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16/10/2003
Improvements plans could add 'hefty rises' to water bills
The water regulator Ofwat has warned today that customers face "hefty rises" in their water bills if improvement programmes are confirmed.
According to the latest key price review document, 'Setting water and sewerage price limits for 2005-10: Overview of companies' draft business plans', analysis indicates that some price increases for many companies' customers were needed simply to maintain the huge improvements achieved over the last 15 years. And although companies will be expected to make further efficiency savings, these will "generally be insufficient to offset rising cost pressures", Ofwat said.
But if the proposals for £20 billion of new investment were confirmed then this would lead to "very substantial price rises for most customers". Ofwat has estimated that, taking all the companies' forecasts together, the average household bill would go up from £234 in 2004-05 to £306 in 2009-10 in real terms if companies' preferred strategies were implemented.
At a conference on water industry matters today, Philip Fletcher, Director General of Water Services, will say: "But hard choices will have to be made about the size of the expenditure programmes the companies are expected to carry out if we are to set price limits that are recognised by customers generally as appropriate and necessary.
"Ministers will have some difficult decisions to make on whether all of the proposed drinking water quality and environmental improvements are essential, and on the pace of delivery of those they agree are needed.
"If the programmes of works which each company will be expected to deliver remain unchanged from those set out in the draft business plans then there can be little doubt that water bills will need to rise substantially."
Ofwat will advise Ministers on the prospects for price limits in December based on the companies' draft business plans. In January 2004, Ministers will issue their final guidance on the quality improvement programmes that companies will be expected to deliver between 2005-10.
(gmcg)
According to the latest key price review document, 'Setting water and sewerage price limits for 2005-10: Overview of companies' draft business plans', analysis indicates that some price increases for many companies' customers were needed simply to maintain the huge improvements achieved over the last 15 years. And although companies will be expected to make further efficiency savings, these will "generally be insufficient to offset rising cost pressures", Ofwat said.
But if the proposals for £20 billion of new investment were confirmed then this would lead to "very substantial price rises for most customers". Ofwat has estimated that, taking all the companies' forecasts together, the average household bill would go up from £234 in 2004-05 to £306 in 2009-10 in real terms if companies' preferred strategies were implemented.
At a conference on water industry matters today, Philip Fletcher, Director General of Water Services, will say: "But hard choices will have to be made about the size of the expenditure programmes the companies are expected to carry out if we are to set price limits that are recognised by customers generally as appropriate and necessary.
"Ministers will have some difficult decisions to make on whether all of the proposed drinking water quality and environmental improvements are essential, and on the pace of delivery of those they agree are needed.
"If the programmes of works which each company will be expected to deliver remain unchanged from those set out in the draft business plans then there can be little doubt that water bills will need to rise substantially."
Ofwat will advise Ministers on the prospects for price limits in December based on the companies' draft business plans. In January 2004, Ministers will issue their final guidance on the quality improvement programmes that companies will be expected to deliver between 2005-10.
(gmcg)
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