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RD 32/03

TO REGULATORY DIRECTORS OF ALL
WATER AND SEWERAGE COMPANIES AND
WATER ONLY COMPANIES

• The level of household revenue outstanding for up to 48 months for the industry now stands at £781 million – an increase of £115m (17%) since 1998-99.
• The majority of companies (20 out of 22) have reported increases in the amount of revenue outstanding between 1998-99 and 2002-03. This compares with 18 that reported increases last year.
• The water only companies (WoCs) continue to report a higher proportionate increase since 1998-99 than the water and sewerage companies (WaSCs).
• The amount of household revenue outstanding for up to 48 months is equivalent to 16% of household revenue billed in 2002-03. In 1998-99 it was equivalent to 13% of household revenue billed for that year.

• The level of household revenue outstanding for less than 12 months now stands at £347 million. This is equivalent to 7% of household revenue billed in 2002-03. Revenue outstanding for up to 12 months in 1998-99 was also equivalent to 7% of revenue billed during that year.
• Revenue outstanding in the older age categories has increased since 1998-99 - by 16% to £192 million for 12-24 months and 71% to £240 million for 24-48 months.
• In 1998-99 the amount of revenue outstanding for 12-24 months was equivalent to 3% of household revenue billed. In 2002-03 revenue outstanding in this age band is equivalent to 4% of household revenue billed.
• The amount of revenue outstanding for 24-48 months in 1998-99 was equivalent to 3% of household revenue billed during that year. In 2002-03 the amount of revenue outstanding in this age band is equivalent to 5% of household revenue billed.

• The amount of household revenue written off across the industry has increased by 41% since 1998-99. £93 million was written off during 2002-03. However, a significant part of this increase has been in the last 12 months, and has been caused by a small number of companies reporting large increases, principally caused by changes in reporting methodology / systems changes or due to data cleansing exercises.
• WaSCs have reported an average increase in revenue written off of 42% and WoCs of 19%. There is significant variation between companies, however, with nine companies reporting reductions since 1998-99.
• The amount of revenue written off in 1998-99 was equivalent to 1.3% of household revenue billed in that year. In 2002-03 the level of revenue written-off has risen to the equivalent of 2% of household revenue billed.

• The level of measured revenue outstanding for up to 48 months has increased by £57m (55%) since 1998-99. This compares with an increase in unmeasured revenue outstanding for up to 48 months of £59m (10%) during the same period. However, these changes will include the effects of more customers switching to a measured basis of charging.
• Measured household revenue outstanding for up to 48 months is equivalent to 17% of measured household revenue billed in 2002-03. In 1998-99 it was also equivalent to 17% of measured household revenue billed. Unmeasured household revenue outstanding for up to 48 months is equivalent to 16% of unmeasured household revenue billed in 2002-03. In 1998-99 it was equivalent to 13% of unmeasured household revenue billed.
• Measured revenue written off has increased from £10m in 1998-99 to £17m in 2002-03 (69% increase). Unmeasured revenue written-off has increased from £56m to £75m (36% increase) during the same period. Again, these are the absolute numbers and will include the effects of meter switching.
• Measured revenue written-off in 1998-99 was equivalent to 1.7% of measured household revenue billed in that year. In 2002-03 measured revenue written-off has risen to be equivalent to 1.9% of measured household revenue billed. Unmeasured revenue written-off in 1998-99 was equivalent to 1.3% of unmeasured household revenue billed. In 2002-03, the equivalent of 2% of unmeasured household revenue billed was written-off.

• Since 1998-99 debt recovery operating expenditure has increased across the industry by 28% to £56 million. On average, WaSCs have reported an increase of 30% whilst WoCs have reported an increase of 19%.
• Five companies have recorded reductions in operating expenditure. Eight companies have reported increases in excess of 30%.
• The annual cost of collecting outstanding household revenue varies significantly between companies but is generally reported to be around £1 - £3 per household billed. The average debt collection cost per household billed has risen from £1.87 in 1998-99 to £2.38 in 2002-03.

• As in previous years, caution is needed in interpreting the number of households with outstanding revenue. The reported data is likely to be over-stated, as some companies will count a customer more than once if they incur debt in more than one year. Some households may also be in debt to more than one company if they have different suppliers for water and sewerage services. However, as companies' systems do not change significantly over time, the year on year trend should be reasonably reliable.
• The number of households with revenue outstanding for up to 48 months has increased by 14% between 1998-99 and 2002-03. The total now stands at over 4.7 million, or 20% of households served. Whilst some companies now have a significantly higher number of households in debt, five companies have fewer households in debt.

• Only six companies reported donations to charitable trusts, although a number of others make donations to other organisations or similar schemes (which are not formally classed as charitable trusts and therefore not reported on separately within the annual returns).
• Donations to charitable trusts have reduced by nearly 22% since 1998-99. In total the industry contributed in excess of £3 million towards charitable trusts in 2002-03.