All eyes on Bristol
May 28th 2010

All eyes are on Bristol Water as the supplier prepares to do battle with Ofwat, comments Andrew Bainbridge, chairman, Major Energy Users’Council

The biggest problem facing water customers is inevitable price rises. While private and public sector users’ are struggling to survive a horrendous recession, the price you will have to pay for your water must increase.

One supplier, Bristol Water, is preparing to do battle with

the Regulator Ofwat. Why? It believes the amount by

which it is allowed to increase its charges to customers

is woefully inadequate.

Bristol Water is alone among the suppliers as all the others have reluctantly accepted Ofwat’s formula for increases. But Bristol say their infrastructure is crumbling and that the very old pipe work underneath Bath, Bristol and the surrounding areas is in such a bad state it constitutes a health hazard.

The Consumer Council for Water says they are scaremongering and Ofwat have hired very expensive legal brains to fight their case. They insist the increases they are allowing Bristol to charge are perfectly adequate.

The supplier is adamant that extra money is essential to ensure a proper maintenance programme, the satisfactory growth of its network and the resilience of the critical infrastructure. Water suppliers in other areas undoubtedly share Bristol’s view and concerns. They’ll be giving moral support and watching the case with considerable interest.

The argument supplied by Bristol is interesting and no doubt other suppliers could make a similar case. “In the interests of all our customers we cannot accept your new price limits”, they say, “There is a huge gap between what we know and what you are willing to fund. We believe we need to invest no less than £1 million each week between now and 2015.We have no alternative but to reject your decision and ask the Competition Commission to review the matter.

“Up to now we have been prepared to accept your pricing limitations but now we think you’ve got it wrong. Your limits are not in the best interests of our existing and future customers.

“You’re not allowing us to raise enough money to fund what needs to be done and what customers have asked for.

“We will not be able to guarantee a secure supply to our 450,000 customers with the funds you are prepared to allocate”.

Bristol wanted Ofwat to agree to increase the average household bill by 87 pence a week by 2015 which they believe would represent the best value for money. Business costs would obviously rise proportionately. “We have worked hard over a long period to keep bills down by ‘sweating’ the working lives of our assets but we can’t delay increased investment any longer” they added.

Our Major Energy Users’ Council members have been watching the development of water competition in Scotland and hoping in vain that they could see similar progress in England and Wales. Competition always makes suppliers re-double their efforts to reduce costs, intensify their customer relations activities and get rid of their worst performing members of staff.

Since there is no competition in Bristol or elsewhere except Scotland, we can only hope the Competition Commission has the vision and intelligence to devise a solution which gives a sensible measure of victory to both customer and supplier.

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