Water bills must rise to safeguard service

07/05/2004

Maintaining existing high standards and improving levels of service are key factors behind an increase in bills over the next five years proposed by Northumbrian Water. The plan takes into account the views of customers and the water watchdog, WaterVoice.

The company has kept the proposed increase as low as possible, but at a level which will allow it to maintain its existing high standards of service and also allow it to tackle sewer flooding and further reduce cases of discoloured water – two improvements that customers most want provided.

The company has submitted its final business plan for the period from 2005 to 2010 to Ofwat. This is the latest stage of the regulator’s five-year review of prices. The strategy in the final business plan is consistent with the draft plan produced by the company in August 2003.

The plan proposes to raise charges by 11% in 2005-06, taking bills back in real terms to the levels they were in 1999 at the time of the last price review.  Charges would rise by a further 17% over the following four years to 2010.  The average household bill, which is currently £222, would rise to £244 next year and to £276 by 2010 before inflation.  At the end of the period Northumbrian Water believes its charges would still be amongst the lowest in the country.

The company believes the increase is necessary to fund the proper maintenance of its existing assets – treatment works, pumps, pipes, sewers and other facilities – and to provide new ones in line with Government requirements.  It would also allow the company to meet increases in its tax bill imposed by the Government.

John Cuthbert, Managing Director, said: “Our charges were reduced by 21% at the last price review.  However, whilst this was welcomed by customers, the reduction in our income simply did not provide adequately for necessary improvements and the proper maintenance of our assets. 

“We said at the time of the last price review that such low charges were unsustainable and this has proved to be the case.  We are a long-term business and our assets must be protected for future generations.”

Ofwat will consider the information provided by the company and will announce its draft decision on prices for 2005-2010 in August and, after a period of consultation, its final decision in December 2004.

For further information contact Cara Hall, Communications Adviser, on 0191 301 6720.