UK water retailers face collapse due to unpaid bills
Businesses racking up unpaid water bills during the pandemic have pushed water retailers to the brink, according to industry suppliers.
The UK Water Retailer Council (UKWRC), which represents 18 suppliers, has commissioned an independent report that also warns that pricing is unfair to customers and that some businesses are paying higher bills than necessary.
Most participants in the market were lossmaking before the pandemic but an increase in non-payments during lockdown has piled on the pressure. There is now a “material risk of systemic retailer failure”, said the report by the consultancy Economic Insight.
If a provider collapsed there is a risk that “customers would be ‘stranded’ without a retailer for a period of time”, the report added. Low margins in the sector also meant that water retailers were unable to invest in the service and deliver the improvements promised at the time the market was opened to liberalisation, the industry said.
“This report clearly highlights that the market is not currently delivering adequately for business customers,” said Phillip Mills, chair of the UKWRC.
The industry warning comes four years after the economic regulator Ofwat introduced reforms to allow non-household customers, which include supermarkets, charities, public sector bodies and retailers, to switch their billing arrangements to any water supplier in the country or to new independent market entrants.
The study found the actual cost of serving the smallest customers in the market — who consume less than 1,400 litres a day — is more than 50 per cent higher than they are allowed to charge by Ofwat, and that these customers account for about 70 per cent of the entire market.
Larger water customers such as pubs and restaurants are being charged more so that they can subsidise smaller businesses, the study found.
Water retailers are allowed to charge smaller customers £78 a year for services — in addition to the cost of the water — but the report says the actual average cost is £121 a year, which covers the cost of metering, scheduling site visits, invoicing and dealing with problems.
John Reynolds, chief executive of Castle Water, which took over Thames Water’s business customers, said the charges were “completely unfair” for many of the smallest customers.
He pointed to several examples of cross-subsidies in the sector. In one case, he said, a pub was paying £500 a year for retail services, while an architect’s practice two doors down was paying £50 a year even though the cost for providing services at both premises was about £120 a year.
In another example, a charity shop pays £16,000 a year — based on an estimate of prices — because it has no meter, which is the responsibility of landlords. On the same street, an amusement arcade with a meter pays just £750 a year.
The Financial Times
Subsidies needed to encourage people to switch from gas boilers to green heating, campaigners warn
Public support for the UK’s net-zero emissions goal could evaporate if households are forced to pay thousands of pounds to switch to green heating systems, climate groups have warned.
It is “politically untenable” to expect households to pay for the full costs of heat pumps, according to climate campaigners, following reports that the UK Government is planning a forced switch to green heating without generous subsidy schemes in place.
Heat pumps typically cost about £10,000 – significantly more than traditional gas boilers – but climate experts say they will be essential in decarbonising home heating.
Reports suggest that the Government is considering banning the installation of new gas boilers by 2035 but ministers have set out little detail on how households will be expected to pay for the switch to heat pumps.
Campaigners say that any date for banning new gas boiler installations is irrelevant without subsidies to help households pay for greener heating.
They warn that ministers risk losing public support for the UK’s commitment to move to a net-zero economy if they do not soon set out a plan for funding the transition.
“If you start talking about regulations banning things, before you’ve introduced the financial support to help people make the change, then that is just going to go down really badly with people,” Ed Matthew, the campaigns director for the climate think tank E3G, told i.
Doug Parr, the chief scientist and policy director at Greenpeace UK, said that the risk of losing public support for the net-zero agenda was “significant” if the Government failed to convince people that they would be looked after during the transition.
The Government is drawing up plans for a “clean heat grant”, which could offer homeowners a grant of £4,000 towards green heating systems. But activists say this will not be generous enough to convince most households to switch, and it will only run from 2022 until 2024.
E3G is calling for the government to fund at least two-thirds of the upfront cost of a heat pump for households, bringing the total cost in line with a new gas boiler. Other groups say the subsidy must be high enough to ensure a heat pump costs no more than a standard gas boiler.
Meanwhile Mike Childs, head of science, policy and research at Friends of the Earth, told i: “It’s absolutely clear that what the Government can’t do is force people to not replace their boilers, and yet spend thousands of pounds more on a more expensive heat pump when people don’t necessarily have that money in their bank account.”
“It’s clearly politically untenable and ridiculous to put out there.”
A spokesperson for the government said: “Over the next 15 years, we will gradually transition away from traditional gas boilers or fossil fuel systems as people replace their appliances with lower carbon, more efficient alternatives.
“We will incentivise the take-up of heat pumps through the new Clean Heat Grant which will be available from April next year.”
iNews
My relationship with energy bills has changed throughout my life: from topping up my energy meter and writing down how much it cost to run a bath, boil the kettle, and make a curry, to scrutinising every email and letter from the many suppliers I’ve used over the years. One thing remains the same: despite being a writer for a living with tens of thousands of words at my disposal, I have struggled to connect with some of the language used in energy bills. And because of this, I sometimes don’t fully understand exactly what I’m paying for, and why.
When the National Literacy Trust asked me if I could define the key terms used in energy bills – including “kilowatt-hour”, “dual fuel” and “tariff” – even though I’ve had a lot of experience with different energy plans, I still struggled to articulate exactly what they meant. It turns out, according to the research they just published with Octopus Energy, Energy Bills and Literacy, I’m not alone in finding these terms tricky.
In fact, almost two thirds of bill payers agreed that the language used in energy bills needs to be more accessible. The problem was particularly acute in the youngest generation of adults. A quarter of 18 to 24-year olds find it difficult to understand their bills, and just 9 per cent of 18 to 24-yearolds could identify the correct definitions of all six common terms. Meanwhile, older age groups – especially the over-65s – were far more comfortable with the language components of their bills.
As an author, but also someone who’s also passionate about helping people to save money and spend wisely, I understand how important it is to communicate things effectively and clearly. I’ve had to be obsessively mindful about my household bills almost constantly for the past decade, and those who’ve followed and supported my work in food and campaigning are often also in a situation where every little counts.
I’m often asked by people why I don’t add energy costs to the recipes I create, but it’s not quite that simple; one size doesn’t fit all when it comes to energy usage. Everyone’s appliances and energy plans are different, so it’s good that this campaign also simplifies the complex use of language with a bill explainer, so people can think about and truly understand their own usage before starting a recipe, or doing a half load of washing, or using a hairdryer.
Almost everyone can be more energy efficient and save money, when they understand exactly where their money goes.
It’s clear the industry must help consumers get to grips with what they’re being charged for as this is a widespread problem. There are so many people out there who need to budget, and we should all be looking for ways to help use less energy in general to support our planet, but the language used can be a real barrier.
There are approximately 7.1 million adults in England who struggle with their literacy. How can people be expected to manage and understand their finances if they’re shut out by deliberately complicated terminology? I think that this is the beginning of the industry making changes to support customers, and be part of the solution.
iNews
Why risk an electric car if you can’t charge it?
Danny Pryke will take some convincing to join the electric car revolution. He does not stock them at his used- car dealership, and has no plans to. “I know they’re coming, but I’m trying to keep away from them for as long as I can,” said Pryke, manager of Essex Car Sales in Benfleet. “Everybody I know who’s ever bought an electric car, they’ve lasted one or two months and chucked it away and gone back to petrol or diesel.
“I don’t think the infrastructure is there for everybody to charge their cars. Around this area, there are lots of flats and townhouses. How are they going to charge — run cables across the street?”
Pryke’s reluctance is understandable — and not just because his family business has made its money from the combustion engine for 50 years. His doubts about whether the infrastructure is up to the job illustrate one of the barriers to convincing people to drive electric cars. Apart from the Isles of Scilly, Pryke’s area is the worst served in the UK for charging points.
There are just 3.3 public chargers per 100,000 people in his local authority of Castle Point, according to government data. Essex as a whole has 18.5 chargers per 100,000 — far below the average 34.1 rate in the UK. The best-served area for electric car charging points is London with 80.1 per 100,000, a rate that soars to 390.7 in Westminster.
Those disparities pose big challenges for the government and its plan to decarbonise transport. Ministers have set a target date of 2030 for making all new cars electric, with the exception of hybrids, which have until 2035. But they have been vague on how to get there. Despite transport secretary Grant Shapps’s pledge in 2019 that “your postcode should play no part in how easy it is to use an electric car”, the pace of the rollout and regional disparities are causing consternation.
The EV revolution poses challenges for the electricity spine. Basil Scarsella, chief executive of UK Power Networks, which is owned by Hong Kong’s CK Infrastructure Holdings and covers 8.2 million homes, said the electricity network “should not be a stumbling block”. It is trying to predict what booming demand will mean for its network.
“We need to be able to ensure that customers can recharge their vehicles whenever they wish. We could have 1.5 to 4.5 million EVs between now and 2030.”
Scarsella said that while one electric car roughly equates to the electricity demands of a house — 2kw — UK Power Networks is also being asked by housing developers to factor in heat pumps, taking the capacity of some homes up to 8kw.
“If you recharge your vehicle at 6pm at the same time you’re cooking, and your whole street does the same, the electricity network might not have enough capacity,” said Scarsella. “Of course, the chances of everybody charging their vehicle at the same time are not high. We are putting in technology to understand the capacity we have at street level.”
The government and energy regulator Ofgem are trying to stimulate investment in charging points. Last week, Ofgem announced a £300 million funding deal for upgrades to energy networks so that charging companies can fit devices without needing to pay for a better grid connection. That will help the installation of 1,800 new charge points at motorway service stations and on key trunk roads.
Steve McMahon, deputy director for electricity distribution at Ofgem, said: “What we don’t want is to end up with network upgrades that are under-utilised or not needed at all. That’s the big trade-off that we have got — do we go early and anticipate the change, or do we wait, see how things evolve and make sure investment can respond to that? The reality is, we’ll need to do a bit of both.”
Read the full article (subscription required) here
The Sunday Times
Campaigners near Bath are calling for bathing water status to be given to a popular stretch of river to make it cleaner and safer.
If the application is successful, Warleigh Weir on the River Avon would be the second river in the UK to gain designated bathing water status after the River Wharf in Ilkley.
The Environment Agency would then have to test the quality of the water regularly in the summer season so swimmers could make an informed decision about whether or not to go into the river.
Johnny Palmer, the owner of Warleigh Weir, is leading the campaign.
“For this site, getting designated bathing water status is really important because it means the Environment Agency can hold polluters to account and reduce the pollution in our water. That means we can swim in the water and enjoy it more,” he said.
Mr Palmer added that the issue is becoming even more critical with the surge in popularity of wild swimming.
Mark Lloyd, chief executive of The Rivers Trust, identified two main problems with pollution in UK rivers: agriculture and sewage from storm overflow.
“When it rains heavily – and it should be in exceptional circumstances but our sewage system is so undergunned for the demands on it that it overflows even with light rain – large quantities of water get washed off large surfaces so that sewers get filled up and beyond capacity,” he said.
“So the water is either going to back up into people’s homes or it has to be released into rivers. That is raw sewage coming into our rivers which I think is unacceptable.”
He added there is an “endemic problem” across the country.
Mr Lloyd agreed that designating more rivers as bathing waters would help address the problem by encouraging polluters to improve the level of investment in water treatment and reduce the number of sewage overflows.
But that comes at a high cost for water companies, farmers and agricultural businesses.
Director of compliance at Wessex Water, Matt Wheeldon, believes there are better ways to improve water quality.
The company is conducting its own investigation using underwater probes that measure a variety of different parameters 24 hours a day.
“The whole bathing water directive is based on 20 samples a year in the bathing season,” he said.
“It doesn’t give people real-time water information on which to make a decision. It takes measurements and then reports them days later. What we are doing is using artificial intelligence to convert easy to measure data into really important data which could affect public health.”
Sky News
Fears raised over risks of water contamination as result of HS2 works
Environmental campaigners have raised concerns about potential contamination of the drinking water supply during the construction of the HS2 high-speed rail link, after the company was ordered to disclose internal documents that provide frank assessments of the risks.
The documents were revealed following a battle lasting more than two years. A Green party member, Sarah Green, unsuccessfully tried freedom of information requests and the information commissioner to gain access to the internal analysis of risk to water supplies from the HS2 project before a tribunal ruled in her favour, ordering the rail company to disclose three unredacted water risk assessments to her.
These documents reveal that six public water sources, including at Blackford and Northmoor in Hillingdon and West Hyde, Amersham, Chalfont St Giles and Little Missenden in Buckinghamshire, may need additional treatment works. Some may need to close during construction and others are awaiting planned closures.
HS2 said it acknowledged the potential risks to the water supply and was putting appropriate mitigation measures in place.
The campaigners said this could result in the public receiving more heavily treated or processed water through their taps, or of aquifer water that is piped into the homes of millions of people being replaced by treated surface water.
The documents also show there is uncertainty about precisely what the impact of some of the construction work will be on some parts of the water supply.
One of the documents – a groundwater assessment relating to the construction and operation of the Chiltern tunnel, a 10-mile tunnel that will carry HS2 beneath the M25 – finds there is a risk of migration of grout or cement that could affect water quality and that some of the work could potentially reduce yields of public and private water supplies.
The report into options for mitigation of the effects of piling on ground water states that the nature and extent of construction activities where water is abstracted makes the creation of chalk turbidity “inevitable”.
“Due to the high risk and high uncertainty mitigation will therefore be required to manage the potential effect of chalk turbidity on public water supplies,” the report states.
It adds that one of the water companies in the area where construction work is being carried out, Affinity Water, “has concerns that even small changes in the influx of lake or gravel water to the abstraction borehole could have significant effects on water quality”.” The company abstracts 69m litres of water per day.
The Environment Agency approved environmental aspects of HS2’s plans relating to construction of the Chiltern tunnel on 23 April.
A spokesperson said: ”The Environment Agency does not grant planning permission for HS2 works. This is the responsibility of the relevant local planning authority. However, we are responsible for issuing consent relating to matters on land drainage, flood defence, water resources and fisheries. We take this responsibility very seriously, as well as the protection of the wildlife and ecosystems around HS2.”
A spokesperson for Affinity Water previously said it had taken “significant steps” to protect water sources in the area from harm.
The Guardian
Utility Week’s weekend press round-up is a curation of articles in the national newspapers relating to the energy and water sector. The views expressed are not those of Utility Week or Faversham House.