water companies and the consumer/householder, this guaranteed maximum could be indexed linked.
Dr Ban Seng Choo UK

The government is reviewing charging for water and is due to announce the outcome soon. Twelve companies now offer to install meters free of charge, but one thing the water companies cannot do is guarantee whether a customer will pay more or less for a meter. This will depend on two main things: the amount of water the individual customer uses and the amount that a customer pays without a meter.

The companies help customers by showing them how to calculate how much water they use, and provide a ready reckoner to work out what a likely bill would be based on this. Many companies provide the opportunity to revert back.

Recycling crazy

We have installed in our house a water recycling system. The system pumps the water used in the shower and bath and recycles it to be used for the washing machine and the flushing of the toilets, it is brilliant!

We have three children and are on a water meter our bills are very high but this system is bringing them down! Just think how much water would be saved if this system was installed into all new houses! We would be interested to hear your comments.
Neil Harvey UK

I am delighted to hear about this - I am in favour of recycling; but how much did the system cost because it can be expensive to install in existing houses? It does demonstrate the incentive effect that a meter has to use water efficiently.

Sub-contracting nightmare

Another change, which has taken place in parallel to privatisation, is the move towards sub contracting which now seems the norm. We recently had problems with our supply following work on the water main - this resulted in damage to some of our appliances after a surge of silt - we found ourselves dealing with the water company, their sub-contractor and then, in the evening as an emergency, with the sub-contractor's sub-contractor.

Our grievance became less to do with the original problem, more the sense that liability for the problem was being passed around between companies: meanwhile we lost several days waiting for phone calls and decisions and spent a week or so without hot water. We did not emerge from the experience with the sense of lean and efficient private enterprise!

This does not sound very satisfactory. The water company must take responsibility for its customers and RP is entitled to expect it to put the matter right. If it will not then we might be able to help.

Our 10 Customer Service Committees are responsible for representing customers, and can handle complaints against water companies. Last year CSCs and Ofwat obtained 640,000 in compensation and rebates for customers. Customers can find Ofwat's CSCs in their phone book.

National grid for water?

With regard to company profits, no one likes to see individuals getting large salaries, but this is mainly sour grapes. These are private companies that need to make a profit to survive in the market place and to provide a decent service.

However, they do have a monopoly on water supply, so perhaps a better system would be to follow what has happened with electricity and have a national grid of water supply infrastructure and then allow any company to sell water based on a true free market. That way, the customer has the choice of who to buy from and the choice to switch at any time.

There are obvious logistical issues with this idea, but in theory it would do away with the monopoly issue and give greater freedom to customers. OFWAT would need to co-ordinate and safeguard customers even more, but overall every party involved would win.
J Webb, UK

Mr Webb has hit on a major issue. Unlike gas and electricity industries, there is no water grid network. This has stunted competition.

There are other difficulties in getting competition in a real market sense into water - one is that it is very expensive to move around because it is bulky and non-compressible. There are also quality issues because water is vital to public health.

Finally one of the main ways of competing for customers in a free market is by price, but this is difficult to develop for household customers without the widespread use of water meters. The government's competition bill could alter the position by opening up the shared use of pipes.

Where does all the money go?

Last year my water bill went up again and I am becoming increasingly annoyed. Although it is hard to judge how good a service one is receiving from just the water in the tap, I am aware that the leakage levels for my area (Thames) have increased by 34%. This is unacceptable when we are continuously being told that we are living in a climate of drought.

In addition, I believe the company's Managing Director received a huge bonus. Just what service are we the customer not getting as a result of such wage rises? I'm glad those surveyed are happy but is not reality that they do not know enough about company performance?
Tom Bradley, London, UK

Mr Bradley makes an exceptionally strong point. The water industry's will is buried underground and improvements by their very nature are supposed to be invisible.

Based on our own figures for Thames Water I can tell him that the number of properties subject to low pressure is a quarter of its level at privatisation. The number of sewer flooding incidents has fallen by 60% and the properties at risk from this horrible event, has dropped by half.

AS regards the environment goes rivers are healthier bathing waters are cleaner, drinking water better quality and serious pollution incidents have fallen.

It is worth setting out what all that money customers have been paying has accomplished. This is especially so because the BBC's own survey showed that 42% of respondents agreed that Britain's rivers and coastlines are dirtier than they used to be. The reality is better than the perceptions.

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