Water firms open bidding on future investment

Water companies draft business plans submitted to Ofwat on Monday would raise customers’ bills by an average of 9% above inflation by 2015

Business plans are a key part of the industry’s five-yearly asset management planning (AMP) process. They include firms’ programmes to maintain, improve and invest in new infrastructure to meet quality and environmental targets.

The industry is arguing that £27 billion needs to be spent between 2010 and 2015 – a third more than in the current investment round – to pay for higher energy costs, tighter environmental standards and to counter climate change.

The plans would see the typical household water bill rise to £350 in 2015, but in fact there are major differences between companies. Some firms are proposing only modest increases while others – such as Thames, Southern and United Utilities – are proposing substantial rises to cope with particular investment projects.

Major investment drivers include the need to reduce and replace water abstractions which threaten wildlife sites, improvements in sewerage systems to protect the environment – including Thames Water’s super-sewer project to catch sewage overflows into the Thames tideway – and the need to protect against potentially more frequent droughts and floods.

Rising energy prices, which account for 10% of the industry’s operating costs, are also a concern for the industry. Many of the costs of meeting the EU water framework Directive may end up being paid for by water firms and their customers.

The Consumer Council for Water (CCW) commented the public would not accept “inflation-busting” price increases.

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