Southern Water is one of the UK's most efficient companies at delivering water but can still do better

That is the opinion of watchdog OFWAT, which released its 1998/9 report on Water and Sewerage Service Unit Costs and Relative Efficiency this week.

In the report Southern Water is in the top band for its operating efficiency, among the leading companies, but slips to just average for its capital maintenance efficiency.

But the company came in second place when compared to other water providers in its charges per household - beaten only by Portsmouth. In terms of sewerage costs per household it faired less well - coming seventh out of ten providers.

The report has already been acted upon as part of OFWAT's price review and assessment of capital efficiency in water companies in England and Wales. Following discussions with OFWAT earlier this year Southern Water announced a £1 billion programme of environmental improvements and reduced costs to customers.

Ronnie Mercer, managing director, said: "We will be spending nearly £600,000 every day on projects to further improve water supply and sewage treatment systems services and meet strict European environmental laws. But the huge cost of this programme has been balanced against the need to moderate prices to our customers."

The programme includes £600 million to improve sewage treatment levels, £195 million to safeguard tap water supplies and £240 million on improvements to the sewerage system. Southern Water predicts the average household bill will reduce from £278 to £239 by 2004-2005 after it was ordered to cut bills by 14 per cent.

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