Paying by meter – household customers

What does Ofwat think of metering? Water metering is, in the long term, our preferred basis for paying for water. It is generally the fairest way of charging for household water and sewerage services. This is because it relates charges to the amount of water used or sewage discharged, and hence to costs. Additionally, customers paying metered charges are able to influence the level of their bill. About 21% (2001-02) of households have water meters. We expect this figure to rise because most new properties are metered and as more people decide they could be better off with a meter. Customers can now opt for a meter to be fitted free of installation charges.

Why don't all customers pay by meter? The majority of customers in England and Wales still pay water and sewerage bills that are based on the rateable value of their home. The domestic rating system came to an end in 1990, but companies can continue to charge their customers on the basis of rateable values. We do not advocate universal metering because, for many customers, the potential benefits in water savings would not outweigh the extra costs of metering. These include the cost of the meter itself, installation, maintenance and meter reading costs.

Can a customer choose to have a meter fitted? Yes, at any time. All water companies have meter option schemes. Since 1 April 2000, anyone can opt to have a meter fitted free of installation charges. For more information ask your water company for a leaflet. If it is unreasonably expensive or impracticable to install a meter companies should offer an 'assessed charge'. Assessed charges should be a better reflection of a customer's consumption than the unmetered charge.

Can companies compulsorily meter household customers? Companies can install meters in properties, but cannot insist that the existing householder pays by volume, except in certain specified circumstances. These are set out in the Water Industry (Prescribed Conditions) Regulations 1999 and apply in England. Under these Regulations, household customers can be required to have meters if they: use a sprinkler; automatically fill a swimming pool or pond; have a large bath; use a reverse osmosis softening unit; have a power shower; or live in an area of water scarcity. Water companies can apply to The Secretary of State to designate an area as water scarce. The Secretary of State makes the decision. No area has been declared an area of water scarcity at present.

Companies are required to set out the approach they will take to charging new occupiers and this information should be readily available. If a meter is already installed in the property and no charges have been demanded from the new occupier, the company can charge the new occupier on a metered basis. Almost all companies install meters in new household properties. One or two companies also install meters where the occupants of domestic properties change. The Water Industry Act 1999 (WIA99) does not require companies to offer a choice of measured and unmeasured bills when customers move into a new house.

Can customers choose not to be metered? If a company has decided to meter your property compulsorily under the Regulations you do not have a right of appeal. (The limited circumstances under which a householder can be compulsorily metered are set out above.) Customers moving into properties with meters cannot have the meter removed. Some vulnerable customers can pay on a different basis in metered properties.

Isn't it unfair to meter some people and not others? No, as long as charges paid reflect the amount of water used. The key to this is making sure that there is a proper balance between the metered and unmetered tariffs. Under the terms of WIA99, we have the power to approve companies' charges schemes. We carry out annual checks on the schemes to make sure companies are not charging too much. What will happen to my bill if I am metered? Your meter will usually be read twice a year and a bill issued based on your consumption. Your water and sewerage bill will consist of two elements – a standing charge that is fixed irrespective of consumption and a volumetric charge based on how much water you have used. Sewerage charges are also calculated from the meter reading. They are normally adjusted to take into account that some water used will not return to the sewer, for example, water used for garden watering, cooking or drinking.

How will having a water meter affect bills? Every household uses a different amount of water. Some will therefore pay more than they would if they remained on unmetered charges and some less. The amount of water used and the companies' charges will determine the actual level of bills. As a general rule, small households of one or two people living in a high rateable value property will usually be better off; four or five people living in a low rateable value property may pay more. Companies can usually send a ready reckoner to help customers decide whether having a meter is beneficial. Following the National Metering Trials, the final report published in 1993 showed the majority of customers had lower bills following metering.

What do standing charges cover? The metered standing charge should reflect the customer-related-costs that are incurred by a company. These include the billing costs, meter reading, maintenance of the meter and account management (for example, customer queries). The standing charge is fixed irrespective of consumption and is the same for all household customers of a particular company. Standing charges vary between companies, but we set guidelines as to the maximum that companies should charge.

What does the volumetric charge cover? The volumetric charge should relate to the demand for water. The volumetric charge element of a customer's bill will vary depending on the water used. Unless a metered customer uses very little water the bulk of their bill will be made up of the volumetric charge. Customers can influence the level of their bills by using water efficiently. We believe the companies must strike a proper balance in metered charging between those charges that reflect customer-related costs and those related to the demand for water. Some companies offer a tariff for low usage households. These tariffs have no standing charge, but a higher volumetric charge. Customers with these charges must use less than a break-even volume of water. The break-even point is where it is no longer beneficial to pay at this volumetric rate.

What are the benefits of metering? Customers only pay for what they use. Some customers, usually those with high rateable value properties and low consumption, can save money. Metering makes sure that customers who use more water meet the costs of providing extra water rather than the costs being met by all customers. Metering also helps to detect leaks, as customers become more conscious of the amount of water used. Companies have better information with which to identify areas with high leakage and customers can identify leaks on their own pipework. Evidence from the Government's water metering trials supports this.

Can I change my mind after I have had a meter fitted? Customers who choose to have a meter fitted and then decide they would prefer to pay on an unmetered basis can choose to go back to their original method of charging. They can do this within 12 months of meter installation, or within one month of receipt of the second metered bill, whichever is the later (subject to certain restrictions). For further information Contact our library or visit our website. Telephone: 0121 625 1361 E-mail address: enquiries@ofwat.gsi.gov.uk Website: www.ofwat.gov.uk

Information Note No 27 November 1995 (Revised July 2002)