Consumer water bills in England and Wales will rise by an average 5.8 percent from April 1, an above-inflation increase granted so that utilities can fund improvements to infrastructure, the regulator Ofwat said today.
Annual prices for water and sewerage will increase by about 18 pounds a household to an average 330 pounds ($649), Ofwat said in an e-mailed statement. That represents a gain of 1.5 percent in real terms plus 4.3 percent for inflation, it said.
Consumers are reining in spending as utility bills and food prices increase and the property market weakens. An index of U.K. retail sales fell to the lowest in 15 months in February and optimism at stores waned, a report by the Confederation of British Industry published today showed.
``Clearly any bill increases are going to be unwelcome, but these price rises are essential to enable companies to continue to provide high-quality, secure water and sewerage services,'' Regina Finn, Ofwat's chief executive officer, said in the statement.
The regulator has allowed water companies to raise prices by an average 4.2 percent a year from 2005 to 2010, mainly to improve reliability of supply. Utilities are spending more to reduce leakage and increase water provisions as drier summers boost demand and deplete reservoirs.
The impact of the charges on households will vary according to the companies that supply them, Ofwat said. The regulator is promoting increased use of metering for accurate bills to control consumption and protect consumers with low incomes.
``Some customers, particularly those who are low users of water, would save money if they had a water meter installed,'' Ofwat said. It wants to ``see companies introducing innovative tariffs that give customers more choice and control over their bills.''
Eight utilities imposed water restrictions in 2006 after two winters of below-average rainfall reduced reserves in southern England. The government issued drought orders for three water companies in May that year, enabling them to apply even tighter limits.
Customer bills for the year ended March 31 rose an average 7 percent from the previous year.
The regulator will announce financial targets and annual price limits for water companies in 2009 for the five-year period starting in 2010.
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