Hikes that drain the bill payers dry (From The Argus)
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Hikes that drain the bill payers dry
10:43am Thursday 9th February 2012 in Comment and Analysis By John Keenan, business editor
Did you leave your bathroom tap running this morning?
I don’t want to worry you about flooding – but if you made sure to leave the plug out, then a lot of money is currently swilling down your drain.
Southern Water, the county’s largest water and sewerage utility company, is hiking its bills by 8.2 per cent, pushing the figure up by £31 a year to an average of £416. Its customers’ bills will go up by 12.4 per cent over three years.
This is far above increases in pay and pensions. It will leave thousands of families struggling. They will have to trim the lean family budget even further.
The massive increases are the result of the Government allowing the industry to link changes to the retail price index (RPI) measure of inflation as it stood in November.
RPI was then running at 5.2 per cent – the first time it had topped five per cent in November for 21 years.
Southern is installing compulsory meters under amendments recently made to the Water Industry Act. The law allows water companies to universally meter households if the area in which they operate is an area of “serious water stress” because of population growth and lack of water.
The company has already fitted 40,000 meters in Sussex, across Horsham, Littlehampton and the surrounding area and Crawley. It has just started meter installations in the Worthing area.
A spokesman for Southern Water said that half of its customers will pay more through metering.
He said this was because while bills are currently based on the rateable value of the house, on a meter they are based on the amount of water people use. Some families will see their bills double. The spokesman said: “Water resources in the South East of England are under pressure, with the region officially defined as ‘water stressed’ by the Government. This is due to the increase in population and the impact of climate change, with warmer and drier years.
“People on a water meter tend to use about ten per cent less water, so we are installing meters for the majority of our customers to make sure we can continue to supply quality drinking water for future generations and protect the environment.”
To be fair to Southern Water, the company can point to investment in new mains and sewers to cope with heavy demand.
Projects include the £300 million Cleaner Seas for Sussex scheme, which will include a new wastewater treatment works at Peacehaven and an 11km sewer pipeline, the replacement of 16km of water mains in 2011/12, a £6.3 million upgrade at Lidsey Wastewater Treatment Works, near Bognor, and a £2.7 million upgrade at Westfield Wastewater Treatment Works, near Hastings – the list goes on. No one would deny that maintaining and improving our water supply is an expensive business.
But consider this – Southern Water paid dividends of £77.1 million to its shareholders during 2010/11. Southern Water has provided rich pickings for overseas investors.
In 2007 a consortium led by JP Morgan won the battle to buy Southern Water with a £4.19 billion offer.
JP Morgan Asset Management currently has the largest stake in the company followed by multi-national banking and financial services group UBS.
We are not allowed to know how much the directors of Southern Water are paid.
When I asked, a spokesman for the company told me: “Southern Water is a private limited company, therefore the salaries of all staff are confidential.”
The point is this: utility companies are monopolies. But they behave like oligarchs.
Customers in Sussex cannot shop around for cheaper deals. The huge dividends handed out to shareholders tell their own story. Surely the companies should be ploughing profits back into maintenance and keeping bills as low as possible?
It is not good enough that directors can hide their salaries behind a smokescreen. They are public utilities and performance and reward should be a matter of public record.
Banks are rightly under intense scrutiny to justify their executives’ salaries and at least customers can walk away from a bank which does not give good service. I don’t advocate nationalisation, as that is just a state-controlled form of the current monopolistic situation.
But water companies must be held to greater account. If not, our money will continue to go down the drain.
