Water UK: Working on behalf of the Water Industry for a sustainable future

Much of the cost of our water services goes to pay for collection and treatment of water to its very high standard for drinking. Our water and sewerage bills also pay for disposal of sewage, improvements to the supply network, reducing leakage, preventing sewer flooding and, not least, conserving the natural environment on which our water supply depends.

• The price of drinking water
• Water and sewerage bills
• How water prices are set
• Customer representation
• Investment in water quality, infrastructure and resources
• Affordability

The price of drinking water

In England and Wales our drinking water costs around 1p for 10 litres (more than 17 pints). In England and Wales the cost of water supplied and wastewater taken away works out at around 94 pence per day.

Water and sewerage bills

Around the country, prices vary between one water company and another. This is because the types of supply (reservoirs, underground sources, rivers etc), the quality of raw water, and geographical and environmental factors are different for each area. Therefore water and wastewater services have to be priced according to local conditions.

Most household customers pay for their water services based on the rateable value of their property. However, more than a third now have meters and are charged according to the amount of water they use.

35%

37%

Each year the economic regulator for England and Wales, Ofwat, publishes detailed information for customers on the price of water, showing how much each water and wastewater supplier charges, how prices have changed and values for the costs associated with domestic consumption.

Typical costs for using water in the home

Domestic use	Water cost	Litres used
Shower	9p	35-40
Bath	18p	80
Watering the garden	£1.23	540/hour
Flushing the toilet	2p	7.5-9.5
Using a dishwasher	5p	20
Source: Ofwat 2009

How water prices are set

In England and Wales price limits are set for five-year periods by the independent economic regulator for water, Ofwat. Today’s prices were set in 2004 for the period 2005-2010.

In Scotland the Water Industry Commission for Scotland sets prices. In 2009 prices for 2010-14 will be set.

In Northern Ireland the first price review is now under way. Prices for 2010 to 2013 (Price Control 2010 - PC10) will be set in December 2009 by the Utility Regulator for Northern Ireland.

Prices go up only as much as the regulator thinks is absolutely necessary and water companies are expected to be very efficient in the way they operate – to deliver water services cost-effectively and to a very high standard. This is monitored and the economic regulator reports on progress annually.

The next reviews of water prices are under way. Prices for 2010-15 (England & Wales), 2010-14 (Scotland) and 2010-13 (Northern Ireland) will be set in 2009.

Customer representation

In October 2005 an independent consumer organisation representing the interests of all customers in England and Wales, the Consumer Council for Water (CCWater), was established.

This water watchdog (which replaced WaterVoice) provides a strong national voice and regional representation for all consumers. CCWater is committed to ensuring customers get value for money, that problems are sorted out quickly and that water and wastewater services are of a high standard.

Customer representation in Scotland is through Waterwatch Scotland and in Northern Ireland, the Consumer Council.

Investment in water quality, infrastructure and resources

A proportion of the household water bill pays to support capital investment. This includes costs for essential work to maintain and improve water quality and the infrastructure and to develop resources to meet water demand in the UK that is growing year by year.

Between 1990 (the date of the main industry privatisation) and 2010 the industry will have invested £80 billion in improving drinking water quality, the water environment and customer service. That is almost £3,500 for every household in England and Wales. Investment is now running at some £4 billion each year, well over £10 million a day.

The underground networks and above-ground installations of the English and Welsh water companies have a replacement cost today of around £250 billion, over £10,000 per connected property. There are over 335,000km of water mains and over 315,000km of sewers with a total value of over £200 billion.

Prices set by Ofwat for 2005-10 included: investment to replace 22,000km of water mains to be laid, renewed or relined; a major programme of environmental improvements (for rivers and coastal waters); the connection of almost one million new properties to the network; and work to prevent and alleviate sewer flooding.

At each price review, the regulator has to determine an appropriate cost of capital for the industry. This is the return to investors for providing the finance that is needed to pay for capital investment.

Affordability

For most customers water and sewerage charges are a relatively small proportion of their income. However, the same may not be true for households on low fixed incomes.

The water industry is conscious of the impact rising bills may have on customers who can’t easily afford, or are already struggling to pay, their bills.

To help these customers, companies offer a range of measures, including: helplines, flexible payment plans, referrals to charitable trusts and hardship funds, free water meters and help in applying for direct payment from tax credits and other benefits. Water service suppliers also offer advice on special tariffs and point customers to debt advice agencies where appropriate.

Water companies are working with government departments and other agencies to address issues of non-payment among customers.

Back to Waterfacts

Price Review 2009
England & Wales

Price setting 2010-15

Water UK

Working on behalf of the water industry towards a sustainable future

Waterfacts: Water Prices