Water bills set to soar
Water bills are set to soar over the next five years as utility companies unveil measures to invest in improving quality.
Ofwat, the regulator, is considering business plans from all water companies and will decide in the autumn 2009 how much firms can reasonably charge consumers for planned improvements, with new bills coming into effect in April 2010.
Thames Water, the biggest company with 13 million customers, says its bills will rise by around 3% above inflation over the next five years in order to support a £6.5 billion plan for water and sewerage services.
Meanwhile, Northumbrian Water expects increases of 1.3% above inflation and United Utilities has said water bills will rise by just over 2% a year between 2010 and 2015, as part of its £4 billion investment plan.
Welsh Water, which has proposed a £1.5 billion investment scheme, does not expect the average household bill to change over the period beyond inflation.
David Owens, chief executive of Thames Water, says the increases mean the average customers will pay around £1 a day for water by 2015.
"For the last two years we have been drawing together our business plans for the next five-year period, which starts in 2010. [It] comes in at £6.5 billion, the highest level of investment proposed by a UK water company ever.”
Are you pouring money after water? Read our article on cutting your water bills
An increase in the general level of prices that persists over a period of time. The inflation rate is a measure of the average change over a period, usually 12 months. If inflation is up 4%, this means the price of products and services is 4% higher than a year earlier, requiring we spend and extra 4% to buy the same things we bought 12 months ago and that any savings and investments must generate 4% (after any taxes) to keep pace with inflation. Since 2003, the Bank of England has used the consumer prices index (CPI) as its official measure of inflation (see also retail prices index).