Water firms told to justify spending

Water companies must justify the money they are proposing to spend and any increases to customers' bills.

That was the uncompromising message from the head of the industry's watchdog as it published its Service and Delivery Report scrutinising how companies performed in 2007-08 in delivering services to customers.

Ofwat chief executive Regina Finn has warned that the regulator "would not tolerate complacency".

Water companies in England and Wales want to increase bills by about 9% more than inflation between 2010 and 2015, pushing the average bill up from £326 a year in 2009 to £355 before inflation in 2015.

"In these tough times, clearly is important that bills are kept under control," Ms Finn said.

"We are challenging these proposals and the water companies are on notice that they will have to justify every single penny of customers' money that they wish to spend."

She added: "We want to ensure that customers receive consistent quality of supply at reasonable prices. We believe increasing competition will be the key to meeting these challenges."

Ofwat's report showed that although companies are generally hitting performance targets, there is still room for improvement - particularly when it comes to leakage.

Although all companies hit their leakage targets for the first time, the industry as a whole still leaked 3,291 megalitres of water a day in 2007-08. This is enough fill the bowl of the new Wembley Stadium almost three times a day.

Water UK, which represents the industry, said companies had coped well with a period which has seen droughts, floods and now the financial crisis.

Chief executive Pamela Taylor said: "The challenge now is to build on this progress in continuing to deliver for customers and communities over the rest of the current investment period up to 2010."

Kate Martin



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