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John Reynolds, Castle Water CEO, is asking for input to respond to an Ofwat consultation which is looking at substantial increases in water charges for large users.
Respond by 23 September: Make your voice heard
Ofwat’s consultation on efficiency may result in a substantial increase in water charges for high-consumption customers – can you let me have your responses by 23 September?
What the consultation is about
Ofwat is currently consulting on current and possible future charging structures for large users, in order to improve water efficiency. This follows the report of the Independent Water Commission, which recommended changing charging structures to incentivise water efficiency.
The economics may be overlooked
The consultation is phrased in terms of reviewing “discounts” for large users and does not appear to fully take into account some aspects of the underlying economics of utility networks:
Although charges are applied on a unit basis, nearly all of the costs relate to long-term infrastructure, and the economics of infrastructure provision have significant scale economies.
Tariffs under review
Specifically, the consultation is looking at “alternatives” to existing tariff structures which offer reduced unit rates as consumption increases. These include:
- Discounted Single Rate Tariffs
- Falling Block Tariffs
Read the full consultation here.
What could it mean for your business?
In some cases, a change in the structure of charges could result in a very substantial increase in water charges.
For example, in the Thames Water area, an increase in unit rates if you consume over 250,000 cubic metres per annum would be 66%, and even for customers with 20–50,000 cubic metres consumption it would be 9%.
I would expect many customers, especially those with intensive water use in the manufacturing sector, to have significant concerns about this.
Castle Water wants to hear from you
I would like to include your views in Castle’s response to the consultation — whether you:
- Support the removal of “discounts”, or
- Believe the current structure reflects economic reality, and that changing it would result in cross-subsidy from efficient large users to inefficient smaller users,
- And how a significant further rise in water charges would affect your activities.
How to share your feedback
Please email me directly at ceo@castlewater.co.uk with anything you would like to include.
Deadline: 23 September
Our response will have much greater impact if it includes the stated views of our customers.
Consultation question to focus on
As is often the case, the consultation is structured into a series of questions. I would particularly welcome your views on:
Q2
“What are your views on the continued provision or removal of discounts to larger business users? What effects would be most keenly felt, and by whom?”
John Reynolds
CEO, Castle Water
