WATER COMPANIES PLAN PRICE INCREASE

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Water bills could increase by £4.2 billion, the equivalent of £162 for every household in the country, following a decision to switch responsibility of sewers from individuals to water companies. Water companies have given warning that the cost of maintaining and repairing the estimated 125,000 miles of private sewers will be a "significant and new obligation", which is not currently reflected in customers' water bills. Private sewers are the lengths of pipes that run from residents' homes to the main sewer, usually running under their nearest road. It is estimated that 10 million homes have a private sewer, with many owners oblivious they are their responsibility.

Water companies will take ownership of them from October, and they intend to start sending letters out next month telling householders of the change. The move will stop huge plumbing bills hitting some households. However, the Department for Environment, Food and Rural Affairs (Defra) has estimated that the initial cost to the water industry of the transfer will hit £957 million, with further running costs of £172 million a year for decades to come, adding up to total of £4.2 billion, or the equivalent £162 for every household, over the long term. Defra has said that households should only see £14 added to annual bills, but the water industry has said that no one is yet certain of the true cost, and when it will hit customers. (Source: Daily Telegraph, Jun/11)

Severn Trent announced its chief executive, who was paid nearly £1m in 2005, has received a 7.7% pay rise. This comes after the company increased its profits in 2005-6 by 30%, to £400m, compared with the year before despite being named one of the worst in the country for leaks, with 500 million litres of water escaping from its pipes every day. The company is also being investigated by the Serious Fraud Office over an allegation that its customers have been overcharged.

A spokesman for Severn Trent said, "Severn Trent pays the rate for the job, whether that is for a clerical assistant, a sewage works operator or a director. Directors' pay is determined by the company's Remuneration Committee, which comprises independent non-executive directors, who are widely experienced business people. They also take advice from specialist independent remuneration consultants."

A customer who blames Severn Trent for regular flooding of his drive after a water pipe used for drainage was removed, said, "It clearly shows they put profits over customer satisfaction. They don't deserve it." In the six months to March 2006, there was a 54% increase in complaints about Severn Trent to the Consumer Council for Water. Frances Ward, deputy regional manager for the Consumer Council for Water, said, "The bonuses paid in 2005-6 are surprising, given the obvious failures that we all know about." Anyone else surprised? (Source: Derby Evening Telegraph, Jul/06)

Drinking water across England and Wales meets 99.88% of all national and EU standards, according to a report by the Drinking Water Inspectorate (DWI). Three million samples of drinking water were tested from 26 water companies, 3,418 failed to meet requirements, compared to 25,000 a decade ago. Government ministers said the findings show standards are "edging higher and higher".

But the report warned that more needs to be done to satisfy consumer demands. The DWI was critical of water companies' handling of customer complaints. From 2005 companies will be required to tell the watchdog about all complaints. Prof Jeni Colbourne, chief inspector of drinking water, said that the treatment of some consumers was "not acceptable". She said, "Consumer expectations are higher than ever and more needs to be done to maintain consumers' confidence in their tap water. It's not acceptable that some consumers in some parts of the country continue to receive discoloured or bad tasting water."

She said that nearly one fifth of old cast iron pipes have been renovated or relined but further work needs to be done. "My inspectors are busy working with water companies to make sure this happens as quickly as practicable," she added. But Prof Colbourne said that overall the record of year-on-year improvement was "very good". She added that the improvements had been brought about by major investment since 1990.

And two water companies, Severn Trent and South Staffordshire, were singled out for special praise for exceeding the national average. The results come as strict new rules have been brought in by the European Commission. The commission has used recommendations from the World Health Organisation to enforce its tougher regime and this year is the first time the WHO's standards have been used by the DWI. Environment minister Elliot Morley said he was "delighted" that the quality of drinking water continues to improve.

But he warned, "Although the report shows standards edging higher and higher to the best ever, I think it is timely to remind everyone concerned that they cannot afford to become complacent." He echoed the DWI's concerns about "isolated hotspots" where homes still receive dirty water. The DWI produces an annual report for the Department of Environment, Food and Rural Affairs (Defra). In addition, the European Commission requires each EU country to provide data every three years on drinking water quality.

UK water companies have called for a sharp rise in customer bills starting in 2005. If the proposed price rises are given the green light by the industry regulator, average bills will rise by £14 each year from 2005 to 2010. This will mean that the average annual bill will rise from £240 a year in 2005 to £310 a year in 2010.

Water UK, the body representing UK water companies, says price rises are needed to fund infrastructure projects. The industry also has to find cash to meet government targets on improving the quality of drinking water. In total, Water UK said the industry planned to spend £22bn between 2005 and 2010 on capital projects, a £5bn increase on the amount spent in the preceding five years.

However, consumer groups reacted with anger to the industry's request to be allowed to raise prices. "Price rises on this scale will risk worsening the industry's mounting debt problems and drive thousands of customers into debt for the first time," said Maurice Terry, chairman of consumer body Watervoice.

Severn Trent Water has announced 350 job losses at the same time as confirming a 15% price rise. The company, which provides water for most of the Midlands, said the cuts are needed to keep bills low and create revenue for investment in services. The price rise will mean customers paying around 70p a day. While it is not clear where the jobs will go or whether there will be compulsory redundancies, Unison said it was considering a ballot over action.

Jonathan Bailey, from Severn Trent, said it had to meet targets set by the water regulator Ofwat. "We are recognised as one of the most efficient water companies in England and Wales. Yet we have to become even more efficient to make sure we keep bills low and can continue to invest £1m a day for the next five years."

Unison regional organiser Andy Main said, "Our members will struggle to understand why, after a positive price review, jobs need to be lost. In the last five years the company has already lost 1,100 jobs and cut costs to the bone. These latest job cuts will seriously affect customer service. Unison members work hard to ensure customer safety and a healthy and secure water supply in the area. If supported by our members we will ballot for industrial action."