09/09/09
Water UK responds to a comprehensive and thorough interim report published in June by the Walker Review of charging for household water and sewerage services.
In an overview of its position, Water UK is pleased to give particular support to three of the Review Group's recommendations, but expresses three reservations about the overall thrust of the interim report. Water UK also identifies and summarises six issues of central importance to the water industry.
The main body of Water UK's 82-page paper comprises its answers to specific questions raised by the Review group in the eleven chapters of its report. The paper concludes with two appendices on subjects connected with customer debt.
Recommendations particularly supported by Water UK
• Querying what water customers should pay for
• Regional pricing
• Geographic averaging of prices
Reservations expressed by Water UK
• Not enough discussion about proposed 'first-best' solutions, moving too quickly to second-best
• Notion of 'true value of water' is too vague
• Affordability problem cannot be significantly addressed through more water efficiency among low-income customers.
Issues of central importance
• Fairness and affordability
Affordability is better dealt with as part of a discussion on fairness, because it is fundamentally different from the issue of debt.
Water UK supports the eight principles of fairness identified by the review, and agrees with the general principle that the water charging system should not be concerned with general poverty. But fundamentally disagrees that the water charging system addresses affordability only in areas of above-average water bills and, in any area, only for customers with an above-average consumption.
• Charging system and metering
Water UK supports the overall direction of travel for charging toward universal metering but each company should be able to increase meter penetration at its own speed.
• Tariffs
Proposals on tariffs in part depend on the notion of 'true value of water', but the review has not defined it in sufficient depth to be able to recommend its use in any context.
• Water efficiency
Water UK supports the approach that the imperative need for increased water efficiency – arising from climate change and the pressures of an increased population with increased expectations – should be one of the drivers of a review of water charging.
• Debt
The industry is pleased the review recognises that domestic customer debt is a serious issue for water companies and that legislative changes are needed to enable water companies to recover money owed them and reduce the debt burden on paying customers (estimated at £11 per annum on every customer's bill).
Water UK is surprised the report gives little mention to the third party deduction scheme Water Direct, operated by the Department for Work and Pensions, and little emphasis in the emerging recommendations, as customers overwhelmingly value the facility.
The review's approach is supported but it highlights the need to address problem 'won't pay' customers, by introducing trickle-valves (reduced-flow devices) to reduce supply, which might provide a suitable incentive for these customers to pay. Further research is needed to investigate this option. Water UK agrees that such a measure should only be used after rigorous independent safeguard conditions have been met.
• Sewerage
The review should be clearer in what it recommends for highway drainage. Water UK agrees that the charging basis for waste water services should continue to be the same as that for water services.
Appendices
• Water Direct third party deduction scheme
• Briefing on 'reduced flow' devices
Water UK responseFor more information please contact:
Water UK Communication
020 7344 1809 (out of hours 07833 450544)
