Households set for rise in water bills
Millions of households are set to be hit with above-average increases in water bills this year, the water regulator Ofwat has confirmed.
According to Ofwat, average water bills will rise by 4.1% in April - more than 1.1% above the rate of inflation - taking the average bill to around £342 a year.
Although the rise amounts to an extra £13 a year, consumer watchdogs have warned that the increase could cause problems for people on low incomes - particularly the elderly - many of whom have seen their budgets stretched to breaking point by high fuel bills and plummeting interest rates.
However, because of the way that water prices are set, Ofwat said that the increases could have been higher if it had not agreed price caps five years ago.
Regina Finn, Ofwat’s chief executive officer, said: "We needed to make some tough decisions back in 2004 when we set prices. Further investment was vital, but we needed to strike a balance with keeping bills down. Our work has kept customers' bills around £100 lower than they would otherwise have been."
Ofwat said the impact of the new charges will vary for individual household customers depending on the company that supplies them and whether or not they have a water meter.
Customers of South West Water will see the lowest price increase of 0.9% above inflation, while Southern Water’s customers will be hardest hit with bills of 2.6% above inflation.
The Consumer Council for Water has asked the government to provide more help to customers struggling to pay their water bills through the tax and benefits system. It said it was working with the government on a review of water charging and affordability.
Dame Yve Buckland, chair of the Consumer Council for Water, said: "Any price increase will be a concern for customers in the current economic climate and we recognise many customers may struggle to keep up with these bill rises."
The price rises will take effect on 1 April and last until 31 March next year. Ofwat is to decide on price limits water companies can impose between 2010 and 2015 in November.
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).