According to the latest pricing plans submitted to regulator Ofwat, some of our big water companies are planning inflation-busting price hikes between 2010 and 2015 to fund their spending plans. With fuel and food bills already going through the roof, that’s bad news for cash-strapped households. And at first sight it’s a bit hard to see why – given the weather we’ve had so far this summer, we can’t be in any danger of running out…
The water companies’ argument is that they need the extra revenue to invest in their facilities and maintain water quality – particularly since they’re serving an ever greater population. Take Thames Water, Britain’s biggest water company, which wants to increase its prices by 3% above inflation. It reckons that it needs to invest £6.5bn over the next few years in the South-East’s ageing water system to cope with an extra 380,000 inhabitants. ‘We have to make sure that our infrastructure, our networks, our treatment works are all ready to cope with that influx of people,’ director of regulation Peter Antolik told the BBC this morning.
Others are likely to follow suit, with United Utilities proposing an increase of 2.7% above inflation and Northumbrian Water a 1.3% rise (although some of this will hopefully be offset by greater use of water meters). This won’t exactly come as a surprise to Ofwat – it predicted in February that prices would go up by about 6% this year – but it now has to decide whether the investment plans justify hikes like these. Naturally we don’t want our water companies cutting corners on their water treatment – but equally, many households are already feeling the squeeze.
It does seem a bit odd that water bills are going the same way as fuel and food bills. After all, it makes perfect sense that oil prices have gone up because of supply concerns – particularly since we’re more reliant on imports now our North Sea oil has started to dry up. But given the amount that’s been falling out of the sky in recent weeks, there can’t be any similar supply concerns about water (in fact, if we could work out a way of exporting it, this would be a much more sustainable industry for the UK than oil…). Unfortunately, getting all this rain into our taps is an expensive business.
Still, let’s not worry just yet – the water companies won’t be submitting their final figures until next year, and Ofwat won’t make its final ruling until November 2009. And in the meantime, at least the dismal summer weather stops us going out and spending our future water bills...
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