Water bills will soar by 30%

Neil Sears|Daily Mail13 April 2012

WATER bills are set to soar by 30% after private utility companies were given the go-ahead to raise prices.

The industry's regulator Ofwat is expected to confirm this week that the firms will be allowed to increase average annual charges to over £300 - up 138% since privatisation in 1990.

The companies argue that the price hike is needed to upgrade Britain's crumbling pipe network and to meet tough new European Commission rules on beach cleanliness.

But critics point out that with many of the firms making hundreds of millions of pounds a year profits, customers should not have to foot the bill.

Peter Bowler, director of the consumer group Water Watch, said: 'These are Mickey Mouse figures. It's just a joke. The industry has enjoyed high profits for years and

Ofwat should be asking where all the money has been going.

'The infrastructure is in a terrible state and needs replacing. But the money should come from the companies, not customers. There is no reason for bills to rise.'

Ofwat boss Philip Fletcher is expected to outline how far the utility firms can go when he delivers a speech to The Economist conference on Thursday.

The independent regulator has the power to veto price rises, but must take into account the cost of maintaining pipes, reservoirs, and filtration and cleaning systems.

Many of the firms involved are billions of pounds in debt after borrowing significant sums to pay for network improvements.

Northumbrian Water, which only recently floated on the Stock Exchange, says it needs to increase bills by 38% to meet the stringent new quality standards, while United Utilities, which supplies homes in the North West, has asked for a 71% rise.

The higher prices will come into effect between 2005 and 2010, but Northumbrian, North West and Anglian Water, which last year made a £287m profit, have applied for permission to raise next year's bills by 4%.

North West and Anglian claim the cost of building new sewers has rocketed, while Northumbrian blames the closure of large factories for reducing its income.

An Ofwat spokesman said last night: 'It would be unrealistic for customers to think about anything other than prices going up. But it is our job to ensure they go up by as little as they need to to allow the companies to fulfil their functions.'

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