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Water bills go up – again
Millions of Southern Water customers are facing inflation-busting price rises in April – despite the firm announcing pre-tax profits of £271m last year. Ben Leo reports.
Southern Water yesterday announced its 2.8million water and wastewater customers can expect an average bill increase of 5.3% – the third highest increase out of all 22 water companies in the UK.
The firm’s chief executive Matthew Wright – last year paid £632,000 in salary, bonuses and expenses – revealed yesterday the new average bill for customers will rise for the third year running from £427 to £449 a year from April 1.
Mr Wright’s financial package is almost 25% more than his predecessor’s.
National water regulator Ofwat said any price rise was “unwelcome”.
The National Debtline said it took a record 19,667 calls for help with water debts last year, up from 12,226 in 2010 and 597 in 2003. The figure has increased by 251% since 2007.
But while millions of customers struggle to pay for increasing water costs, the Worthing-based company announced their operating profit rocketed by 18% last year.
They said the increase in customers’ bills is helping to pay for an investment programme worth around £1.8 billion from 2010 to 2015.
This includes the replacement of 23km of water mains to reduce the risk of bursts, leaks and supply interruptions.
But the company has one of the worst records in the country when it comes to managing and hitting leak targets set by Ofwat.
In 2010-2011 they missed their leak reduction target by 16%, resulting in the loss of 96 million litres of water per day. As a result they were forced to pay back £5 million to their customers.
Darren Bentham, Southern Water’s Chief Customer Officer, said: “By ensuring investment in our communities we are able to support thousands of jobs, while delivering improved services and a wide range of environmental improvements such as cleaner rivers and seas.
“Our five-year spending programme includes more than 330 environmental projects.
“That’s more than any other water company and makes up a large part of our investment.
“These projects are in response to new European legislation and will have many environmental benefits.
“However, it’s a fine balance. While our charges must rise to meet the enormous cost of our investment, we have a duty to our customers to keep our increases to a minimum.”
Regina Finn, chief executive of Ofwat, claimed the national average bill increase of 3.5% wasn’t as high as the water companies wanted.
Southern Water had asked for 10%.
She said: “Back in 2009, companies wanted bills rises of 10% above inflation. That didn't chime with what customers told us they wanted, so we said they could only increase bills in line with inflation.
We understand that there is huge pressure on household incomes, and any rise is unwelcome. Inflation is driving these increases.
“We will make sure customers get value for money and if companies fall short in delivering their investment promises, we will take action.”
Ofwat announced proposals last week to change the way it regulates water and sewerage with the aim of developing more efficient, customer-focused companies.
Ms Finn added: “There are longer term challenges if we are to continue to keep bills down.
“Unpredictable rainfall, and population growth in areas where water is already stretched, means we need to get better at managing and sharing our water. If we don’t, customers will lose out.”
Tony Smith, chief executive of the Consumer Council for Water, said it was important Southern Water demonstrated they were committed to providing value for money to their customers.
He added: “Customers’ will expect excellent levels of service at an affordable price.
“The company will need to demonstrate that they are putting their customers’ priorities first.”
The Argus reported last week how Southern Water plans to install nearly 500,000 water meters at every home across Kent, Surrey and Sussex by 2015, including up to 75,000 in Brighton and Hove.
The majority of installations in Worthing were completed last year and the company has already started installing meters in Hove, working from west to east.
For customers struggling to pay their water bill, call Southern Water on 0845 272 0845 for advice.
Southern Water employs nearly 2,000 staff across their operational area of Sussex, Kent, Hampshire and the Isle of Wight.
Its headquarters is based in Durrington, near Worthing, and its parent company is called Greensands Holdings Limited. The main shareholders of Greensands Holdings Ltd are infrastructure funds and pension companies.
These are represented on the Board of Southern Water Services by non-executive directors from UBS Global Asset Management and JP Morgan Asset Management.
They say none of their shareholders take dividends from either Southern Water or the Greensands group of companies as they are “committed to the company for the long term.”
The company has two executive directors, an independent non-executive Chairman and five non-executive directors.
The total amount paid to the group of directors last year was £1.225m.
South East Water
South East water, which is only responsible for water supply and not waste water, announced a below-average increase of 3%.
Because it doesn’t supply waste water services, some customers receive fresh water from South East water and waste water services from another.
For example, customers in Burgess Hill receive fresh water from South East Water and wastewater services from Southern Water.
South East water supplies drinking water to more than 2m properties in Kent, Sussex, Surrey, Hampshire and Berkshire.
In Sussex they reach homes in Uckfield, Burgess Hill, Haywards Heath, Seaford, Eastbourne, Crowbrough and everywhere inbetween. Steve George, Customer Services Director at South East Water, said: “We believe that an average cost for drinking water of just 55 pence per day remains excellent value for money, but we do appreciate that some of our customers may be experiencing financial difficulties and so we have measures in place to help those customers facing real hardship.”
Thames Water recorded the second highest increase with an average combined water and waste water bill increase of 5.5%.
Wessex Water, which covers areas including Dorset, Somerset, Bristol, announced an increase of 4.9%, while South West Water was the only company to record a saving of 7.3%.
This is because customers served by South West Water will benefit from a Government contribution which will reduce the bill for all households by £50 per year.
Laura Marcinkiene, 31, Brighton “I hadn’t heard about the price increase until now but it doesn’t surprise me. If they’re increasing the prices for the reasons they say they are, then great. But I can’t help but worry it’s all about profit. My bill is around £200 a year at the moment and I suppose an increase would be manageable, but when you consider everything else is going up it’s hard not to worry.”
Tejna Kahn, 53 from Brighton “I heard they need the money for infrastructure and investment, which if true is good news. But there’s always a part of you that thinks when someone is being paid £600,000 a year it’s all a bit unnecessary. I pay £35 a month at the moment so I’m guessing that’s going to go up. It’s worrying.”
Patricia Moore, 64, Uckfield “It’s disgusting. This is from a company that bans people using their hose pipe despite watching people come home to floods in their houses, towns and villages.
John Moore, 68, Uckfield “Luckily I’m only here about three months of the year so I don’t have to contend with it all. But in Spain our water comes from a tanker that’s replaced twice a year and it’s much easier like that. In England people are always having to compromise the way they live to reduce their bills. As a pensioner it’s terrible news.”
Natasha House, 39, Hove “I’m not impressed at all. I’ve just had a water meter fitted and I already wasn’t convinced my bills were going to go down, but now they have an increase coming I’m quite sure they won’t. If they do I’ll be very surprised. There’s always a reason for an increase, whether its water, gas or electricity, and I think it’s unnecessary.”
Your chance to quiz Southern Water boss after price hike
Millions of Southern Water customers are facing above-inflation price hikes in April – despite the company announcing operating profits of £271m last year.
Southern Water today announced their 2.8m water and wastewater customers can expect an average bill increase of 5.3% – the third highest increase out the 24 water companies in the UK.
We're putting Southern Water's director of communications, Geoff Loader, in the Your Interview hot seat to answer your questions.
What would you like to ask? Send in your questions today to email@example.com
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