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| |  Reports on water companies |
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International comparisons - unit costs
This section compares unit costs of both water and sewerage services. Unit cost comparisons provide a simple indicator of relative cost performance. We express costs on the basis of cost per property billed and cost per cubic metre of water delivered and sewage collected. We divide overall unit costs into:Where possible, we separate the cost of operations into functional areas of expenditure. We publish information on the unit costs of the water and sewerage services in England and Wales each year in a letter to the water company regulatory directors.
High and low costs do not always directly reflect relative efficiency. The following factors can affect unit costs.
- Levels of water use vary widely between countries and therefore when measuring unit costs in p/m3, volume may be a poor determinant of costs for some areas of operations. Similarly, assumptions made on the number of properties will affect the unit costs when measured in £/prop.
- Different operating environments such as the extent of pumping or the level of treatment required will affect unit cost comparisons.
- Scale economies may increase or reduce unit costs relative to other businesses while vertical integration of processes may also provide scope economies.
A 2002 study by WS Atkins that we commissioned found broadly similar levels of capital maintenance across countries. Differences in capital maintenance unit costs were found to be because of differences in asset valuations, asset lives and accountancy rules.
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Water service unit costs - results for 2006-07