Water firm asks for 10% price increase

Soaring energy bills and a significant drop in income have prompted one water company to propose an inflation-busting price increase of more than 10%.

Sutton and East Surrey Water – which supplies parts of Surrey, Sussex, Kent as well as the London boroughs of Merton, Sutton and Croydon – has asked industry watchdog Ofwat for permission to charge its customers an extra 10.2% from April 2009.

The company said it had been hit hard by rising energy costs, which are now more than double the figure allowed for by Ofwat for the 2005-10 pricing period.

The drought of 2006 – which led the company to introduce a hosepipe ban and secure a Drought Order – followed by two wet summers has also resulted in less demand from metered customers, causing a significant drop in income, bosses said.

They have proposed a 12.6% price increase from April 2010 in the company’s Draft Business Plan for 2010 to 2015, but have now asked Ofwat to allow it to bring most of the increase forward to next year.

Ofwat chief executive officer Regina Finn said: “We are very concerned to see Sutton and East Surrey Water looking for permission to increase their customers’ bills substantially in 2009-10.”

She added: “The onus is on the company to convince us that its customers should face higher bills.”

The Consumer Council for Water (CCWater) said it had serious concerns about the impact the price rises would have on customers.

David Bland, chair of CCWater London and South East, said: “We recognise that Sutton and East Surrey Water is facing higher than expected energy costs, but we know from what customers have told us any price rises would be a worry, especially in the current economic climate.”

Ofwat will now scrutinise the company’s application and consult on its draft decision in November. A final decision is set to be announced in December.

Kate Martin

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