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Ofwat holds bills down for customers

Ofwat holds bills down for customers

News Release issued by the COI News Distribution Service on 23 July 2009

Proposed average bill to go down by £14 by 2015
Investment of almost £21 billion over five years

Ofwat today published draft proposals for the prices water and sewerage companies can charge their customers between 2010 – 15. Its proposals will see household bills remaining broadly stable until 2015.

Every five years Ofwat sets limits on the prices water and sewerage companies in England and Wales can charge their customers. Its draft proposals follow the submission of water companies' final business plans in April.

The regulator's scrutiny of companies' business plans will see the average household water and sewerage bill reduced by around four per cent or £14 to £330 by 2015.1 This is before inflation is considered.

Companies will still be able to invest extensively. Almost £21 billion will be pumped into helping maintain and improve services to consumers. The proposals will build on the progress made over the last 20 years since privatisation, allowing companies to carry on delivering a safe, reliable supply.

Flooding in 2007 highlighted the risk extreme weather conditions pose to water supplies. The proposed investment will see this risk reduced for around ten million people.

More than £4 billion will be invested in maintaining and improving drinking water quality, as well as protecting the environment. This will help deliver cleaner wetlands, rivers and beaches.

Regina Finn, Ofwat Chief Executive Officer said:

"We understand times are hard and we have listened to what customers have told us. They want a safe, reliable water supply at a reasonable cost.

"People can shop around for the best deal on many things, but not water. That's why we've challenged the companies' plans rigorously to ensure that customers get the best value for money from the £21 billion of investment.

"Our proposals allow the companies to build on the successes of the past, keep bills broadly stable and create a better environment.

"Our decisions allow efficient, well run companies to invest in the right place at the right time for the right price."

Companies, customers and interested parties now have the opportunity to present their views on Ofwat's proposals. Final limits on the prices companies can charge will be published in November. New bills will then come into effect in April 2010.

Ofwat's proposals will allow companies to ensure customers continue to see improvements and receive a safe, reliable supply of drinking water. Benefits would include:

* Over 10,000km of water mains being improved or replaced – more than the equivalent of London to Cape Town.

* Extreme events such as flooding can severely disrupt water supplies. Around 10 million people would benefit from investment to guard against them being without water.

* A reduction to national leakage levels of around 70 million litres a day by 2015. This extra saving would be enough to fill the auditorium of the Royal Albert Hall around 300 times every year.

* Addressing sewer flooding problems for more than 5,600 properties.

* Improve 130 water treatment works and 520 sewage treatment works to maintain and improve the environment and drinking water quality.

* Maintain or improve more than 2,700km of rivers to meet EU environmental standards.

* Improve water quality in more than 55 wetlands and bathing waters.

* Investment in renewable energy sources to reduce carbon emissions and cut operational costs by around £8.5 million a year. The electricity generated would be equivalent to the amount required for around 90,000 homes.

Ms Finn said:

"We've reduced bills, whilst allowing extensive investment of almost £21 billion. Everyone will see real benefits as a result of our proposals.

"Not only will customers continue to receive a safe, reliable supply of water, but we have worked closely with our partners to ensure our environment gets a better deal too.

"Events such as flooding can seriously affect water supplies. We need to help guard against that. Investment over the next five years will help keep the taps running by reducing the risk of supply interruptions for around 10 million people.

"But it doesn't stop here. Once we finalise prices in November, we will continue to hold companies to account by making sure they deliver on their investment promises. Should they fail to do so we will take action."

Ofwat's challenge sees average bills around 12 per cent or £45 lower by 2015, compared to what companies wanted.

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Notes to Editors

1. The average household bill is, by definition, an average across all customers. Individual customers' bills may be more or less than the average because of their particular characteristics, for example, whether they have a water meter. Changes to customers' bills will vary according to which company supplies them. Some customers receive their water services from one company and receive their sewerage services from another.

2. The Water Services Regulation Authority (Ofwat) is the economic regulator of water and sewerage companies in England and Wales. It exercises its powers in a way that it judges will protect the interests of consumers, promote value and safeguard future water and sewerage services by allowing efficient companies to carry out their functions properly, and finance them.

3. For more details about the price review process and Ofwat's draft decisions, please visit www.ofwat.gov.uk .

4. Ofwat's draft proposals will allow companies to build on the successes of the last 20 years. Since privatisation, £80 billion of investment across England and Wales has seen significant improvements in service delivered. These include:

* Leakage down by around a third since its peak in the mid-1990s.

* Around 339,000 fewer customers at risk of lower pressure – a reduction of 99% since 1989.

* The proportion of properties at highest risk of sewer flooding has reduced by more than 75% in the last 10 years – more than 20,000 properties.

* Drinking water quality in England and Wales is comparable with the best in Europe. In 2008 99.96% of drinking water met quality standards.

* In 1990, only around 78% of England and Wales's bathing waters met the minimum standards. In 2008 this figure had risen to 97%.

5. Proposed bill changes have been rounded to the nearest whole £ (for example, a change of £3.82, will be written as an increase of £4). Some % totals may therefore not add up due to rounding

6. Media enquiries to Ofwat Press Office on:

Benedict Fisher on 0121 625 1442 / benedict.fisher@ofwat.gsi.gov.uk


0121 625 3662/ 1416 / 1496 / pressofficeteam@ofwat.gsi.gov.uk


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