Why are we paying so much for water?

Published 15th Apr 2010

Household bills may rise rather than fall for those people unable to switch to a meter


Consumers have accused water companies of dragging their feet over the introduction of lower tariffs and water meters that could cut customer bills.

Times Money has received a series of letters from frustrated readers who have struggled to lower their water bills.

Water companies have also warned that customers in homes that are unsuitable for a meter could see their bills rise to offset savings made by those who can switch.

It comes as millions of households are sinking into “water poverty” amid a sharp rise in the cost of turning on the tap in parts of the country, say consumer groups.

Water bills have been steadily climbing over the past decade as customers have had to foot the cost of a huge programme of investment in Britain’s Victorian plumbing and sewerage system.

The average bill in England and Wales was £343 last year, the highest on record, compared with £283 in 2001.

However, this masks considerable regional variations. Homes served by South West Water faced an annual charge of £487 last year, compared with £301 for those in the Severn Trent.

These spiralling bills have pushed more than 3.5 million households into water poverty, defined as spending more than 3 per cent of annual income on water.

After a deal agreed by Ofwat, the water-industry regulator, bills are expected to fall by an average of 0.76 per cent this year, but this figure, too, conceals wide variations around the country. For example, households in the area served by Northumbrian Water will see bills jump by more than 5 per cent.

Ann Robinson, utilities expert at uSwitch.com, says: “Consumers face a postcode lottery and this means that there will be winners and losers depending on what their local water supplier has agreed with Ofwat. Unfortunately, because consumers are obliged to be with their local supplier they can be held to ransom in this way.”

Campaigners argue that the current water-pricing system is baffling for many, with household charges being based on the value of homes on the rental market in 1991. This archaic “rateable value” pricing can result in almost identical houses on the same street being charged different water rates because one property is nearer a bus stop or has more attractive period features.

About two thirds of British households continue to pay bills based on rateable value, according to Ofwat. A major review of water charges, the results of which were released last year, concluded that 80 per cent of homes should be metered within ten years, compared with about a third now.

Switching to a meter can dramatically reduce your bill. The average unmetered bill was £361 last year, compared with the average metered bill of £305, according to uSwitch.

However, there are millions of households in properties unsuitable for meters, including many flats built or converted before 1990, favoured by low-income families, first-time buyers and pensioners.

Under Ofwat rules, customers who have asked for a meter but cannot have one should be offered an alternative to rateable-value charging. These “assessed charge” tariffs take into account the number of bedrooms or adults living in a property.

However, only a fraction of homes are on cheaper assessed tariffs.

In a double blow for those unable to get a meter, water companies also warn that bills are likely to increase for those on assessed charge and rateable tariffs to offset a revenue shortfall created by homeowners who can switch to metered billing.

Barrie Clarke, from Water UK, the industry body, says: “When low-use customers with high rateable values switch to a meter, their bills fall to reflect more closely the cost of the service they receive. But it would be unfair for these customers to go on subsidising the remaining unmetered customers, so unmetered charges have to increase.”

Consumer groups warn that this could mean bills for some rising sharply in the next decade. Andy White, of the Consumer Council for Water, says: “We are raising concerns about the differences that are opening up between these types of bills and about the potential for additional costs being unfairly placed on customers with unmetered tariffs.”

Consumers, meanwhile, have vented their frustration at the process of switching to an assessed tariff.

Stephenie Campbell, 43, has been fighting Thames Water to be put on to an assessed tariff for a single person. Ms Campbell, who has severe ME, contacted the company in 2005 about getting a meter installed in her home but was told that her building was not suitable. Last year she contacted the company again after hearing about the assessed tariff.

“I e-mailed in October but was completely ignored. I called, but was told that Thames Water could not fit a meter and could not help me. I really had to pursue them,” she says.

“Eventually I e-mailed again, with reference to Ofwat, and Thames Water agreed to an appointment to check my building. The person confirmed I could not get a meter but that I could go on to an assessed tariff.”

In the past month, Ms Campbell has been moved on to an assessed tariff, single occupancy, reducing her annual bill from £495 to £120. However, other single women living in the building are still paying the rateable value charge. “It is ridiculous that elderly women living in identical flats in the same block are paying such different amounts for water,” she adds.

A spokesman for Thames Water says: “It is not possible for us to determine whether a property can be metered until a survey is completed. In this case we acted promptly to the customer’s request for a meter and immediately applied the assessed household charge when the property was proved unmeterable.”

The Consumer Council for Water has called for reform of the way in which water is priced. It wants the next Government to set up a £500 million fund to support individuals in water poverty. Meanwhile, consumer groups have urged households to check whether a water meter can be installed in their home.

Ms Robinson says: “The message isn’t getting through to the public. Water charges remain a significant proportion of bills for millions of households and it is likely to get more expensive, not less.” She suggests that, as a rule of thumb, it is likely that households will save money with a meter if there are more bedrooms than individuals living at the property.

Those living alone should insist on an inspection from the water company as this will qualify them for a cheaper assessed charge. Most water companies now offer a single occupier tariff.

However, larger families with heavy water usage who are living in smaller homes could find that they pay more on a meter. There is a calculator, available at the Consumer Council for Water website (www.ccwater.org.uk), that can work out whether it is worth switching to a metered tariff. The Government insists that water companies provide a cap on the bills of low-income households who need to use more water. The WaterSure scheme caps bills for families on income support with three or more children below 19, or those with a medical condition that requires the use of large quantities of water.For more information on reducing your water bill, contact your water company or the Consumer Council forWater on 0121-345 1000.

Case study

Peter Cook, from Wilmslow, Cheshire, applied for a water meter last year. He lives alone in a one-bedroom flat and believed that he was being charged too much for the minimal amount of water he used. “I use very little water. However, there is little incentive for me to keep my water consumption to a minimum because I do not pay for what I use,” he says.

Earlier this year an engineer from United Utilities visited Mr Cook, but concluded that it would not be possible to fit a meter in his home as the internal stop tap was obstructed. It was not possible to connect a meter outside because his property was connected to the mains via a common supply pipe, which carried water to other flats in his residential block.

Instead of a meter, United Utilities offered to move Mr Cook on to a single-occupancy tariff, available to households that qualify for an assessed charge. His annual water bill has fallen from £302 to £240 a year. He says: “I pay for my electricity, gas, phone and food by usage, in fact everything except water. I just can’t believe it is that difficult to install a meter.”

Water-saving tips

• Watering your garden uses 540 litres an hour, costing about £1.30. A water butt allows you to store rainwater run-off from the roof of your home or shed, which you can use on your garden instead. A butt costs about £40 but is often available at a reduced price from your water company.

• You can save litres of water every time you flush the toilet by installing a cistern device, available from most water companies. Hippo the Water Saver sits underneath the cistern float and saves up to 2.5 litres a flush, but it is recommended for use only in larger cisterns. The smaller Save-A-Flush bag saves about a litre of water a flush.

• When it is time to replace your dishwasher or washing machine, look for the Waterwise mark or Energy SavingTrust logo to ensure that the new model uses water efficiently. You can call Waterwise to check the efficiency rating of any model available. Always ensure that your machine is completely full before switching it on. Two half loads use substantially more water than one full load.

• Avoid leaving the tap running unnecessarily. Turn it off while you are brushing your teeth, collect water in a bowl below your tap to wash vegetables or dishes, and keep a jug of water in the fridge so you do not have to run the water until it gets cold.

For more water-saving ideas, visit waterwise.org.uk or energysavingtrust.org.uk

Source: ' Times '

View All Latest Articles