Government publishes final guidance on water pricing

The government published its final guidance and regulatory impact assessment for its policies on drinking water and the environment this week as part of the periodic review, ahead of Ofwat's announcement on final price limits in December.

The programme of work detailed in the final guidance is much the same as that outlined in the principal guidance in March. However, the government has indicated that companies should undertake further improvements, including:

  • reducing incidences of discolouration in drinking water supplies, as well as those that have unsatisfactory taste or smell;
  • authorising a demonstration programme on the best means to remove endocrine disruptors (sex change chemicals) in sewage treatment works;
  • engaging managers of land (mainly farmers) in water gathering grounds to encourage beneficial changes in catchment management practices; and
  • improving the summer effluent quality from sewage treatment works discharging into the Thames.

Environment Secretary Margaret Beckett said the extra work would only add roughly £1 to customers bills by 2009. However, this is on top of the average £34 increase proposed in Ofwat’s draft price limits in August (see related story). The increases would be implemented over five years.

The final guidance was generally well received.

English Nature’s head of policy, James Marsden said: “We are very pleased that the final guidance supports action to help achieve UK Biodiversity Action Plan objectives and two innovative catchment-based land management schemes. The catchment initiatives will provide important lessons for more sustainable solutions to water quality management in the future, as well as helping to deliver favourable condition in upland sites of special scientific interest.”

Barbara Young, Chief Executive of the Environment Agency said: “Ofwat must now follow the guidance and enable companies to fund all the work that Ministers consider necessary to protect the environment, and must also fund a long term solution to sewage problems in the Thames.”

Lady Young added that the investment that Ministers are recommending offers excellent value for money.

She said the Agency supports the decision that, from 2005, the costs of dealing with water company abstractions that are damaging the environment will not be met from customers water bills, but that the Agency will use its statutory powers to modify abstraction licences to deliver necessary improvements within the 2005 to 2010 period.

“We believe that this will ensure that abstractors are treated more fairly,” Ms Young said.

By David Hopkins

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