WATER COMPANIES PLAN PRICE INCREASE 3

HIGHER BILLS
Severn Trent Water plans to increase water bills for Derbyshire households by almost 50% in the next five years. ST claims that the rise is necessary to fund investment of Ł178m in Derbyshire, the equivalent of Ł850 per household and almost four times the average annual bill, for the period from 2006 to 2010.

Plans include the replacement of key treatment works, replacement of 435km of water pipes a year, work to prevent sewer floods and to protect water supplies. Consumers can also expect "improvements" to the taste and odour of tap water as 12,000kms of pipes are cleaned.

In December 2003, ST announced half-year profits of Ł178.8m. A spokesman for Watervoice, a consumers' group, said, "The proposed rises are neither affordable nor acceptable." Pete Bowler, campaigns officer at WaterWatch, said, "Water customers are being fleeced."

STILL BAD
OFWAT statistics for water leakage in 2003-4 show that Severn Trent managed to cut down its leakage from 550 million megalitres a day to 510 million megalitres. This still leaves the company with the second worst water leakage levels anywhere in the country.

NO HOSEPIPE BAN
Severn Trent Water said that reservoirs are almost full and a hosepipe ban during the summer looks unlikely. Carsington Reservoir is 99% full and Ogston Reservoir between Clay Cross and Matlock is 95% full.

Richard Martin, ST's director of operations, said, "We have had a dry winter in the Midlands, but recent rainfall has helped to top up our reservoirs, which are now almost full. At the moment, there's no question of us imposing any water restrictions and we're confident we can continue to supply our customers with water whenever they need it, even if we see the return of warm, dry weather. So even if we end up with a blistering hot summer, ST is well prepared to provide water when and where our customers need it."

WATER COMPANIES PLAN PRICE INCREASE

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Taps Severn Trent announced its chief executive, who was paid nearly Ł1m in 2005, has received a 7.7% pay rise. This comes after the company increased its profits in 2005-6 by 30%, to Ł400m, 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 Ł14 each year from 2005 to 2010. This will mean that the average annual bill will rise from Ł240 a year in 2005 to Ł310 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 Ł22bn between 2005 and 2010 on capital projects, a Ł5bn 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 Ł1m 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."

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