£130 million for water customers

Posted: Monday 18th August 2008

Water watchdog, the Consumer Council for Water, has secured nearly £130 million in extra benefits for water consumers, after challenging water companies to share their profits.

While many water companies reported healthy profits in the last two years, six chose to give something back to consumers, making a total of £129.4 million, either through extra investments or through price reductions.

The Consumer Council for Water wrote to all water companies asking them to think of their consumers when announcing profit figures, specifically encouraging them to consider ways that consumers could share in what for most have been successful financial years. This could be either through keeping price increases to inflation levels or below, or making extra investments in pipes, sewers, and treatment processes to provide future benefits.

As a result, this year Wessex Water committed to spend an extra £14 million above and beyond what is required by the regulator, Ofwat, to reduce leakage, provide greater security of supply, and reduce the risk of sewer flooding.

Thames Water is spending £10 million of shareholders funds on setting up a charitable trust to help disadvantaged customers in difficult circumstances, and on new community and educational activities.

United Utilities has pledged to donate an additional £12 million to its charitable trust which gives customers with serious financial problems a one-off chance to clear their debts. The company already gives £3 million to the charity each year.

Last year, Anglian Water pledged to invest an additional £50 million in new schemes to secure water supplies in case of future droughts or interruptions to supply. Yorkshire Water said that they would invest around £21.4 million in customer benefits, and Northumbrian Water announced it would limit bill rises to inflation levels over three years, saving customers around £22 million in total.

Dame Yve Buckland, Chair of the Consumer Council for Water, said: “Profits are good and necessary as they help fund the improvements in pipes, sewers and treatment works that ensure a safe and reliable water supply, and provide an efficient sewerage service that consumers value highly.

“We are pleased that these companies chose to examine the level of their profits and share the rewards directly with consumers. Following our request, many other water companies made greater efforts to inform their customers as to what they are actually getting for their money.

“We know that the industry did very well from the last price review. There was a rapid rise in the value of companies and, for the first time since privatisation, no water companies appealed against the price limits set by Ofwat.

“Recently, water companies published their draft business plans for 2010 to 2015, which included the prices they want to charge customers for that period.

“We will again be pressing the companies and Ofwat to make sure that the next five years deliver a consumer focused package of benefits, at a price customers are willing to pay.”

In addition to the £129.4 million, another example of a water company providing extra benefits is Dŵr Cymru Welsh Water, which each year makes a customer dividend. This year it was worth £21 for each customer taking both water and sewerage services, amounting to a total rebate of £27 million.

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