Utility warns Essex will run dry without hiking prices

The boss of Essex & Suffolk Water expects a battle to get a hike in household bills of nearly 5% accepted despite warning that without a major new reservoir the taps will run dry in the counties.

Essex is the country's driest county and needs to pump its supplies from the River Ouse in Norfolk.

The local water company has received planning permission for a £150 million extension of Essex's major reservoir at Abberton near Colchester and to pay for this is calling for an average increase in water bills from next spring of 4.9% per annum over inflation for the next five years.

But John Cuthbert, managing director of Northumbrian Water the listed company which owns Essex & Suffolk Water, said: "We expect a significant challenge from the regulator. We expect an awful lot of questioning."

Northumbrian today said that, for the year to 31 March, pre-tax profits dived 10% to £152 million. Revenues from industrial and commercial customers fell 4% because of some going bust, while energy costs leapt 50% in the year.

The dividend is up 6% to 12.79p.