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Liquid assets won’t ease the drought

PUBLISHED: 08:30 01 June 2006 | UPDATED: 10:56 22 October 2010

Water company chiefs will meet government ministers today to justify record profits and soaring bills against a backdrop of drought orders and leaking pipe.

Water company chiefs will meet government ministers today to justify record profits and soaring bills against a backdrop of drought orders and leaking pipes. Environment correspondent TARA GREAVES reports.

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It seems odd to be writing about drought when we have just had one of the wettest Mays on record. But, as the bosses of the major water companies in England will tell us, the conundrum is that last month's rainfall will do little to alter the current situation.

After two dry winters, the ground is too hard to easily absorb water, which spells trouble for many aquifers and reservoirs.

The first drought order for 10 years, banning the use of hosepipes and sprinklers, came into force a few days ago in the south east, with more companies reported to be thinking along the same lines.

And yet, virtually all the big 10 water companies are predicted to beat profit expectations - despite restrictions on some 6.2m households and in one case a third of water in the system wasted through leaking pipes.

AWG, the parent group of Anglian Water, yesterday announced its annual profits had more than doubled to £135m in the year to April 2006, helped by price rises and dry weather boosting demand.

This year the firm said it was to raise water bills for 2006 by 2.4pc - still less than most water companies - and that it also planned bigger shareholder payouts in coming years.

But Anglian Water, with its 5.6m customers, 36,500km of water mains and 3,300 employees, is one of the better companies; there are no plans for a hosepipe ban and leakage rates are one of the lowest in the country.

However, considering the state of supplies in other areas, questions need to be asked about how much money is lining shareholders' pockets and what is being spent on ensuring water is not simply going down the drain.

It also brings to the forefront the issue of privitisation, but those in favour will say the only way for proper investment is for the private sector to take control.

Experts predict water will be more important than oil this century.

Two-fifths of people in the world already face serious water shortages, and water-borne diseases fill half its hospital beds.

Those of us in rich countries use 10 times more water than those in poor ones and while, clearly, our current situation does not compare with desperate people who are dying of thirst in other parts of the world, there are issues that need to be raised.

New environment secretary David Miliband will meet 23 company bosses today at a crisis summit to discuss the current situation.

A spokesman for the Department for Environment, Food and Rural Affairs (Defra) said: “Mr Miliband is relatively new in his post and it is recess this week, so parliamentary pressure is off. He is keen to open a working relationship with them.”

But with the Environment Agency predicting we could see one of the most serious droughts for 100 years this summer, Mr Miliband will need to do more than just talk about it.

When customers pay more, they expect more and, certainly in drought areas, they are getting less. Just how long will their patience hold?

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t Q: & A with ANDREW MACKINTOSH of Anglian Water

Q: Why is it that we are one of the driest areas in the country and yet have enough water to meet our needs while wetter areas have not?

A: “The good thing about being in a dry area, where we only get an average of 600mm of rain a year, compared to 912mm in the rest of the country and with some areas getting 1,200mm, is that we know how to take care of our water. We just haven't got it to waste,” said Mr Mackintosh. Anglian Water's reservoirs are currently 95pc full and though underground reserves are lower than they would like, there are no present plans to impose restrictions.

Q: How has this been achieved?

A: Key to Anglian Water's success is water metering and fighting leakage, Mr Mackintosh believes.

“58pc of our customers are on a meter - that's nearly twice the national average. It is not as bad as people think. In fact, on average everyone on a meter saves £100. And when we put meters in it helps to spot leakage,” he said. Earlier this year the government granted permission for one south coast firm to install compulsory meters for the first time, but it is not something Anglian Water is proposing.

Q: What about leaks?

A: Anglian Water has spent £15m this year on mending leaks and has a team of 150 staff out detecting and fixing some 2,000 a month. It has one of the lowest levels of leakage in the country. It relies on people reporting leaks and then a priority system is in place to work out what should be done first. “We fix the biggest ones first because more water is obviously wasted,” said Mr Mackintosh. Leakage from customer pipes accounts for about a third of total losses.

Q: With East Anglia being so flat is it hard to pump water around?

A: The company spends £40m on energy a year and that will continue to go up. Anglian Water is looking into more renewable energy.

Q: But what of the profits?

A: Mr Mackintosh said: “We have to make money so we can invest more money.”

Turnover was £68.9m higher as a consequence of the regulatory pricing formula and increased seasonal demand due to dry weather in the early part of the summer in 2005.

This net increase in revenue contributed to a rise in operating profit at Anglian Water of 17pc to £372.8m

Q: So where are the investments?

A: “Anglian Water has invested £5bn since privatisation and customers have paid £2.5bn towards that. We have borrowed the rest. If you go back to pre-privatisation there was no investment at all, which is why we were swimming in seas with raw sewage in them and water quality was so much worse than today,” he said.

In the last year the company invested £292m in maintaining and improving infrastructure during the year. For every £1 paid to shareholders, £4 is invested.

Q: Will our bills go up?

A: Anglian Water bills are going up by 2.43pc this year. South West Water is increasing by 12.23pc, Thames Water by 4.53pc and all other water and sewerage companies increasing by between 6.16pc and 8.82pc.

Q: Water is not running out: it is simply that there are steadily more of us to share it. With massive growth predicted for this region how will we cope?

A: “New homes absolutely have to be water efficient, the same way that they have double glazing and loft insulation. There is a voluntary code at the moment but I do not think it is strong enough. We are lobbying government on this point. It is better to do it now than retrofit.”

Q: There are rumours that Anglian Water might be sold off, is that true?

A: “We never comment on market speculation,” Mr Mackintosh said.

Q: If we have enough water, do we need to worry about saving it?

A: The answer is yes. The company has come up with a list of top tips for doing so.

1 Use a bowl for washing vegetables and dishes.

2 Do not leave the tap running while brushing your teeth.

3 Fix leaking taps. A dripping tap can lose up to 4ltrs of water a day.

4 Wait until you have a full load of clothes before doing the washing, or use the half load button - you will save water, electricity and detergent. Washing machines typically account for around 14pc of the water used in the home.

5 Take a shower instead of a bath. A five-minute shower uses half the water of an average bath.


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