PN 17/04: Water companies' final plans seek average bill rise of 29%
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PN 17/04

7 May 2004
Water companies' final plans seek average bill rise of 29%

Water companies are seeking average bill increases of 29 per cent over the next five years in their final business plans submitted to Ofwat.

The plans, which set out the price limits the companies believe they will need, would increase the average bill for customers in England and Wales from £240 in 2004/05 to £310 in 2009/10, with a significant average rise in the first year of £28.

Of the ten water and sewerage companies, the highest proposed increase comes from Southern Water at 45 per cent, with the lowest from Anglian Water at 17 per cent.

The water companies estimate they will need to carry out nearly £22 billion of capital expenditure – almost £1 billion more than was estimated in their draft business plans last year.

Each of the plans, which include delivery of the water sector's share of the Government's environmental and quality improvement strategy, will now be reviewed and scrutinised in detail by Ofwat. Ofwat will publish its draft decisions on each company's price limit on 5 August 2004.

Director General of Water Services Philip Fletcher said:

"There are many upward pressures on costs, such as more taxes to pay, further improvements to deliver and greater levels of investment needed to maintain asset systems. At the same time many of the easier efficiency gains have been realised by the companies. So I fear that it is inevitable that prices to customers will have to rise. We will work hard to ensure that price limits are no higher than is necessary to enable companies to raise finance and deliver all these improvements."

Companies, customers and other stakeholders will be consulted on the draft decisions and Ministers will give final guidance on the improvement programme in September. The final decisions will be announced in December. Increases will take effect in customers' bills in April 2005.

Notes to Editors:
1. The Director General of Water Services is the economic regulator of the water and sewerage companies in England and Wales. He exercises his powers in a way that he judges will allow them to carry out their functions properly, and finance them. WaterVoice represents customers' interests.
2.Summaries of all the final business plans submitted to Ofwat will be available on the website www.ofwat.gov.uk
3.Total capital expenditure proposed by the companies is £22 billion. Nearly £1 billion of this will be met from grants and contributions paid by developers.

MEDIA ENQUIRIES TO OFWAT PRESS OFFICE ON: 0121 625 1416/1496/1442
Out of hours enquiries to pager: 08700 555 500 water 503/509. Ofwat publications and press notices can be found on Ofwat's website at: www.ofwat.gov.uk
Table 1 – Company proposed average expected household bills
Average household bills (£) (1)
Average bills (£) (2)
Company final business plans
2004-05
2005-06
2009-10
Water and sewerage companies
water
sewerage
water
sewerage
water
sewerage
Anglian
- Anglian region
118
166
130
164
151
180
- Hartlepool region
91
101
123
Dwr Cymru
120
158
146
187
147
205
United Utilities
126
129
133
144
163
193
Northumbrian
- Northumbrian region
97
125
106
138
119
157
- Essex and Suffolk region
127
141
160
Severn Trent
110
100
119
111
136
131
South West
122
223
138
238
185
282
Southern
86
161
101
188
125
233
Thames
108
93
152
98
171
109
Wessex
122
145
137
163
162
192
Yorkshire
113
123
119
131
131
154
WaSC average
113
127
130
138
150
162
Water only companies
Bournemouth &
W Hampshire
104
119
117
Bristol
103
122
136
Cambridge
86
100
104
Dee Valley
101
108
105
Folkestone & Dover
139
148
198
Mid Kent
127
145
153
Portsmouth
73
78
88
South East
126
154
162
South Staffordshire
87
95
105
Sutton & East Surrey
119
158
173
Tendring Hundred
154
159
159
Three Valleys
115
131
155
WoC average
108
126
140
Industry average
113
127
130
138
148
162
1 Household bills are expressed in 2002-03 prices
2 Future bills do not take account of inflation.
Table 2 – Company proposed percentage increases in average household bills compared to 2004-05
By 2005-06
By 2009-10
Water
%
Sewerage
%
Combined bill
%
Water
%
Sewerage
%
Combined bill
%
Water and sewerage companies
Anglian
- Anglian region
10
-1
3
28
8
17
- Hartlepool region
11
34
Dwr Cymru
22
18
20
23
30
27
United Utilities
5
11
8
29
49
39
Northumbrian
- Northumbrian region
10
10
10
24
26
25
- Essex and Suffolk region
11
25
Severn Trent
8
11
9
23
31
27
South West
13
7
9
51
27
35
Southern
17
17
17
45
45
45
Thames
40
6
25
58
17
39
Wessex
12
12
12
33
32
33
Yorkshire
6
6
6
16
25
21
Water only companies
Bournemouth &
W Hampshire
14
13
Bristol
19
32
Cambridge
16
21
Dee Valley
7
5
Folkestone & Dover
6
38
Mid Kent
14
20
Portsmouth
8
21
South East
22
29
South Staffordshire
9
21
Sutton & East Surrey
32
45
Tendring Hundred
3
3
Three Valleys
14
35
Industry average
15
9
12
31
28
29
Table 3 – Company proposed price limits for 2005-06 to 2009-10
2005-06
%
2006-07
%
2007-08
%
2008-09
%
2009-10
%
Average price limits
%
Water and sewerage companies
Anglian (1)
5.4
2.0
4.7
5.2
5.9
4.6
Dwr Cymru
21.5
3.0
2.5
2.5
1.5
5.9
United Utilities
10.7
11.7
8.5
5.1
3.3
7.8
Northumbrian (2)
11.1
6.1
4.2
3.0
1.0
5.0
Severn Trent
11.0
11.0
2.1
2.1
2.1
5.6
South West
12.5
9.8
9.8
7.5
3.9
8.7
Southern
17.0
5.6
5.6
5.5
5.5
7.7
Thames
22.1
5.5
2.8
2.0
2.2
6.7
Wessex
12.0
12.0
7.0
1.0
1.0
6.5
Yorkshire
6.9
3.7
3.7
3.7
3.7
4.3
WaSc average
13.1
7.1
4.7
3.6
3.1
6.3
Water only companies
Bournemouth &
W Hampshire
15.9
3.0
0.0
0.0
-2.0
3.2
Bristol
20.0
6.0
6.0
0.0
0.0
6.2
Cambridge
17.3
3.1
1.1
0.6
0.2
4.3
Dee Valley
10.4
-0.1
-0.1
-0.1
-0.1
1.9
Folkestone & Dover
8.3
8.3
8.3
8.3
8.3
8.3
Mid Kent
15.1
4.4
1.9
0.9
0.0
4.3
Portsmouth
7.2
4.7
2.9
2.7
0.9
3.7
South East
23.5
5.7
1.6
0.0
0.0
5.8
South Staffordshire
9.7
3.9
2.5
1.5
1.8
3.8
Sutton & East Surrey
33.0
2.2
2.2
2.2
2.2
7.7
Tendring Hundred
3.7
-1.4
0.9
0.1
0.2
0.7
Three Valleys
15.0
13.0
2.9
1.7
1.5
6.7
WoC average
16.7
6.8
2.7
1.2
0.9
5.5
Industry average
13.4
7.1
4.6
3.4
2.9
6.2
(1) The price limit for Anglian Water applies to Anglian Water and Hartlepool Water.
(2) The price limit for Northumbrian Water applies to Northumbrian Water and Essex and Suffolk Water.

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