Dec. 16, 2002 -- Water regulator Ofwat has approved Midlands water supplier Severn Trent's appeal to raise prices for the next two years to meet new standards to protect water supplies, and to tackle increasing flooding from sewers.
The new price limits will mean average bills rising by less than one pence a day for each of the next two years.
"This means we'll be able to add more protection for water supplies and tackle more sewer flooding. But we will still keep Severn Trent Water's bill among the lowest in the country," said Brian Duckworth, Severn Trent Water's managing director.
Prices for water were set in 2000 for the period up to 2005 and saw Midlands water bills fall by an initial 14% before inflation, with prices held stable in real terms up to the end of that period.
Now bills will rise by just over 2% ahead of the rate of inflation for each of the next two years, adding around £3 a year to bills.
"Our customers had a significant price cut in the their water bills in 2000, and we're delighted we've been able to improve services still further at the same time. For around 56p a day currently, Midlands people enjoy tap water that's second to none in the UK, and rivers that are better than any time in living memory.
"But we are now faced by increasing demands to help householders hit by sewer flooding, and to add even more protection for water supplies by meeting new nitrate and cryptosporidium regulations, as well as adding to our security arrangements as requested by the government," explained Brian.
Other issues include meeting the costs of new drainage charges into canals and managing the impact of rising bad debts which has followed the 1999 ban on disconnecting customers who refuse to pay their bills.
"We made our case which Ofwat challenged. We've now been able to add clarity and weight to some of our arguments and the regulator has listened," stressed Brian.
The impact of new regulations on nitrates has not been accommodated within Ofwat's determination on Severn Trent Water's appeal.
"This is a complicated issue. We will be looking at the regulator's reason carefully over the next few weeks," said Brian.
"We did not go into this process lightly - this is the first time we have done so in more than a decade. These are real costs to the company but they add real benefits for Midlands water customers.
"We must make sure we have the long term funding in place so we can continue to protect water supplies and develop our ability to tackle the impacts of climate change and flooding," explained Brian.
