Water meters to become compulsory?

Yet again metering water metering is becoming a significant issue. The papers were full over the weekend of stories about Defra accepting the case for basing all water charges on metering as well as the potential for water shortages in the South West after the exceptionally low rainfall in 2010.

The coalition has promised to review water charges and in particular tackle the anomaly of customers in the South West paying the highest water bills in the country. Annual bills are £723 compared with £367 nationally.

But installing meters is expensive, at about £200 a time and there are big issues over how to install meters in buildings that have been turned into flats, an increasing trend in most major cities. It can be very difficult and consequently costs can be excessive.

The debts of the water companies due to unpaid water bills are increasing fast up 20% last year. In London water bills will have to increase significantly to pay for the Thames Tideway tunnel. Further increases on top to reduce bills in the South West and pay for metering will be very unpopular and difficult to sell.

So although installing water meters may sound like a sensible idea to reduce water consumption and ensure people pay for what they use. The prospect of a significant increase in bills will not be an easy message for the politicians to sell. Defra were due to launch a consultation shortly but the debacle over the forest sell off is likely to delay any decisions on water meters.  Expect much talking but little action.

White Paper on future of water industry announced

The announcement by Richard Benyon, Minister at DEFRA that the Government will produce a water white paper in Summer 2011 should be welcomed. A clear long term vision for the sector is absolutely vital with the increasing challenges of climate change, population growth and rising expectations.

Affordability of water has become a political issue (don’t make the mistake of underrating it), as highlighted by the Walker report. Its particularly vital in the South West where it is reaching a political crescendo. This also impacts on the contentious issue of water metering and the costs inherent in the massive investment required for the Thames Tideway project. Those who think that competition is likely to be the salvation are likely to be disappointed. Richard Benyon makes clear that the Cave review is integral to the process but there is no suggestion that the industry will be restructured just some tinkering around large water users and abstraction.

The other major issue is diffuse water pollution. The relatively easy point sources have largely been tackled. Now with the Water Framework Directive the emphasis is moving to the much more difficult diffuse pollution sources. This will require major investment. With the transformation in the number of people surfing (and all year round) and campaigns by papers like the Sunday Times the pressure to improve will only increase.

Central to resolving all these issues is clear political direction. The water industry needs to grasp the opportunity presented by the development of the White paper to get involved in the debate and shape the future of the industry.

Action needed on water charges

Photo: Walker Review 

The Walker Review on charging for water raises some important questions and challenges for the water industry. Anna Walker said in her conclusions: “while the regulatory regime in the water industry has served customers well over the last twenty years, we now face considerable new challenges”. She went on to say: The biggest issue is the mismatch between how we value water now and how we will need to do so in future”. 

The Walker Review strongly challenges whether the current system of charging is fair. Two particular issues are the high level of charges in the South West, 43% higher than other areas and the high levels of debt.  The report questions why debt in the water industry should be three times higher than in the energy sector, although water bills are a third of energy bills suggesting that something is fundamentally wrong.

The issue of fairness addressed in the Walker Review is crucial to customer’s perception of the water industry. The industry depends on the support of customers to enable future investment. Government and regulators need to find the time and courage to tackle the issues raised in the Walker report soon before they escalate and become bigger and more expensive still.