Sewerage costs for rural customers could triple if concerns that the draft Water Bill could unwind cross-subsidies are realised.
That was a key concern raised by water industry representatives when they gave evidence to the Select Committee for Environment, Food and Rural Affairs.
Enabling upstream and retail competition entails changing codes managed by Ofwat. Witnesses said these changes could undermine a fundamental policy of regional average pricing for water and sewerage services.
Rob Wesley, head of policy at Water UK, said: “If was to change, it should be a matter for government rather than being deferred to the regulator.”
Jean Spencer, director of regulation at Anglian Water, said: “If that is the intention it should be explicit.” She added: “If you de-average sewerage, the impact on rural customers could be two or three times current costs.”
The large amount of discretion given to Ofwat caused other concerns. Wessex Water chief executive Colin Skellett said he was “surprised at how much latitude is given to Ofwat. I am surprised ministers don’t want to take more control.”
This article first appeared in Utility Week’s print edition of 26th October 2012.
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