Water firm condemns 'harsh' price ruling

ANGLIAN Water today attacked a “harsh” ruling by industry regulator Ofwat limiting its price increases over the next five years to an average of just 0.5%,

ANGLIAN Water today attacked a “harsh” ruling by industry regulator Ofwat limiting its price increases over the next five years to an average of just 0.5%.

The level of increase was higher than the 0.2% indicated by Ofwat in a draft ruling earlier this year but fell well short of the average 2.7% increase sought by the company.

Anglian Water chief executive Jonson Cox said: “No-one should be under any illusion that we will now have to make significant cost cuts and efficiency improvements to meet the tough financial targets we have been given, and we are already recognised in this review as one of the most efficient water companies in the UK.

“The business plan we put forward struck the right balance between keeping bills down, being able to invest in essential infrastructure and in securing water supplies against the impacts of climate change. This is what our customers told us they wanted,” said Mr Cox. “We also had the backing of leading organisations in the region such as the CBI and regional development agency.”

He said the company particularly concerned at Ofwat's decision to cut �80 million earmarked for securing water supplies and sewerage services in vulnerable areas and further prevention of internal sewer flooding.

“Ofwat also reduces by over �125million our plan to invest in infrastructure for this fastest growing region of the UK, which we believe will risk undermining housing growth, economic competitiveness, and job opportunities,” he added.

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“Before commenting further, we are going to study the detail contained in Ofwat's 136 page document. We have until January 25 to decide whether to accept this settlement or to appeal to the Competition Commission.”

However, Ofwat chief executive Regina Finn said Anglia's settlement took into account the view of local customers and the need to invest in services to meet new demand and ensure the reliability of supplies.

The price increases allowed would enable the company to invest �2.1 billion over the next five years, including around �102million to increase the capacity of 18 sewage treatment works to cope with around 197,000 extra people, due to forecast increases in population.

It was also include the provision of water to 145,000 extra customers as new homes were built in the region, the development of alternative water sources and protecting assets from severe weather events and the installation of 124,000 more water meters for customers who opted for them plus185,000 meters for other customers to help them control their bills.

“We have listened to customers in the east of England,” said Ms Finn. “They have told us that their priority is safe, reliable water supplies at a reasonable cost. We've challenged Anglian Water and kept bills �28 lower than they asked for. This is not just about keeping bills down, but about what customers get for their money.”

She added: “Investment will help reduce the risk of supply failure for around 1.8 million people in the area served by Anglian.

“The region's population is set to grow by around 200,000 over the next five years. Investment will allow water and sewerage services to keep pace as new homes are built.”

Anglian Water provides sewerage services across the eastern region and also supplies water to most properties in Suffolk and north Essex.

The structure of the permitted prices increases means that a typical annual bill for Anglian's metered customers will actually fall slightly, from a current level �348 to �342 next year and �336 by 2014-15, while a typical bill for unmetered customers will rise from �474 this year to �476 in 2010-11 and �541 by 2014-15.

This difference, combined with a relatively high number of metered customers in the region, means the average annual bill for Anglian customers, excluding inflation, will also fall slightly, from this year's �389 to �381 in 2010-11 and �362 by 2014-15, despite the 0.5% average annual increase in prices.

Northumbrian Water, owner of the Essex & Suffolk company which supplies water in mid-Essex, north Suffolk and south Norfolk, will be allowed to increase its prices by an average of 1.7% a year, compared with a draft ruling of 0.9% but a company submission for 3.3%.

A typical metered water bill for Essex & Suffolk customers will rise from �138 to �147 next year and to �164 by 2014 while a typical unmetered bill will go up from �196 to �213 next year and to �238 by 2014. The average annual Essex & Suffolk bill will rise from �169 to �182 next year and to �193 by 2012-13 before easing back to �190 by 2014-15.

Veolia Water East, formerly Tendring Hundred Water, will be required to cut its prices by an overall average of 1.1% a year, compared with a 2.5% reduction originally proposed by Ofwat and a 2.9% increase sought by the company.

A typical annual bill for the company's metered customers will fall from �156 to �149 next year and to �144 by 2014-15 but a typical unmetered bill will rise from �202 to �213 next year before easing back to �206 by 2014-15.

The sewerage element of Anglian Water's bills, which is also payable by Northumbrian and Veolia water customers in the region, will fall from an average of �216 to �213 next year and to �202 by 2014-15.