Water companies to charge more during droughts
Firms accused of ‘contempt’ for customers as they await green light to increase bills at times of high demand
MATT OLIVER
Water companies will be able to charge consumers higher prices during droughts under plans being considered by Ofwat.
Firms will be allowed to impose “surge pricing” and factor “water scarcity” into bills as part of a drive to reduce consumption.
This would clear the way for suppliers to introduce prices that change based on the time of year and escalate if consumers pass a certain threshold.
Most of the new pricing schemes would require households to have smart meters.
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Under seasonal surge pricing customers could be charged more during the summer and less in winter, while rising block tariffs would charge higher prices when consumers pass a certain threshold of water use.
The changes have been backed in principle by both Labour and the water industry, but could prove controversial at a time when utility companies are already under fire for raising bills.
There are no formal plans by companies to introduce widespread surge pricing yet, but Ofwat’s consultation said suppliers regarded the current rules as a block on doing so.
On Thursday, five suppliers – Severn Trent, Southern Water, Thames Water, Wessex Water and South East Water – were granted permission by Ofwat to raise bills above previously agreed levels to support higher spending on improving infrastructure.
In response, Andy Burnham accused water companies of treating consumers like “a blank cheque”.
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The proposals to formalise surge pricing follow small trials in several parts of the country, the largest covering about 14,000 Anglian Water households in Lincoln and Norwich.
Customers have seen their water costs increase from £2.69 per cubic metre to as much as £4.39 from May to August. For the rest of the year, it is reduced to £1.78 per cubic metre. Vulnerable and poorer customers are excluded from the scheme.
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