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Behemoth

Water metering to become an option in long term plans

NEWS RELEASE
Ref: 263/07
Date: 16 August 2007Nobel House, 17 Smith Square, London SW1P 3JR
Out of hours telephone 020 7270 8960

Water metering to become an option in long term plans

Water companies in areas of serious water stress will be able to seek compulsory water metering as part of their 25 year forward plans, Environment Minister Phil Woolas announced today.

The proposal, developed by the Water Saving Group, adds metering to the existing raft of options for companies - alongside developing new resources – for ensuring long term security of supply. Today’s move follows consultation with companies, regulators, charities and members of the public. The Environment Agency is publishing its response to a parallel consultation on defining areas of water stress today.

Phil Woolas said:

“The terrible flooding we have seen recently came after more than two years of severe drought in some parts of the country. As the impacts of climate change on our weather and rainfall patterns increase, we have to face up to the fact that what we might now consider to be extremes could become more commonplace. We need a flexible range of tools at our disposal if we are to manage supplies sustainably in the future.

“Metering saves water – around 10% per household – and it seems right to me that in seriously water-stressed areas the costs and benefits of compulsory metering are given consideration alongside other options.

“This is not a green light for universal metering, and it in no way absolves companies from their responsibility to deliver on leakage targets. Water companies will have to make a strong case in their 25 year forward plans for compulsory metering in their region to get approval to go ahead, demonstrating that metering offers the best value for water customers’ money compared with the other options available, such as building new reservoirs. They will have to take into account the impacts on individual customers and particularly on vulnerable households. Their draft plans will be open to public consultation, so everyone in an affected area will have the chance to make their views known”.

Inclusion of metering in long term management plans will come into effect after the price review 2009.

Households use almost 70% of the billed water supplied by companies in England and Wales, with the rest used by the business and public sectors.

Average per capita consumption in England and Wales in 2005/06 was approximately 150 litres per person per day. Total household demand has been increasing for some years and this increase is expected to continue. The predicted increase in demand is a result both of projections of increases in per capita consumption and expected increases in numbers of households.

Notes to editors
1. Water metering in England and Wales currently stands at around 30% and is increasing by 2% a year.

2. 58 responses to the water metering consultation were received. A summary is published at
www.defra.gov.uk/corporate/consult/naturalenvironment.htm

3. Responses to the Environment Agency’s consultation on defining areas of water stress are published at www.environment-agency.gov.uk

4. A House of Lords Science and Technology Committee report recommending that it be made easier for water companies in water stressed areas to impose compulsory metering was published on 6 June 2006 and is available at: http://www.publications.parliament.uk/pa/ld200506/ldselect/ldsctech/ldsctech.htm

5. In April 2007 the Government placed water companies under a duty to produce and consult upon water resource management plans. Ministers will be able to direct the content of plans. Draft plans will be consulted upon in 2008 and finalised in 2009. Ministers can require public hearings on the draft plans, and can direct changes before they are published in final form.

6. The Water Saving Group is a Defra-led stakeholder group with key water industry stakeholders working together to improve water efficiency in households. The high level group is chaired by Phil Woolas, Minister for the Environment. It meets every six months and members include Regina Finn of Ofwat, Barbara Young of the Environment Agency, Yve Buckland of the Consumer Council for Water, and Pamela Taylor of Water UK, as well as representatives from Waterwise, water companies, and Communities and Local Government. For more information on the WSG visit www.defra.gov.uk/environment/water/conserve/wsg/index.htm
marigold

Water metering is an option for households at the moment, compulsory water metering would make it less optional... Wouldn't it?
Behemoth

Yup.
Percy

I have had a meter fitted recently. I was paying £19 a month for mains water. This is now down to £6 a month. Plus we are educating ourselves on ways of saving water.
Pea

I thought they put meters on all new connections, we had one fitted with the new connection years ago.
Behemoth

Pea wrote:
I thought they put meters on all new connections, we had one fitted with the new connection years ago.


Yes - been the norm for over 10 years now. About 30% of properties in England and Wales are metered.
Percy

All new properties/connections from April 1st 1989 have to be metered as this was the cut off date by the government for water companies to stop using the rating system for new properties. The company I work for now meter any new occupancies as well. Also all commercial properties are supposed to be metered.
OP

Several years ago the monopoly suppliers of gas and electricity services were introduced to competitive markets. The result is that whilst world energy prices have gone up and down, consumers at least have choice. Gas and electricity of course are usually supplied with a meter.

It's all very well introducing meters for water, but since water supply is still a monopoly industry, the consumer is still in a very difficult position. Sure, if you are on a meter you can use less water and pay less - but you can still do that with gas and electricity, plus you can also choose to have a single supplier for both, you can opt for suppliers who only provide it from renewable sources and so on. Until the government breaks up the monopoly water suppliers and offers consumers choice, I'll remain very suspicious of this kind of initiative. We moved from the dry south east to the wetter north, and our water bill went up by 250% - just because Yorkshire Water like to charge more.
Behemoth

You'll have to justify that. Wink

What was your old company and what were their tariffs?

Is it the case you moved from a Low Rateable value property to high RV property or to property with a meter and reflection of your actual consumption?

Give me the company name and your method of being charged and I can lay out the facts.

Competion in water isn't as straight forward as the other utilities as people are usually tied to local water supplies and treatment works and networks. It's not bought in bulk from Russia. You can break down the lements of treatment, distribution and customer service and to some extent this is being done already.
Northern_Lad

orangepippin wrote:
We moved from the dry south east to the wetter north, and our water bill went up by 250%

At least you can drink the water up here, rather than leaving glasses of water out for a day or two then taking a stick of chalk.

orangepippin wrote:
- just because Yorkshire Water like to charge more.

The clue's in the money-grabbing, tight-fisted area in the name. Wink
Treacodactyl

Northern_Lad wrote:
At least you can drink the water up here, rather than leaving glasses of water out for a day or two then taking a stick of chalk.


It's fine down here, ideal to make a decent pint. It' a good source of calcium so cuts down on the need for moo juice and lines lead pipes preventing people going mad.
OP

Northern_Lad wrote:

The clue's in the money-grabbing, tight-fisted area in the name. Wink


Good point. I did not think of that.
Behemoth

Ahem...info please not stereotypical nonsence from those who live in mud huts and think the sun only makes a showing on feast days or if they bang their pans loud enough. Wink
thos

Behemoth wrote:
Ahem...info please not stereotypical nonsence from those who live in mud huts and think the sun only makes a showing on feast days or if they bang their pans loud enough. Wink

Ah, I wondered where I was going wrong. I must bank my pans louder next year.
Percy

The main differance in the water north and south is mainly where it comes from. The majority of the water north of the country is from open reservoirs and needs more treatment than down south as this comes from underground aquifers. That is the reason for the chalk mostly in the south east as the water permeates through the chalk layers. The drawback to this is the hardness of the water which over time causes the calcium deposits in any device in the house which heats up the water. For example a kettle. However, whether you like it or not scientifically, it has been proven that water in the s.e. of the country is one of the healthiest in europe.
OP

Thanks for this explanation, presumably that also means that water in the north is more expensive. Tap water is undrinkable here because of the amount of chemicals in it, so unfortunately we only drink bottled water these days.
Percy

I can only assume it's the treatment costs. But having said that I have customers who have moved down from a soft water area and complain about the water down here. At the end of the day it's probably what you have got use to.
Jamanda

I much prefer Northern water to down South stuff. London water is too chlorinated (it's OK if you leave it out for a few hours though) and Devon water is just too soft. It's lovely for washing but not nice to drink. Pennines water does it for me! And I know this may be contentious, possibly even treacherous , but I actually prefer it from the West side than the East.

But it is all safe and drinkable in this country. Bottled water is very bad from an environmental point of view.
OP

Jamanda wrote:
But it is all safe and drinkable in this country. Bottled water is very bad from an environmental point of view.

Safe - yes, drinkable - no.

I don't drink tea or coffee so water is my main drink and the stuff that comes out of the tap is like drinking swimming pool water. I can still remember as a boy in the south east running home from school and drinking a large glass of water straight from the tap, lovely and refreshing. That is not possible here in East Yorkshire. I'm not even sure, given the level of chemicals, that it actually is safe either. There is a lot of discussion about additives in food and the nutritional benefits of organic vs inorganic produce. Yet the tap water is about as inorganic as you can possibly get!
Behemoth

You really don't want 'organic' water. Laughing

I suspect where you are that you get your water from the River Derwent. River water is another kettle of fish compared to aquifer or upland reservoir and does need the most treatment, is the most expensive to treat and then pump around. It's generally not to my taste either but I suspect Rob R has been drinking it all his life.Go a bit further east and you could get chalk aquifer water. Surprisingly upland reservoirs water needs minimal treatment, mainly to take the colour out.
Jamanda

H2O is an inorganic chemical. The minerals which dissolve in it to make it taste nice are inorganic too. I really wouldn't want any organic additions to that myself.

Have you tried letting the tap water stand in a jug in the fridge for a couple of hours?
OP

What I meant was, there's a lot of awareness of the importance of nutritional value in food and whether organic (or ideally, untreated) produce is better, and yet we pay no attention to the quality of the water that we drink with it. If the production of potatoes or carrots required them to be stuffed full of chlorine we would rightly be up in arms, yet we are quite happy for this chemical cocktail to be added to our drinking water.

OK I realise that without it the water would be too dangerous to use, but I don't want to drink it in this state and the only alternative unfortunately is bottled water. I'm not convinced the environmental impact of using bottled water is necessarily worse than the impact of the chemical treatment that goes into tap water either, although there are clearly some "food miles" involved in bottled water. I think Vittel is the best drinking water, but that is a bit too far away. Perhaps the water companies should do more to encourage local sustainable untreated or low-treated drinking water supplies. However, since the water companies are basically regional monopolies and the regulator appears to be entirely at their beck and call, this is unlikely to happen. This is why I think (back to an earlier post) a lot of this depends on introducing competition into the water industry.
Treacodactyl

Behemoth wrote:
River water is another kettle of fish ...


I would have hoped they could at least screen the fish out. Shocked Laughing

orangepippin, any change of having your own supply, spring borehole or whatever?
OP

Actually, I have heard that someone in the town has found a spring in their garden and the water will shortly be available for sale, so I will investigate this further. This is the kind of thing that OFWAT etc should be actively encouraging, but they just seem so far behind the times. There is far too much focus on targets for installing water meters - as if that somehow means we are tackling the real underlying issues of sustainable water use.
Behemoth

It has actually been around for a couple of years now:

http://www.ofwat.gov.uk/aptrix/ofwat/publish.nsf/Content/competition_intro

not a big take up yet as there's not a lot of money in it. Many of the small private water companies in existence when the old water authorities were privatised have been taken over because they were inefficient, mainly through economies of scale. The most efficient company in the UK is...um...YWS.
Jamanda

How would it work? A new company would have to have it's own reservoirs/pumping stations/pipe network. How could that sort of investment ever even start to break even?
sean

I assume that they'd just buy the stuff in bulk from an existing supplier and resell it. Same as telecoms companies.
Green Man

Remember water charges are not just for what flows into your house but for what flows out also. puke_l
Jamanda

sean wrote:
I assume that they'd just buy the stuff in bulk from an existing supplier and resell it. Same as telecoms companies.


But if it were to be real competition ie you could buy water treated "organically" instead of corporation pop. How could that ever work?
sean

It wouldn't. Which is where the whole concept of competition in fields like this falls down.
OP

Which is why as consumers we pay over the odds for a service which offers no choice whatsoever.

Competition has been achieved in the electricity and gas supply industries, so surely there should be some opportunities for competition in water supply - although I accept there are some mechanical differences, particularly the lack of a national grid.

For example, you can pay a bit more to get electricity from a supplier of renewable electricity. That doesn't mean the exact bit of electricity that comes into your house was routed directly from a wind-farm, it just means that the total amount of electricity in the national grid that comes from renewable sources goes up by a tiny bit more and demand for normal non-renewable sources falls a tiny bit. To make matters worse the regulator, OFWAT, seems to be rather under-powered and lacking in the will to sort the problem out.

None of this is possible in the water supply industry because there is no mechanism for consumers to influence suppliers. However if OFWAT was a bit more proactive there must surely be things that could be done.
Jamanda

We have good, safe, clean drinking water delivered 24/7. We have our sewage taken away and treated. Our rivers and beaches are getting cleaner and less polluted and all for about £400, I believe it's less in Yorkshire. I think those things are so important to our health and well being I'm quite happy to pay the charges.
OP

Our bill is nearer to £600. It went from £17 per month to £45 per month for a similar sized house when we moved from Herts to Yorkshire 10 years ago. I personally am not happy to pay that amount, at least not without having a choice of supplier.

You could equally argue that we have good safe electricity delivered 24/7, and our energy is getting cleaner etc etc - the difference is that with electricity you have a choice of supplier, and by exercising that choice you force the supplier to be more efficient, or to use wind energy, or nuclear, or whatever you want.
Behemoth

Just posted a long response but it got lost on submission Confused
Will try again tomorrow.
James

(maybe it was along these lines, Behemoth!)

Orange pippin-
Sorry if this is a bit of and essay, but I feel I have to get it off my chest.

I work in the groundwater & contaminated land department of the Environment Agency.

I live in York, so my water (I think…correct if I’m wrong B’moth) comes from the river Ouse. Depending on were you live in East Yorks, you’ll either have water from a reservoir in Wharfdale, or maybe something coming from the East Yorkshire chalk. There are very few areas in England that have surface waters as clean as Wharfdale . And if it comes from the chalk, then there’s no difference to the millions of guys in the south & east.

Local springs, on the other hand, are a VERY different matter. I've heard on the grape-vine (prior to what you have mentioned) of a village spring in Yorkshire that is considering going commercial. I know for a fact that the quality of this water is horribly bad, probably very bacterially active, and with shocking levels of other dissolved solids…I’m not saying this is the same location, but I’d be very worried if a local bloke started flogging water. What’s it doing to the rest of the environment? Does he or she know? Do you know? What little ecosystem is the spring supporting at present? Has he or she undertaken years of monitoring to prove that no impact will occur….I doubt it (otherwise I would have read it)

I (and maybe behemoth to) am paid by your taxes to make sure that the environment isn’t damaged by the water that comes out of your taps. The environmental assessments that go into a public supply are MASSIVE. So you can rest assured that there’s far less environmental risk associated with abstraction from Yorkshire water than from a randomly abstracted private spring.

Now. Next thing (sorry if this is a bit of flame…). Water quality. Depending on the type of bottled water you buy, you’re probably being duped into thinking its better quality than you think. “Table water” is the cheapest bottled water you can get- its exactly the same stuff as you get out of your taps (filtered, chlorinated etc…). Then there’s “spring water”. The legislation for spring water allows a multitude of sins to be peddled onto the pore consumer. Prior to working for the EA, I worked for a groundwater consultancy. We acted on behalf of a very large Scottish spring water. We had to drill new boreholes for them so they could blend their water because the existing water was higher than permissible limits for arsenic. So now they blend it & have wrangled around the legilstations so that (on average) the concentration of arsenic is permisable. Believe me, the water coming out of your tap is MUCH lower in arsenic that this spring water coming from the highlands. Although spring waters cannot have chlorine added, they can be irradiated via ultra-violet light. They can also be chemically treated to precipitate out iron and manganese. So don’t go thinking that these bottles are lovely and pure…’cos very often they’re more treated than your tap water. Then there’s mineral water. These are OK, but again, only as good as the chemical content they contain, and the bacterial count. They don’t have to tell you the bacterial count on the bottle, but these waters are bacterially live. I wouldn’t let a baby drink mineral water.

So how about the fact that it tastes of chlorine? Actually, public water treatment and sterilisation is now done mostly without the use of chlorine. That’s partly because of expense, partly environment risk, and partly due to a strange reaction between tiny amounts of organic carbon and traces of chlorine, which makes a volatile smelly compound which people don’t like. Instead they use ozone- just pure oxyegen, then just before it goes into supply they dribble a little bit of chlorine in because it gives a lasting sterility (unlike ozone)

And cost? A bloke I know is thinking of setting up a large water bottling plant. He’s a consultant for a major soft drinks company(red tins of sweet brown fizzy stuff). A medium sized mineral water plant clears £8 million per year in profit. Right now, I’m faced with trying to way up the environment cost/ benefit of ANOTHER bloody water bottling plant, which is going to inflict MORE environmental harm on our (infact, YOUR) overstretched eco-system, just so some rich bugger can pocket eight million quid per year because people are under the misapprehension that this water’s better than the water they get from their taps. Meanwhile, the waterlevels drop further & the otters, salmon and water voles have fewer hiding places and things get tighter and tighter.

Your tap water cost you a few pence per day.

So next time you buy a bottle of water, remember that a portion of your taxes is paying to ensure the water environment is preserved. And we’re doing a damn site better job than anyone else in Europe- not a story you hear about on the news. And your water rates ensure that the water in your tap is the cleanest in the world.

PLEASE dont buy bottled water.
Jamanda

Well said James. Thank you for putting it so clearly.
OP

Thanks James for the comprehensive and very interesting reply. Unfortunately I intend to carry on buying bottled water - for drinking that is, not for the bath Smile The main reason is that, regrettably, the water that comes out of the tap is not drinkable. I know this because on occasion when I have run out of Evian I have tried it, and it is not nice.

I am confident in the water quality standards set by Evian, Vittel et al and the French Government ... but have no evidence for that other than the French take food and drink very seriously. I expect they have their mishaps as we do. I do intend to see what bottled water is available locally, but as you say you do wonder how safe it might be. You say that so many consumers are under a “misapprehension” that bottled water is better than tap water … but perhaps you should ask yourself why that is. Either you are right and they are all wrong … or …

We all have to weigh up the environmental impact of our actions, but one of the reasons water quality is so important to me personally is because I don’t drink tea or coffee, so I have to drink something during the day – and how environmentally friendly is tea and coffee production and how much water is used to grow it and how many food miles are covered to get it here? These things are never simple are they?

Secondly, my point about the cost of water was related to the lack of competition in the water industry. Yorkshire Water are a monopoly and that greatly affects the way they operate, the prices, and the services they offer. It is not sufficient to say it costs a few pence a day, since it is well over £1 a day and that is a lot of money to many people, and the prices are increasing at above the rate of inflation. I'd like to see real competition in the water industry, because I think that might be better for the environment as well as the consumer. The gas and electricity industries show what is possible when utility monopolies are broken up. Who knows, given a choice, consumers might actually be prepared to pay more for water that was produced sustainably?
James

deleted repeat post
James

orange pippin-
I accept your reasoning and understand why you intend to continue buying water but I still dont agree

The water quality of french mineral waters is exactly the same as UK mineral waters (its EU legislation). So what I said above applies to your French water to.

Quote:
You say that so many consumers are under a “misapprehension” that bottled water is better than tap water … but perhaps you should ask yourself why that is. Either you are right and they are all wrong … or …


either they've spend 15 years in the water industrutry, doing every job from a factory floor worker in a mineral water plant, through drilling the holes, analysing the water, assessing the impacts, to a regulator telling people were they can and cannot abstract, (and before that spend years training for the task)....or.....

I'd agree that water is easily masked by tea & coffee. While I do drink tea (and I'm like a bear with a sore head until I've had an espresso in the morning!), most of the day I drink water, and I'm perfectly happy to drink tap water for this.

Regarding the cost again- a large portion of the cost you pay is for Yorkshire water to get rid of your sewage. The water's cheap at the price- I said a few pence to make the point....perhaps its a bit more.

People get used to a certain 'taste' of water. If we then change regions, the new water tastes horrible, no matter what the quality. It takes years for us to addapt to new tasting water, and when we've finally done so, we think all other water is horrible apart from our home water. In reality, none is better or worse, just different. I still think the stuff coming from my parents taps is the best tasting water. Interestingly, French mineral waters tend towards a higher carbonate content, more akin to the water you'd find in southern England than the water thats probably coming out of your tap.

Quote:
I'd like to see real competition in the water industry, because I think that might be better for the environment


I fundementally disagree on this point. So much so I could probably write another essay...but lets just agree to differe.
OP

James wrote:

The water quality of french mineral waters is exactly the same as UK mineral waters (its EU legislation). So what I said above applies to your French water to.


That's the legal framework, not necessarily the same as the quality of the water that comes out of the source.



James wrote:

Orangepippin wrote:
You say that so many consumers are under a “misapprehension” that bottled water is better than tap water … but perhaps you should ask yourself why that is. Either you are right and they are all wrong … or …

either they've spend 15 years in the water industrutry, doing every job from a factory floor worker in a mineral water plant, through drilling the holes, analysing the water, assessing the impacts, to a regulator telling people were they can and cannot abstract, (and before that spend years training for the task)....or.....


Hmm ... I would suggest that organisations that think their customers are under a misapprehension are either monopolies or no longer in business.

Yes, we will have to agree to disagree but thanks to your comments I do feel a bit better informed about all this.
Green Man

I believe it is the chlorine in some tap water that makes it taste and smell so bad. Pour a jug from the tap and put it in the fridge. The chemicals dissipates in half an hour and I challenge anybody to taste the difference from bottled water, many I feel are often tainted with plastic from the packaging anyway.
Tilia

This is all interesting stuff. Thanks James and, while your here...

We used to live in an area with no mains water. The house I lived in was fed from a spring up the hill and, as far as we know, wasn't treated in any way (occasion shrimps in the bath). Why did we not all die?

The house my OH lived in (and I eventually moved into) was fed from a spring down the hill. It was pumped up the hill and passed through charcoal and UV filters and was delicious. Why can't mains water be treated like this?

Also, would it be possible to collect roof water into the house and treat it by the charcoal, UV method?
Tilia

Oh well, looks like I missed you...

I'm not being arsey (just in case of mis-understanding). These are genuine questions. I'm curious because I've experienced mains and non-mains water and occasionally drink bottled and you seem to know what you're talking about

Obviously its the weekend and yer man is probably off doing something more interesting than me - anyone else have any ideas on the answers?
Jamanda

He'll be back Tilia. Behemoth will be able to answer too when he turns up. He is very knowledgeable too.
Behemoth

Tilia wrote:
This is all interesting stuff. Thanks James and, while your here...

We used to live in an area with no mains water. The house I lived in was fed from a spring up the hill and, as far as we know, wasn't treated in any way (occasion shrimps in the bath). Why did we not all die?


Because the natural filitration, which the industry mimisc, provides clean wholesome water and if the spring water is collected and before contamination by vegetable and animal matter it would need no further treatment. because the supply netwrok is short i.e. a pipe to the house further chlorinatioon is also not needed. Some water supplie that companie run are basically this.

Tilia wrote:
The house my OH lived in (and I eventually moved into) was fed from a spring down the hill. It was pumped up the hill and passed through charcoal and UV filters and was delicious. Why can't mains water be treated like this?

Also, would it be possible to collect roof water into the house and treat it by the charcoal, UV method?


Simple answer is that this is exactly what is done, particularly at small rural works. Water is chlorinated to ensure it's safety once in the distribution system. Properly done it shouldn't be noticable and as CKR has mentioned you can leave water to stand in the fridge and it will disspate. Treat such water and opened bottled water as perishable.

Roof water - yes you could. They do this in Bermuda as there is no potable ground water. You have to keep you roof meticulously clean and your filters to stop bacteria build up. As you do with a Britta filter, but people don't leading to tummy bugs and belief the water's not good.

Water is a natural material and will have different characteristics and over all different tastes. You can treat water from different sources using the same methods and they will still taste different. Many people grow up with a particular water and get to accept that as the 'right' taste. If they move or the supply changes they notice and it doesn't taste right. I don't like river water as it tastes 'flat' to me. Perfectly safe, I just don't like it.
Tilia

Fantastic, thanks for that. I love this site - such a mine of information! Cool
Behemoth

orangepippin wrote:
Our bill is nearer to £600. It went from £17 per month to £45 per month for a similar sized house when we moved from Herts to Yorkshire 10 years ago. I personally am not happy to pay that amount, at least not without having a choice of supplier.

You could equally argue that we have good safe electricity delivered 24/7, and our energy is getting cleaner etc etc - the difference is that with electricity you have a choice of supplier, and by exercising that choice you force the supplier to be more efficient, or to use wind energy, or nuclear, or whatever you want.


OP I asked earlier for some info to make a valid comparison but in its absence I'll make a few assumptions.

First I'll assume that you are not on a meter at either property so...

The rateable value of the proprties was set by the relevant local authorities in the 1970's when water and sewage was paid for through local taxation. For what ever reason it would seem that you've moved into a higher rated property.

Without knowing which company served you I can't compare the actual rate per £. Which could be the same.

Did the £17 include sewage treatment costs?

£600 is a large bill and it would take a lot of people in the house to use that amount of water and sewage services. A free meter would probably reduce your bill so you're only paying for what you use, not on an illogical, out of date and inconsistent RV basis.

Competition on electricity ang gas is easier becasue gas is gas and electricity is electricity. As we've mentioned, water varies. Just because a company in the South can produce clean wholesome water (using the same treament methods as in Yorkshire to the same standards) at a cheaper rate doesn't mean that they would automatically be able to produce it cheaper elsewhere.

Also, electricity and gas a bought in, not produced, by your supplier. Their competition comes partly on their abilty to get a good deal and reducing customer service costs, i.e. the ability to bill you effectively and cheaply (scuse me while I laugh my pants off at their performance). Water companies consistently outperform other utilities in terms of cost and service (one particular company local to you has been utility of the year for an unprecedented three years in a row).

There is some competition in the industry in contracting services. For example Welsh Water has no operational staff. they competitively contract out all their operations. Yorkshire Water operates their sewage system and treatment works in the South of the country. We also operate several sewage works in Scotland, will be providing half of Northern Ireland with their drinking water when we've constructed the new works and we also operate and maintain the water and sewage works on MoD sites in the South West. We do this because we can provide a good service for a fair price.

Don't underestimate Ofwat they make us work very hard to provide a better service at lower costs. If you remove the cost of investment your bill would have reduced over the last ten years due to increased operating efficiencies.
OP

Quote:
Water companies consistently outperform other utilities in terms of cost and service

That probably explains the £2bn profits the industry made last year.

Quote:
Don't underestimate Ofwat they make us work very hard to provide a better service at lower costs. If you remove the cost of investment your bill would have reduced over the last ten years due to increased operating efficiencies.


As a consumer it is difficult to understand why the regulator lets the water industry increase its costs to consumers by 4.2% above inflation between 2005-2010.

Quote:
There is some competition in the industry in contracting services.

Competition means giving consumers a choice. AFAIK that has still not happened in the water industry, although it has in electricity, gas, and telecomms.
James

Tilia, -exactly as behemoth says. But two more points:

Firstly, everyones bodies build up a natural flora of bacteria associated with their lifestyles. In locations fed by ‘live’ spring water, your gut will have a constant very low level input of these bacteria. Having small amounts of the local bugs in your system gives a natural resistance to these. The reciprocal of this is that not having the bugs means you have no resistance. For example, I’m on town water, but my parents are on unsterilised spring water. While I grew up there, I never suffered from an upset stomach, but if I visit them for any length of time, I’m sure to feel a little wobbly. Same as when you go on holiday to a remote area- everyone tells you ‘don’t drink the water!’- but you think ‘well how the heck do the locals survive then?’. They’re use to it. We’re not.

Secondly, chlorine is used in larger networks because it provides long term sterilisation. Activated carbon works by taking the vast majority of organic matter out of the water, UV works by killing any living bacteria in the water. But as soon as the water passes beyond the UV light, its open to infection again. This isn’t a problem if you’ve got a few tens of metres of small bore nalgene pipes running from your spring to your pressure vessel/ kitchen sink. But if it’s a few miles of wide, leaky pipe work, its easy for the sterile water to be re-infected unless there’s a slow release sterilant. So by using chlorine, the water co’s can make sure its sterile when it come out of your tap, not just when it leaves their treatment plant.
Behemoth

orangepippin wrote:
That probably explains the £2bn profits the industry made last year.


Yup, you work harder, more efficently and reduce costs, you get to keep the savings and then the regulator resets the benchmark and you have to work harder...


orangepippin wrote:
As a consumer it is difficult to understand why the regulator lets the water industry increase its costs to consumers by 4.2% above inflation between 2005-2010.


Yes, I'd agree, the explanation usually involves a level of detail that most can't be bothered with.

orangepippin wrote:
Competition means giving consumers a choice. AFAIK that has still not happened in the water industry, although it has in electricity, gas, and telecomms.


Choice does not automatically mean better or cheaper. Competition will not provide a choice of product. You will get the same water through your pipes. So competition is in cutting operating and customer service costs. As this is in the companies interests (see point 1) it is already happening.

How many people are in your household? Let me know and I can give you a rough estimate of how much a metered bill would be.
OP

Behemoth wrote:
Choice does not automatically mean better or cheaper. Competition will not provide a choice of product. You will get the same water through your pipes. So competition is in cutting operating and customer service costs. As this is in the companies interests (see point 1) it is already happening.


You are clearly an unreconstructed monopolist Smile Seriously, this is completely wrong.


Behemoth wrote:
How many people are in your household? Let me know and I can give you a rough estimate of how much a metered bill would be.

Thanks, I’ll follow this up.
Behemoth

orangepippin wrote:
You are clearly an unreconstructed monopolist Smile Seriously, this is completely wrong.


Well my Gas and Electricity bill's gone up and their customer service is rubbish. Laughing

If you can work out a way that allows choice of product and an economic model that allows competition on operating costs but also finances capital investment in infrastructure, sell it you'll be a rich man. There's rooms of people working on this who've tried all sorts of models and they always fall down. No where in the world has cracked it yet.

Rough rule of thumb for an average houshold is about 45m3 per person per year. Assuming there's three of you:

Water Standing charge £25.84
Water 135 x £1.092 = £147.42
Sewage Standing charge £35.81 (although this is only £1.40 if you are not connected for surface water i.e roofs go to soakaways etc)
Sewage 135 x £1.171 = £158.08

Total = £367.15

with lots of scope for water effciency savings.
OP

Quote:
If you can work out a way that allows choice of product and an economic model that allows competition on operating costs but also finances capital investment in infrastructure, sell it you'll be a rich man. There's rooms of people working on this who've tried all sorts of models and they always fall down. No where in the world has cracked it yet.

Go and have a look at the electricity market, there could be some lessons to learn. You could well be right, it may be impossible to have competition in the water industry, but I remain under the "misapprehension" that competition is good for the industry and good for the consumer and good for the environment.
Behemoth

Wiser men than me already have.
Behemoth

Just a thought if the taste is such a problem, call YW and get somebody out to check the water, there may be a plumbing solution. Washing machine feeds can cause problems. They'll also be able to advise on a meter.
James

orangepippin wrote:
but I remain under the "misapprehension" that competition is good for the industry and good for the consumer and good for the environment.


good for the industry, yes
rewarding for the consumer, yes

Good for the environment? hmmmm....I think the one thing that has been squeezed over & over again during the deregulation of service industries is the environment. Thats partly from experience, partly from just a gut feeling (so I may be wrong...)
OP

I think it is good for the environment in the situation where consumers are able to exert pressure on the suppliers to reward environmentally friendly initiatives. This is where suppliers of "green" electricity are probably prospering at the expense of conventional suppliers. Similarly, in food production, do you think we would have such a widespread uptake of organic food by the food industry if it was controlled by a small number of regional monopolistic suppliers and a government regulator?

I think free competition, but within a legislated framework, is probably the best overall compromise?
Behemoth

So how would you set up the competition?
OP

I'll answer with another question ... how can you give consumers a choice of supplier?
Behemoth

Do you mean a choice water supply or a choice of sock puppet companies who buy water from producers and resell it to customers on a theoretical basis cos they don't actually touch the stuff and have no interst in the environment cost its nothing to do with their activity?
OP

You can lead a horse to water but you can't make it drink!
Behemoth

Have you been clubing or have you just got up early!

Which is it that you mean?

Giving customers a choice of water at their house would suggest some sort of duplicate or triplicate water distribution network or doorstep deliveries of bottled water. A local supplier could set up a small treatment and distribution operation or even use the existing supply betwork if licensed. However that is a choice of suppliers not a choice of supply. You still have a monopoly in supply.

The other model is to split water production, distribution, retail, sewage collection, treatment and disposal into separate components each subject to competition.

Water collection and treatment this is regulated by the EA (abstraction licences and environmental impact) and the DWI (drinking water quality). Different works have different production costs based on the nature of the raw water and their location. Most works supply a dedicated are and there is no duplication of works to give customers 'choice'.

Also abstraction licences limit what you can take and when this would impact on the operation of the works. I

In order to introduce market competition you need a common grid, this doesn't exist nationally but does in Yorkshire (to ensure continuity of supply when the balance of resources shifts and some resources need to be conserved a competitive problem we'll ignore for now). So lets assume YWS 112 water treatment works are sold off to 4 companies and every one, including the small isolated rural supplies, are on the grid. We also have to assume that everyone has a meter to account for volumes used.

The water is put into the grid. This is adminstered by a single contract awarding body who lets competitive contracts to operate and maintain the distribution network.

Water supply companies, really water retailers can enter the market buy their water from any of the producers and then retail it to customers. The price of their water is dependent on the unit cost from the prodcuer (which as we've seen varies), the fee charged by the network operator and the customer service costs of the retailer.

Ther retailers decide to buy all the cheaper water they can get, borehole water and offer low prices. Everyone flocks to them but there comes a point when all the water that can be provided at that price has been bought and distributed to customers, so they can't take any customers over that volume. The producers could try for increased abstraction and more boreholes but this may be environementally damaging. A couple of long dry summers will also have an impact on the availability of this resource.

They need to find other sources, upland reservoirs are next cheapest, ideally you dont want to touch these over winter as the idea is that they recvharge and then you draw them down over spring and summer to ensure continuity of supply (reservoirs are meant to go down).

After that it'll be rivers, idealy you use thes in winter when flows are high and take less in summer when flows are low, to protect the environment.

However if you are an operator with predominantly river abstraction you'll want to be selling your water all the time, but you can't because you are limited to protect the envirionment. Ditto for boreholes but you'll hit the bottom and can't pump any more so your rate of abstraction is governed limiting the amount you can supply at any one time. For the upland reservoirs you are limited by the capcaity of the reservoir, time of year and the gamble on the rain falling to fill it up.

The retailers negotiate this maze to buy some water in bulk, by now they've had to smooth out fluctuation of price due to source and season, so we have a regional average price. The only way they can undercut each other is in customer services. They can't differnetiate the product they buy in and all water is produced to DWI standard. They are diovorced from production and distribution and have no interest in any of the operations.

Producers are trying to increase profitablility by reducing costs of inputs and energy. Some of them dress this as green but given the variable nature of supply and costs it's hard to brand any one supply as 'green'.

We haven't strated with sewage yet. That tends to run down hill.

Ofwat does monitor costs of operating water and sewage works. It dientifies the most efficient and cheapest (not necessarily the same thing) companies and holds them up as the benchmark for all companies to attain. If they don't they lose money at the next price settign review which is held every five years. You can't carry on regardless.
OP

Quote:
Have you been clubing or have you just got up early!

Couldn't sleep - worrying about the state of the water industry.

Very informative as ever. However we are still stuck where we started. I think we both agree that customers say they want lower prices, safe water but no nasty chlorine taste (otherwise they will carry on drinking bottled water), and less environmental impact. My suggestion is that this is best achieved by introducing competition into the industry, so that customers can exercise choice. I've pointed out other utilities where this has happened, also the example of organic farming. Your view is that customers may want these things but (a) they are under a misapprehension, (b) it is not technically possible, and (c) the industry and the regulator are working together to achieve the same things that consumers want anyway.

I guess it comes down to whether you believe choice and free markets can achieve "better" solutions than centralised state intervention. I think that is true in some scenarios, but I don't necessarily think it is true in the water industry - you clearly do, fair enough.

Big issues!
Northern_Lad

orangepippin wrote:
Quote:
Have you been clubing or have you just got up early!

Couldn't sleep - worrying about the state of the water industry.

Very informative as ever. However we are still stuck where we started. I think we both agree that customers say they want lower prices, safe water but no nasty chlorine taste (otherwise they will carry on drinking bottled water), and less environmental impact. My suggestion is that this is best achieved by introducing competition into the industry, so that customers can exercise choice. I've pointed out other utilities where this has happened, also the example of organic farming. Your view is that customers may want these things but (a) they are under a misapprehension, (b) it is not technically possible, and (c) the industry and the regulator are working together to achieve the same things that consumers want anyway.

I guess it comes down to whether you believe choice and free markets can achieve "better" solutions than centralised state intervention. I think that is true in some scenarios, but I don't necessarily think it is true in the water industry - you clearly do, fair enough.

Big issues!


He does have big issues for a bloke, but he's got a good bra and he's on a strict diet.

Anyhoo,... What do you see when you say opening up the water market? I can see how gas and electricity can do it: the infrastructure's open to all and the generate and store the source, they can then easily route it round the country.
Water's slightly harder as, for starters, there's no national grid for water. Also, if you could ship it about, would you really choose southern water, with it's half stone of chalk per litre or good Dales/Peaks/Lakes water? the North would dry up, and the south become a lake.
OP

Even I will admit there are probably a few more technical issues in the water industry than say electricity which make it harder to introduce competition. Gas is pretty close perhaps.

One thing we all seem to agree on is that "bottled water is bad". If that is the case, what are the water companies and OFWAT doing to encourage consumers back to tap water? The problem at the moment is that the water monopolies have no incentive to do anything about this kind of issue.
Northern_Lad

orangepippin wrote:
One thing we all seem to agree on is that "bottled water is bad". If that is the case, what are the water companies and OFWAT doing to encourage consumers back to tap water? The problem at the moment is that the water monopolies have no incentive to do anything about this kind of issue.


It's pretty hard. Drinking bottled water is a lot to do with image; there have been tastings done that show people actually prefer the taste of tap water over bottled, but people still go for the bottled stuff. there are a couple of restaurants now that put all water in clear bottles no matter what you ask for.
Behemoth

Lots and yes we do. 30% and rising of our domestic consumption is volume based. Most importantly we have to be trusted to deliver a safe supply 24/7.

http://www.yorkshirewater.com/?OBH=4344

We've run various campaigns and road shows over recent years including an ice cream van touring shows and holiday resorts giving away free chilled tap water to hot and bothered public; on line water chillers in schools; "ask for it by name" sponsoring of the wYTV weather forcast.

We sold the ice cream van recently to some dodgy blokes from Birmingham who paid cash.
OP

Northern_Lad wrote:
It's pretty hard. Drinking bottled water is a lot to do with image; there have been tastings done that show people actually prefer the taste of tap water over bottled.

Organised by OFWAT ??.

Anyway, image, convenience, taste ? So what. That's what consumers do. If you want consumers to try your product instead of a competitor's you can try the obvious things like better marketing. Approach opinion formers Jamie Oliver or Nigella, get them to listen to your view. You could also try any number of tried and tested retail initiatives - buy one get one free etc etc. Or try coming up with a better product - how about tap water that doesn't taste of chlorine, that might go down well.

However, notwithstanding Behemoth's icecream van, my point remains that monopolies have no incentive to do this kind of thing. They are making money (lots of it) already. OFWAT has let them put their prices up by 4% above inflation.
Behemoth

Remember Ofwat does not regulate drinking water quality. That's the role of the DWI.

We've already mentioned how you can reduce the taste of chlorine.

1 Fill jug.
2 Put in fridge
3 Leave for two hours

We even gave jugs away that would fit in your fridge door.

As mentioned before - bill increase are financing investment - billions of it - operating costs are lower than before. One rise negates the reduction. If we were without incentives bills would be even higher.

I'm clearly not going to get through your cynism that we actually do care about what we do. Oh look the lunch time prositutes have arrived, now where's the corporate credit card....
James

orangepippin wrote:
Your view is that customers may want these things but (a) they are under a misapprehension, (b) it is not technically possible, and (c) the industry and the regulator are working together to achieve the same things that consumers want anyway.


Actually I think it was I who suggested there was a misapprehension held.

And it was associated with the relative quality of bottled water versus tap water, not related to the free-market economics of water companies.

orangepippin wrote:
buy one get one free.


shouldnt that be buy one, get 9,999 free?
bottled water cost on average 10,000 times the price of tap water
(http://commentisfree.guardian.co.uk/open_thread/2007/07/time_to_cap_bottled_water.html)
OP

I stand corrected, but I think your comments were in the same vein. It comes down to whether the water company plus the regulator can realistically act in the best interests of the consumer. Clearly we are not going to agree on that! Many of the arguments (on both sides) could be applied equally to local authorities and councils. They too are in a sense regional monopolies of public services, with some similarities with water or other utility services.
OP

Hmm, maybe the regulator has some teeth after all:

http://business.timesonline.co.uk/tol/business/industry_sectors/utilities/article2554394.ece

£12m fine for Thames Water for failing to compensate customers for poor service and loss of water supplies, and 2 other water companies also in the firing line.
Behemoth

Yup and it's my job to make sure we're above board and don't get bitten, Hmmmmm £13m? Perhaps I'm due a pay rise....

Anyway, more competition stuff:

Wednesday 3 October 2007 10:22
Water Services Regulation Authority (National)

Ofwat announces the first new water and sewerage company since privatisation


Ofwat has appointed a new water and sewerage company - the first new company to offer both services since privatisation - by granting its twelfth inset appointment.

Inset appointments allow for one supplier to be replaced by another for a specific geographical area.

SSE Water (SSEW) will provide water and sewerage services to a housing development near Salisbury, called The Portway. SSEW will serve its customers by buying water from Wessex Water, and discharging sewage to Wessex Water's network.

From the outset, Ofwat will ensure that SSEW's customers will pay no more than they would have had they been supplied by Wessex Water. Ofwat also expects these customers to receive a quality of service at least as good as if Wessex Water had served the site. SSEW is part of Scottish and Southern Energy (SSE), which has a proven record for its high levels of customer service. Ofwat expects SSEW to set a benchmark in the water industry for similar high levels of customer service.

Notes to Editors:

1. The Water Services Regulation Authority (Ofwat) is the economic regulator of water and sewerage companies in England and Wales. It exercises its powers in a way that it judges will allow companies to carry out their functions properly, and finance them. Its duties include protecting the interests of consumers, wherever appropriate by promoting effective competition.

2. Ofwat published a consultation paper on its website on 17 May 2007 asking for views on its proposal to grant SSEW an appointment.

3. There are three qualifying criteria for seeking an inset appointment.

* For an area in which each of the premises of one or more customers is supplied (or is likely to be supplied) with not less than 50 megalitres of water in England (250 megalitres of water in Wales) in any period of 12 months. This also applies to inset appointments for sewerage services.

* For an area which is not served by an existing appointed company - an 'unserved site'. This includes an area that may be currently supplied by unregulated or 'private' supplies with its own source of water. This criterion has to be met for both water and sewerage services included in the inset appointment application.

* For an area if the existing appointed company consents to transfer that area to the inset appointee.

Centre City Tower
7 Hill Street
Birmingham
B5 4UA
OP

To put this in context the water companies made profits of about £2bn last year, not far behind the £2.5bn made by Tesco this year.
sean

If you didn't want them to make a profit you shouldn't have spent the late seventies and eighties voting Conservative.
Behemoth

Lots more info below. I expect the new water company is in the business to make a profit. You'll find the rate of return on your water company shares is steady but unspectacular.

Financial performance and expenditure of the water companies in England and Wales 2006-07 report

September 2007


This report examines the operating profits, cash flows and balance sheets of the regulated water and sewerage companies and the water only companies in England and Wales for the financial year 2006-07. It also provides information about each company's day-to-day running costs (operating expenditure) and the investment they undertake to maintain and upgrade the pipes, sewers and treatment works (capital investment).

During this financial year, the headline developments were:

The rate of return fell slightly, from 6.6% to 6.4%, as companies experienced lower than expected revenues and higher operating costs.
Although pre-tax profits have risen as a result of favourable interest conditions, which has reduced the companies' borrowing costs, operating profits were at a similar level to 2005-06.
Six companies have paid special dividends totalling £1.9 billion between them. These one-off payments increase the level of debt in the companies and may lead to lower tax charges.
Companies have spent 30% more on maintenance this year. They are now almost exactly in line with where we expected them to be at this stage of the five-year period to 2009-10.
However, they have spent 15% less overall on capital investment than we assumed when we set price limits in 2004. Of this, 4% is due to efficiencies, which we welcome. However, most of the remaining shortfall is because of planning delays.
Drinking water quality continues to be very good, with compliance at 99.96%.
We have looked at the performance of companies' assets and are concerned that six companies have reported increases in sewer collapses and pollution incidents. These companies have work to do to achieve a stable sewerage network.
We fined United Utilities £8.5 million for breaking the rules that govern transfer pricing rules (trade with associated companies within the group and with the parent company).

http://www.ofwat.gov.uk/aptrix/ofwat/publish.nsf/Content/fpe_report2006-07
Behemoth

And ofwat says:

"Since privatisation the industry has invested approximately £70 billion in the water and sewerage infrastructure in England and Wales. This equals average annual capital investment of more than £3.9 billion compared with an equivalent investment figure of £2 billion a year during the 1980s. In 2006-07, the industry invested the equivalent of 50% of its turnover; this is high when compared with other industries.

The aggregate gross capital investment (which includes both maintenance and enhancement projects) in 2006-07 was £4.35 billion, compared with £3.5 billion in 2005-06.

It is still some £1.4 billion behind our expectations for the first two years of the current price limit period, which is only partly explained by efficiencies. The majority of companies are investing what is needed in most areas to maintain the standard of service consumers expect. However, there have been delays in delivering some schemes as a consequence of planning issues and less developer activity than forecast."

For comparison what's Tescos capital investment been?
OP

sean wrote:
If you didn't want them to make a profit you shouldn't have spent the late seventies and eighties voting Conservative.

I have no problem with businesses making a profit in a competitive environment. The problem here is that the water companies are regional monopolies, and consumers are currently facing year on year increases which are substantially above the rate of inflation. Compare this with Tesco - if you don't like their profits then go and shop somewhere else or grow your own food - you have a choice.
OP

Behemoth wrote:
For comparison what's Tescos capital investment been?

I'm afraid I have no idea, I am not an accountant. Check their corporate website. I'm not sure how Tescos capital investment is relevant this? They operate in a competive market, they can charge what they like and invest what they like - if you as a consumer don't agree, go and shop somewhere else.
Behemoth

You made the comparison to their profit. I just wondered if you knew. Probably very little as they operate in a different sector that doesn't require large scale civil engineering.
Behemoth

orangepippin wrote:
sean wrote:
If you didn't want them to make a profit you shouldn't have spent the late seventies and eighties voting Conservative.

I have no problem with businesses making a profit in a competitive environment. The problem here is that the water companies are regional monopolies, and consumers are currently facing year on year increases which are substantially above the rate of inflation. Compare this with Tesco - if you don't like their profits then go and shop somewhere else or grow your own food - you have a choice.


Have you had anythoughts on how this could be done.

And please don't answer with a question. Wink
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