Ofwat approves water bill rises

OFWAT, the water regulator, today gave the green light to a larger-than-expected rise in household water bills from April, up on average by 18% or £46 - but may not have done enough to head off a revolt from the companies, some of whom believe they are being bled dry.

The average water bill will rise to £295 by 2009, Philip Fletcher, head of Ofwat, revealed today.

While the final ruling has seen Fletcher give significant ground to the companies from his previously proposed average rise of 13%, it falls short of the rise averaging £72, or 29%, originally demanded by the companies to deal with major overhauls of Britain's Victorian mains system, sewers that continue to foul flood, and new Brussels environmental diktats.

Thames Water customers will see their bills rise by £50 a year or 24% but the rise is well short of that demanded by Thames's German parent company RWE, which called for 40% increases to deal with chronic problems with leaks. Thames is still not ruling out taking Ofwat to the Competition Commission to try to win higher customers bills.

Quoted companies also fear that bigger expenditure programmes will prevent them continuing to pay their traditionally high-yielding dividends to shareholders.

The higher-than-expected final determination saw shares in United Utilities, Anglian Water and Severn Trent all rise, though none of them has yet ruled out referring Ofwat to the Competition Commission.

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