Water bills set to rise still further
Arundel & South Downs MP Nick Herbert has denounced the decision of Southern Water to raise its charges well above the rate of inflation.
The firm has announced that bills will rise annually by an average of 4.5 per cent above inflation from 2010-11 to 2014-15. However, it will begin with a huge 14.8 per cent increase above inflation in 2010-11. The rises are amongst the steepest announced by water companies in England and Wales.
Mr Herbert has written to water regulator Ofwat to register his "deep concern" at the announcement. He says that customers will be "appalled" by the scale of the rises and warns that this will turn to anger if steep increases in water bills are followed by restrictions on supply in a dry summer.
In his letter, Mr Herbert continues: "I would like to know to what extent the increased revenues will be used by Southern to ensure continuity of supplies in the future. This is an issue which I have raised with you in the All Party Parliamentary Water Group and I will certainly return to it in the future."
The hikes will dump further misery on customers who, in February, were told that bills for 2008-09 would rise by 7.8 per cent. Southern Water said the money from these rises would be used for ‘service improvements', including work to reduce leakages.
By 2014-15, the average household bill will be £426 - up from £352 in 2008-09 - representing a 21.1 per cent increase.
The latest round of increases has been blamed by Southern Water, in part, on European environmental legislation, a £10 million annual increase in power costs and the need to cater for the Government's massive house-building programme. They also say that they will invest £2.6 billion to maintain and improve services.
In contrast to the announcement from Southern Water, Welsh Water say that average household bills for their customers will not increase above inflation during the period from 2010 to 2015, yet the firm will still be in a position to invest £1.5 billion.
Earlier this year, Southern Water received a record fine of £20.3 million from the regulator. Ofwat found the company guilty of deliberately misreporting information about its performance on customer service. It also found that the company had failed to meet required performance standards and to make ‘guaranteed standards payments' to customers. At the time, Southern Water claimed that the fine would be met by shareholders.
Nick Herbert commented: "The proposed increases announced by Southern Water are well above inflation and come at a time when we are also seeing big increases in the price of gas and electricity, food and fuel.
"People on low or fixed incomes, particularly the elderly, will find it increasingly difficult to pay higher water bills along with everything else."
Mr Herbert added: "Local people would find it totally unacceptable to pay these whopping increases and then be told in the next dry summer that their supply is being restricted. It's easy to forget that, two years ago, we nearly saw the introduction of standpipes in West Sussex."
Notes for Editors
1. The news release from Southern Water can be seen at http://www.southernwater.co.uk/News/latestNews/default.asp?aID=66460826&year=2008&month=08
2. For a summary of Southern Water's draft business plan for 2010-2015, visit http://www.southernwater.co.uk/pdf/aboutUs/draftBusinessPlan/Southern%20Water%20FINAL%20v4.pdf
3. The draft business plan is open for public consultation until 31 October 2008. Please send your comments to: PR09 Consultation, Southern House, Yeoman Road, Worthing, West Sussex BN13 3NX (or e-mail PR09@southernwater.co.uk). The final business plan will be submitted to Ofwat in April 2009.
4. Ofwat is the economic regulator of water and sewerage companies in England and Wales. For their website, visit http://www.ofwat.gov.uk/.
5. To compare the proposals of water companies across England and Wales, visit http://news.bbc.co.uk/1/hi/business/7552564.stm.