WATER COMPANIES PLAN PRICE INCREASE

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Severn Trent said that the unusually high rainfall through July and August significantly cut demand for water and that full-year revenues will be around £12m less than previously expected. The company lost an additional £25m - £35m because a water-treatment plant in Gloucester was flooded in July, cutting off supplies to 140,000 homes for 17 days. The company said it would not pay compensation to those affected, claiming that the "unprecedented weather" meant customers did not qualify for a £10 payment for every day their supply was disrupted. (Source: Guardian, Oct/07)

Severn Trent lost over 500 million litres every day between 2004 and 2005, compared to 340 million in 2000-1. A spokeswoman said, "It would be impossible to locate and repair every leak. Some are so small they're impossible to find, and trying to do so would mean a significant increase in people's bills, which we wouldn't want to do." She added that the introduction of water meters, now used by 25% of customers, meant the company could more accurately determine how much water was being lost through leaks. (Source: Derby Evening Telegraph, Mar/06)

Water companies argued that household water bills would need to rise by about £15 annually in the five years to 2010 to cover the cost of upgrading and repairing water mains and sewers. The utilities reckon that they will have to spend around £21bn in that period to keep the system up to scratch, an increase of about 25% on the estimated £17bn spend for the five years to 2005. The companies estimated that consumers would see the average annual bill in England and Wales rising to about £315 by 2010 from the £240 average bill expected next year.

The proposals were unveiled by Water UK, an industry body representing the country's water and wastewater service suppliers like Severn Trent and United Utilities. Pamela Taylor, Water UK's chief executive, stressed, however, that the proposed bill increases were "early best estimates" since the regulator, Ofwat, will enter a lengthy consultation period before announcing new controls in November 2004. "They are proposals for meeting the requirements of environmental and quality regulators, the maintenance of pipes and works, the expectations of customers and the need to improve security of supply," Ms Taylor said.

The proposals put forward by the water companies are the first step in the review process being carried out by Ofwat to help it set price limits for the five-year period. The result of the last review, which came into effect in April 2000, saw household bills fall by about £30, Water UK estimated. Ms Taylor insisted that the proposals represented "good value" for consumers. "If you looked at the increases over the decade from 1999-2000 to 2009-2010, the average annual increase would be £5, with a range of £0 to £15 each year," she said. (Source: The Independent)

Statistics show that over 550 megalitres of water which is meant to be destined for households, seeps out of Severn Trent Water's pipes every 24 hours. To put the figure into perspective, that is enough to fill the pool at the Moor Lane sports centre 1,320 times. It makes up 27% of Severn Trent's entire water supply and is the highest level of leakage since 1996. The alarming 2002-2003 statistics emerged following a Parliamentary question from Nottinghamshire MP Paddy Tipping and leaves Severn Trent with what appears to be easily the second highest rate of leakage in Britain. Company bosses are now waiting for the results of an investigation into the crisis by the water industry regulator OFWAT - expected early in 2004. Severn Trent has warned that it might have to raise water prices to carry out maintenance work.

Derby North MP Bob Laxton said, "This is a problem and it desperately needs to be worked out." Recently, the company came under fire from residents in West Drive, Mickleover, for allowing a leaking pipe to flood their street for 14 hours and earlier, a burst water pipe in Friar Gate caused chaos in the city centre. A Severn Trent spokesman said that the company knew that much of its equipment was outdated and in need of repair and it plans to spend £2.5bn improving its service between 2005 and 2010. He said, "The bulk of what we intend to do is on maintenance. We aim to maintain our network over the next five years as a priority." OFWAT is expected to set new targets for Severn Trent when it completes its investigation in January 2004.

The loss equates to one third of the company's total water supply. Incredibly, this news comes from a company which warned Derbyshire residents that they would need to conserve as much water as possible because reservoir levels were low. People were also told to do their bit to guard against water shortages by looking out for leaking pipes in their homes. And bear in mind that these are the same residents who have also been warned that water bills could rise by as much as 25% in the next few years.

Severn Trent Water confirmed a £2.3bn investment programme across the East and West Midlands over the next five years. The company says the money will mean improved drinking water quality, more flooding protection and upgraded sewerage infrastructure. Bills will rise by £31 a year to an average £252 from April 2005. The company has already announced 350 job losses.

Jonathan Bailey, Severn Trent Water's director of customer relations, said, "We've already invested £1.50 for every £1 profit we've made since 1990 to achieve the record levels of quality and service our customers now get. We all know how hard it can be simply keeping your home or car in good working order and we have to do a similar job but on a massive scale as parts of our system and equipment wear out, need maintenance or replacing."

Work will include cleaning more than 1,285km of water pipes, dealing with more than 1,600 sewer flooding problems and tackling smells from at least 9 sewage works which cause occasional nuisance. Sir James Perowne, WaterVoice Central chairman, said, "Many customers find it hard enough to pay bills now. We continue to lobby hard to ensure that the government gives effective help through the benefits and tax credits system to customers who can't afford water bills, on fixed or low incomes."

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