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Reports on water companies
Household customer information
Charging developments In this section, we have set out any significant changes in policy or charging structures that companies have brought in from 1 April 2008. Assessed charges Thames Water If you request a meter, but the company is not able to install one, you will be eligible for an assessed charge to replace your rateable value bill. Thames Water has changed its charge this year. Previously, the company based its assessed charges on the average metered bill in its area. From 1 April 2008, its charges are based on the number of bedrooms in a property. The more bedrooms you have, the higher the charge will be. See the assessed charges section for more details. Tariff trials For 2008-09, we have approved four metered tariff trials that offer a range of metered charges that may better suit customers' needs. They aim to find out how customers are affected when they are charged in different ways. We have described them briefly below and more details can be found in the tariff trial table. Folkestone & Dover Water Folkestone & Dover Water has introduced a rising block tariff trial for a limited number of metered properties in 2008-09. Under this type of tariff, the more water you use, the more you pay for that water. The charge is made up of a:
If you use up to 80m3 of water (the first "block") you will be charged 25% less for each unit of water than the standard metered volumetric charge. If you use more than 80m3 (and enter the second "block") you will be charged 50% more for each unit for the extra water than the standard metered volumetric charge. If you have three children under the age of 18 in your household, you can ask for an extra 15m3 at the low rate, so your first block will be 95m3 of water. If you have four or more children in the household under the age of 18 you can claim a further 15m3 at the low rate: so your first block will be 110m3 of water. Any extra water you use over these amounts will be charged at the higher rate of 50% more than the standard charge. Wessex Water Wessex Water will start three tariff trials during 2008-09. These are:
A limited number of customers moving house will be put on these tariffs. The rising block tariff is similar to the Folkestone & Dover tariff trial described above. The tariff is made up of a:
The first "block" will be 60m3. If you use up to 60m3 you will be charged 20% less for each unit of water than the standard volumetric charge. If you use more than 60m3, you will be charged a volumetric rate 20% higher than the standard volumetric charge for each extra unit of water. In the seasonal tariff the charges change depending on the time of year that you use the water. You will pay less for your water in the winter, but more in the summer. The charge is made up of a:
You will be charged 20% less than the standard volumetric charge for the water you use between 1 October and 31 March (the winter charge). For the water you use between 1 April and 30 September (the summer charge), you will pay a summer rate which is 20% higher than the standard volumetric charge. The peak seasonal tariff has elements of the rising block tariff and seasonal tariff described above. The company will measure how much water you use in the winter (from 1 October to 31 March). The amount of water measured in this period will be used to calculate your "quarterly base volume". The water you use from 1 October to 31 March will be charged at a winter rate. This will be 5% less than the standard volumetric rate for each unit of water. If you use up to the quarterly base volume between 1 April to 30 June and 1 July to 30 September, you will again be charged 5% less than the standard volumetric rate for that water. If you use more than your quarterly base amount of water from 1 April to 30 June and 1 July to 30 September, the extra water will be charged at a rate 90% higher than the standard volumetric rate for each unit of water. All three trials only affect your water charges: your sewerage charge will continue to be the standard tariff. Dŵr Cymru We have also approved two trials (Water Direct and Water Collect) aimed at helping eligible customers to pay their bill. Under the Water Direct scheme, the company will reduce your bill by £25 a year if you are on benefits and sign up, through the Department for Work and Pensions, to pay your bills directly from your benefits. You will only be eligible for this scheme if you receive Jobseeker's Allowance, Pension Credit or Income Support and you are behind with your water or sewerage bill. The trial started this year and will last between two and three years. Through the Water Collect, Dŵr Cymru will offer a limited number of customers a £10 annual discount when they pay for their water through a participating local authority or housing association. South East Water (former Mid Kent area) In 2007-08, we approved a seasonal tariff trial for a new housing development which will have 250 properties when it is finished. South East Water expects that 100 properties will be on the seasonal tariff once the development is finished. At the moment, 147 properties have been completed and 32 are on the seasonal tariff. The tariff consists of a:
The winter charge, from 1 September to 30 April, will be 50% less than the standard charge for each unit of water you use. The summer charge, from 1 May to 31 August, will be 90% higher than the standard rate for each unit of water you use. For further information on the tariff trials detailed above, please refer to the relevant company's charges scheme. Two other companies hope to set up tariff trials later in the year. They will ask for amendments to their charges schemes when the tariffs are ready to be implemented. Charging proposals modified or not approved for 2008-09 We have protected customers by agreeing with companies that they should withdraw or defer some proposals which need to be thought about more, before introducing them in the future. We have set out examples of these below. Anglian Water The company proposed charging the full sewerage charge to household customers who had asked to be disconnected. This was on the grounds that the customer might be obtaining water from another source and continuing to use the sewerage service. We do not think that a customer in a disconnected property would use the full sewerage services and therefore decided that this would be an unreasonable charge. Following our challenge, the company altered its policy. Severn Trent Water The company proposed introducing a charge to trace customers who moved out of their property, failed to notify the company of their change of address, and who were behind with their water bill. Severn Trent Water proposed a charge between £50 and £200, or the level of the debt, whichever was lower. We did not believe this charge would be cost reflective. The company did not provide evidence to justify the level of charge, and removed it from the charges scheme. South West Water The company wanted to charge second home owners with an assessed charge the highest multi-occupancy rate regardless of how many people were actually in the property. South West Water could not provide evidence to justify treating these customers differently from other home owners. Following our challenge, the company agreed to apply the assessed charge based on the number of people in the property, in the same way for all customers. Wessex Water The company proposed three tariff trials:
How customers are charged Unmetered charges If you are a household customer and you don't have a water meter you will usually pay:
Your charges are based on the RV of your property under the 1973 Valuation Act. These were used in the past to calculate your local "rates". The Valuation Office has not issued any new RVs since March 1990 because of the change in the basis of local taxation. Most new household properties built after 1990 have water meters fitted. The Water Industry Act 1991 and the Water Industry Act 1999 allowed companies to use RVs to calculate unmetered bills. In some cases, for example if your property has been extensively altered, the original RV of the property may be out of date and will no longer apply. In such cases, your water company may apply a notional RV charge, based on what it believes the RV would be. It uses criteria like the size and location of the property and the RV of similar properties in the area. Unmetered water charges The unmetered water charges for households table shows each company's unmetered charges for water, as well as the forecast average unmetered household water bills for 2008-09. As well as charges like those described above, it shows that Severn Trent Water or South Staffordshire Water customers' bills do not include a fixed charge. Customers of Anglian Water in the Hartlepool area or Sutton & East Surrey Water in its northern area pay a fixed licence fee and no RV charge. The sample unmetered water bills for households table gives examples of what a yearly household water bill would be in each area with an RV of £100, £200 and £300 for 2007-08 and 2008-09. Unmetered sewerage charges Your unmetered sewerage charges will include charges for three main sewerage services. These are for collecting and treating:
In principle, if you can demonstrate that you do not receive one of these services (apart from highway drainage), you should be entitled to a reduction in charges. Foul sewerage service The costs of collecting, treating and disposing of foul sewage depend upon how much sewage is collected and its strength. But companies do not assess the strength of foul sewage for charging individual household customers. Most companies charge for the foul sewerage service by a charge based on the RV of your property. You can see these charges for every company in the unmetered sewerage charges for households table. The sample unmetered sewerage bills for households table gives examples of what a yearly household bill for foul sewerage would be in each area with an RV of £100, £200 and £300 for 2007-08 and 2008-09. Surface water drainage (SWD) and highway drainage (HWD) Surface water is the water that drains from your land into the public sewer network. You will pay for SWD either by:
Companies also treat water that falls onto the public roads and drains to the sewers and collect a charge for this. The costs of this highway drainage service are not related to the amount of water that you use or to the value or size of your property, so there is no correct way of recovering these costs. HWD benefits everyone who uses the road network either directly or indirectly. As a result, there is a case for recovering the costs of this service from highway authorities or from road users. At present, however, the law prevents this. In 'Water charging in England and Wales: Government decisions following consultation', published in November 1998, the Government indicated that there are no plans to change the way in which HWD charges are collected. It suggested that there might be little benefit in any change and that the cost of the service would still have to be collected through other charges, such as council tax. The charging methods for surface water and highway drainage for unmetered households table shows how each company and other companies charge for SWD and HWD. Surface water drainage rebates In MD152, 'Approval of companies' charges schemes in 2000-2001' (September 1999), we required every sewerage company to offer a rebate for SWD to customers whose surface water does not drain into the public sewer network. All ten sewerage companies now do this and provide information about the rebates on your bill. We did this to increase fairness in the way you are charged. We do not, however, expect companies to provide backdated rebates for periods before the current charging year. If companies were to do this, they would expect to backdate similar increases in charges for customers who they did not previously know were connected for SWD. We do not think this is practicable or desirable. If you qualify for a rebate you will receive it through either a lower RV or standing charge. The surface water drainage rebates for unmetered households table shows the level of SWD rebates for 2008-09. Metered charges If you are a household customer and have a water meter, your bill will have two elements for water services and two elements for sewerage services. These are:
Metered water charges To help customers to use water wisely, each company should set the metered volumetric charge to recover the costs that it will spend over the longer term to meet demand. Such incentives for using water wisely will help companies to meet the environmental challenges that the water and sewerage sectors are facing. The metered standing charge, on the other hand, should be no more than the customer-related costs for the unmetered service, along with the fixed costs associated with providing you with a metered service (for example, meter reading). High standing charges reduce the incentives for you to control how much water you use. They do not fit well with each company's duty (placed on it by the 1995 Environment Act) to promote the efficient use of water by customers. The metered water charges for households table shows each company's metered charges for water as well as the forecast average metered household water bills for 2008-09. The sample metered water bills for households table shows what a yearly household water bill would be in each area if you use 60m3, 110m3 or 160m3. Metered sewerage services Your water company will charge you for collecting and treating:
In principle, if you can demonstrate that you do not receive one of these services apart from highway drainage, you should be entitled to a reduction in charges. Foul sewerage service Companies usually base their charges for foul sewerage for metered household customers on the volumes recorded on the water meter (adjusted where appropriate for water which does not return to the sewer). The metered sewerage charges for households table shows these charges for each company. The sample metered sewerage bills for households table shows what a yearly metered sewerage bill would be in each area if you use 60m3, 110m3 160m3 of water. Surface water drainage (SWD) and highway drainage (HWD) charges Surface water is the water that drains from your land into the public sewer network. You will pay for SWD either:
Companies also treat water that falls onto the public roads and drains to the sewers and collect a charge for this. The costs of this highway drainage service are not related to the amount of water that you use or to the value or size of your property, so there is no correct way of recovering these costs. HWD benefits everyone who uses the road network either directly or indirectly. As a result, there is a case for recovering the costs of this service from highway authorities or from road users. At present, however, the law prevents this. In 'Water charging in England and Wales: Government decisions following consultation', published in November 1998, the Government indicated that there are no plans to change the way in which HWD charges are collected. It suggested that there might be little benefit in any change and that the cost of the service would still have to be collected through other charges, such as council tax. Dŵr Cymru has transferred its charges for HWD from the volumetric rate to the standing charge. This change was phased in over three years from 2006-07. The company will not make any extra money overall as a result of this change. It will continue to recover charges for SWD through the volumetric rate. The charging methods for surface water and highway drainage for metered households table shows how each company charges for SWD and HWD. Surface water drainage rebates In MD152, 'Approval of companies' charges schemes in 2000-2001' (September 1999), we required every sewerage company to offer a rebate for SWD to customers whose surface water does not drain into the public sewer network. All ten sewerage companies now do this and provide information about the rebates on your bill. We did this to increase fairness in the way you are charged. We do not, however, expect companies to provide backdated rebates for periods before the current charging year. If companies were to do this, they would expect to backdate similar increases in charges for customers who they did not previously know were connected for SWD. We do not think this is practicable or desirable. If you qualify for a rebate you will receive it through either a lower standing charge or volumetric rate. The surface water drainage rebates for metered households table shows the level of SWD rebates in 2008-09. Alternative metered tariffs There are other metered tariffs, which may apply to certain groups of household customers. These are:
Low user tariffs If you are an Anglian Water (including Hartlepool Water) or a South East (former Mid Kent Water) customer and you use a relatively small amount of water, you may be offered a special metered tariff. The tariffs have no standing charge and a higher than standard volumetric charge. To benefit from the tariff, you need to use no more than the break-even volume (the volume above which you no longer save money). This is currently 75m3 a year for both companies. Following consultation, we set out what we think about optional low user tariffs in MD165, 'Approval of companies' charges schemes in 2001-2002' (September 2000). Our consultation showed that there was only limited support for such tariffs, so we are unwilling to accept new proposals from companies who wish to introduce them. However, we have not made Anglian Water or Mid Kent Water withdraw their existing low user tariffs as this would not help the customers already on the tariff. Tariffs for vulnerable groups The Water Industry (Charges) (Vulnerable Groups) Regulations 1999 apply for metered customers of companies operating wholly or mainly in England and are applied voluntarily by companies operating wholly or mainly in Wales. If you meet certain qualifying conditions you can apply for a WaterSure (formerly vulnerable groups) tariff. On this tariff you will pay either a bill based on how much water you use or a bill capped at the average household charge for your area – whichever is lower. The WaterSure (formerly vulnerable groups) charges table sets out the WaterSure charges for each company for 2007-08 and 2008-09. In line with the regulations, we required each company to set its charges for 2008-09 at or as close as possible to the average household bill for the water and sewerage services. Charges for tankered domestic waste Owners of cesspools and septic tanks employ private tanker operators to transport this waste to sewage treatment works. The sewerage company charges the tanker operator to dispose of the waste, which the tanker operator passes on to its customer, together with its own costs. The charges sewerage companies pass on to tanker operators for 2008-09 are shown in the tankered domestic waste charges table. Sewerage companies are not obliged under the Water Industry Act 1991 to provide this service. As such, we currently have no jurisdiction to regulate these charges, either under condition B (because the charges are not part of the price limit basket of charges) or condition E (relating to undue discrimination or preference) of the companies' licences. Nor do we have regulatory jurisdiction over the charges that tanker operators make. Under the Competition Act 1998 (CA98), we have powers along with the Office of Fair Trading to investigate commercial activities connected with the provision of water and sewerage services. We can use the powers to investigate complaints about how these sewerage services are provided. We will consider whether this is the best way forward for individual cases. Following the principle that charges should be cost-reflective, we think it is appropriate for each company to offer separate charges for septic tank and cesspool waste. Eight companies have separate charges for different types of waste. Assessed charges If you would like to have a water meter but can't have one because it would be too difficult or expensive to install, your water company must offer you an assessed charge as an alternative to your rateable value charge. Your water company may also use an assessed charge if your property has been merged or substantially altered, which means the original RV is wrong. Each company decides how it sets these charges, but it must treat all of its customers on assessed charges in the same way. The household assessed charges for water and sewerage companies and the household assessed charges for water only companies tables show the current assessed charges that the water companies offer. The most common assessed charges are:
If you are an Anglian Water customer, the company will estimate your individual usage and apply the appropriate metered tariff. If you are a Bournemouth & West Hampshire Water customer, you will pay the standard metered charge on an assumed usage of 60m3 for each person living in the property. Northumbrian Water will charge you a fixed rate based on a usage of 120m3, reduced to 70m3 if you live on your own. We asked some of the companies to review their assessed charges last year. Some companies set assessed charges equal to the average metered bill and we were concerned that these charges might be too high because assessed charge customers are likely to use less water on average than metered customers use. This is because assessed charge customers often live in flats, which are likely to have fewer people living in them than in houses. The companies below previously set their assessed charges equal to the average metered bill and have made the following changes:
The balance between unmetered and metered charges Since the Water Industry Act 1999 gave household customers the right to ask for a free meter, many customers have opted to switch to being metered. In order to treat all household customers fairly, each company has to adjust the balance between unmetered and metered charges to take account of the impact of customers switching to meters. This is known as tariff re-balancing. Your water company's income can be affected in three ways when you switch to a meter because your:
We use this calculation to make sure that each company maintains a fair balance between charges for unmetered and metered customers. As more customers choose to have meters, companies tend to increase unmetered charges. This is fair because, on average, remaining unmetered customers have previously paid less than it costs to supply them with the water they use. The effect will continue as the number of metered customers increases. If a household that switches to a meter uses less water than the unmetered average, or if it reduces how much water is used, companies cannot directly recover these lost charges. We allowed for this in the 2004 price review by setting price limits consistent with the projected rate of meter switching for each company. Unmetered/metered tariff differential We expect any difference, on average, between unmetered and metered household bills to be no greater than the extra costs of providing a metered service. These additional costs consist of:
The difference between these two bills is the unmetered/metered tariff differential. The unmetered/metered household tariff differential table shows the differentials for each company in 2008-09, together with their differential targets. While we expect companies to meet their differential targets, we allow them to be flexible with their targets (£1 each for water and sewerage). On this basis we consider that 17 companies have met their combined differential targets for water and sewerage. The average amount of water that each company company delivers to unmetered households may fluctuate from year to year as changing weather conditions affect how much water people use. We don't think these changes should lead to unnecessary changes in prices for unmetered and metered customers. So, we allow companies some extra flexibility around their differential targets if they can show that unusual weather conditions have affected the amount of water that unmetered customers use. We deal with this issue on a case-by-case basis. We allowed Severn Trent Water, South East Water (both South East and former Mid Kent areas), and Sutton & East Surrey Water to exceed their combined differential targets, so that neither metered nor unmetered bills would rise significantly more than their price limits Tendring Hundred Water has opted to exceed its differential target for this year and next year because a past accounting error meant the company overcharged its unmetered customers while undercharging those with meters. It has exceeded its differential target because it has increased its metered charges and reduced unmetered charges to redress the imbalance in past charging. It has effectively clawed back money from metered customers that it undercharged to return to unmetered customers it had overcharged. Metered charges will therefore increase by a much higher proportion than they otherwise would have done. The company will provide rebates to customers who started to receive metered services after the error was detected, as they did not benefit from the error. Although Tendring Hundred Water will not benefit financially, we are disappointed that the company has taken this approach. We believe that the company should have borne the costs of reducing unmetered charges without increasing metered charges. However, in this circumstance, we have no powers to stop the company raising its metered charges. Payment options for household customers We ask companies to make a range of payment options available to you, to help you pay your bill. Examples of ways to pay your bill include paying by direct debit, cash, cheque, credit or debit card, payment card or on-line. Companies are also required to offer a range of locations for bill payment. Examples include banks, post offices, and paypoint or payzone outlets. Many of the payment options that companies offer are free of charge. We realise that you may face difficulties when budgeting for essential household bills. To help with this, we expect companies to maintain acceptable payment arrangements for low-income customers. This includes allowing you to:
For more details on the specific payment options each company offers, either refer to its charges scheme or contact the company directly. We will continue to work with the industry and with CCWater to make sure that water companies plan their debt management and recovery approaches to collect outstanding revenue as effectively as possible. Charges to vacant properties In RD 02/06, 'Charges to vacant properties: conclusions' (March 2006), we published our views on companies' approaches to charging you if no-one lives in your property. We said that:
All companies follow our suggested charging policy. We will continue to monitor companies' charges to check that you are fairly charged for the services you receive. Non-payment of water and sewerage bills Since the WIA99 came into effect, water companies can no longer disconnect you for non-payment of your household bills. However, companies can take court action against you to recover unpaid bills  |
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