Water company can increase prices

Demand for meters and bad debts were among the 'uncertain costs'

Bristol Water has been allowed to increase its prices after a review by the water regulator Ofwat.

Average household water supply bills will rise by £5 a year in April to £144 before inflationary adjustments.

The decision was based on "uncertain costs" which had to be estimated when prices were previously set in 2004.

These included a soaring number of domestic customers opting for a free meter, the level of bad debts and water abstraction charges.

'Assumptions made'

Price limits were next due to be revised in 2009, but Ofwat agreed to an interim review for Bristol Water following a request by the company.

Managing director Alan Parsons said: "When prices are set, some costs are more uncertain than others.

"What we have seen is that some of the assumptions made in the past were materially different to our actual experience."

The company plans to invest £50m this year to help meet output standards set by Ofwat.

Much of it is to be financed by extra borrowing rather than through current charges, although the revised price limits are expected to help recover the costs.

One of its projects is the Northern Strategic Support Scheme, which would be able to help deal with the type of water supply problems experienced in Gloucester and Tewkesbury during this summer's flooding.