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Water watchdog challenges Bristol Water’s proposed price increase |
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Wednesday, 05 December 2007 |
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The Consumer Council for Water has challenged Bristol Water’s bid to further increase its prices for the next two years.
Last month, the company asked the water regulator Ofwat to sanction a further 5.5% increase in its price limits for 2008-09 and 2009-10 – because of a fall in expected revenue. If agreed, this would take the average bill in 2009-10 to £148 from £141.
Bristol Water recently announced a 1% increase in its operating profit for the first six months of the financial year – up to £14.2 million, compared with £14 million for the same period last year.
Charles Howeson, Chair of the Consumer Council for Water Western, said: “We recognise that Ofwat allows companies to ask for a price increase if they incur greater costs than forecast. However, Bristol Water’s interim financial results show that the company are generating a reasonable profit, while the company continues to meet its regulatory requirements in terms of service delivery to its customers.”
When Ofwat set the price limits in 2004, they made assumptions about the level of revenue the company would receive over the 2005-10 period. The company says that it has experienced a significant impact because more customers are opting for free water meters than Ofwat forecast; the level of unpaid annual bills by Bristol Water customers has led to a revenue shortfall; and water abstraction charges levied by the Environment Agency have been higher than forecast.
Charles Howeson concluded: “Bristol Water’s customers will react negatively to the prospect of higher prices when the company is performing well financially. Ofwat has proposed revised price limits which would see the average Bristol Water annual bill increase over the next two years by £4 more than what was allowed in 2004. We have asked Ofwat to review this decision, and lower the proposed price limits to deliver a better deal for Bristol Water’s customers.”
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