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Water Companies To Reduce Household Bills By 2% In First Year Of Cuts

3rd Feb 2015 12:43

LONDON (Alliance News) - Water and sewerage companies in the UK will cut average household bills by 2% between 2015 and 2016, under the industry regulator's orders to reduce bills by 5% over a five year period, Water UK said Tuesday.

The large reduction between 2015 and 2016 suggests water companies will take a larger hit in the first year of reductions over the five-year period.

Water UK, which industry body which represents all major water and wastewater service supply companies including FTSE 100-listed Severn Trent PLC and United Utilities PLC, said the average water and sewerage bill for 2015 to 2016 in England and Wales will fall by 2% in April, representing a GBP9 reduction in the average annual household bill.

Water UK said "over the next five years, average water and waste water bills will continue to fall."

The 2% reduction in average bills between 2015 and 2016 is part of a bigger picture led by industry regulator Ofwat, which made the decision to reduce the average household bill by 5% over a five year period, suggesting water companies will take a larger hit in the first year than in the subsequent four years.

Over the next five years, Water UK said companies will reduce the amount they pay to their investors as a result of the savings for customers.

According to Water UK, Severn Trent and United Utilities will reduce average bills by 1% between 2015 and 2016, resulting in both companies reducing bills by GBP4 a year, to GBP329 and GBP411 respectively.

Over the five-year period, Severn Trent bills will fall by 4%, whilst United Utilities will reduce bills by 3%.

In addition, companies will provide a package worth more than GBP40 million to support customers struggling to pay their bills or who are in debt. The funds will be used for debt matching, write off schemes, debt advice, and water efficiency measures to help customers reduce their bills, said Water UK.

By April, 14 out of a total of 18 companies also will introduce social tariffs which will allow customers to reduce their bills further, with the remaining companies introducing social tariffs in 2016. The companies involved were not named.

"As well as lowering bills and offering more customer support, water companies will continue to invest the billions needed to deliver their customers' priorities, including tackling leakage, preventing supply interruptions and preventing sewer flooding," said Water UK.

In December, Ofwat ordered companies to spend a combined GBP44 billion, representing around GBP2,000 per household in England and Wales, over the five-year period to improve the level of service they offer to customers.

Over the next five years, water companies aim to save 370 million litres of water per day by tackling leakage and promoting efficiencies, reducing water supply interruptions by 32%, and cutting the number of properties flooded by sewers by 33%, as suggested by Ofwat.

"The UK water industry contributes at least GBP15 billion to the UK economy each year. The investment over the next five years ensures water companies will continue to provide a wide range of jobs in every region and essential infrastructure to help spur growth," said Water UK.

Severn Trent shares were up 0.2% to 2,111.00 pence per share on Monday afternoon, whilst United Utilities shares were down 0.3% to 998.00 pence per share.

By Joshua Warner; [email protected]; @JoshAlliance

Copyright 2015 Alliance News Limited. All Rights Reserved.


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