Water bills feel the pressure

Customers like the service they get from water companies, but they don’t like the amount they’re asked to pay for it, according to the latest CCWater annual customer survey. Conor McGlone reports.

The good news is that the general level of customer service is rising. The bad news is that customers do not think they are getting value for money. This is not surprising: bills are up on average 55 per cent since 2004 – roughly three times the rise in average incomes.

According to the annual survey by ­CCWater, customer satisfaction with the value for money of water services has been falling since 2011, and at 69 per cent now stands at the lowest level for four years.

Satisfaction with the value of sewerage services has been relatively stable since 2012, and now stands at an average 71 per cent. However, the proportion of customers who feel water and sewerage charges are fair has fallen over the past three years, and considerably: from 67 per cent in 2011 to 54 per cent in 2013.

A resounding 93 per cent of respondents were satisfied overall with their water supply in 2013, an increase from 90 per cent in 2012. Similarly, there was a small rise in customer satisfaction with sewerage services, from 85 per cent to 87 per cent, after three years of decline, but customers do not feel they are getting the best bang for their buck.

This, says CCWater, is a symptom of water companies struggling to “bridge the gap” between customers’ increased levels of satisfaction with the water and sewerage services they receive and the hole in their pockets it made by paying for them.

The Institute of Customer Service recently published its customer satisfaction index, which reveals that 28 per cent of utility customers are looking for lower prices – the highest of any sector. However, chief executive Jo Causon says a basic level of service should apply. Nearly three-quarters of customers want a balance of service and cost.

 “While price is important for consumers, our research clearly demonstrates that targeting lower prices at the expense of customer service is not the answer,” she says.

Water is not at the bottom of the utility pile when it comes to value for money. CCWater says customers place water as somewhere in the middle. Energy utilities are performing far worse in this area, falling to 56-64 per cent in 2013 from 66-71 per cent in 2012.

If CCWater’s survey is anything to go by, the public’s attitude on water charges is hardening, so will water bills become the next major battle ground for politicians?

Labour thinks so. It has called for a “national affordability scheme”, which would set a UK-wide standard for social tariffs. An amendment to that effect was defeated when Labour tried to attach it to the Water Bill, but shadow water minister Angela Smith confirmed to Utility Week that a triumphant Labour government would introduce the scheme and end “the current postcode lottery whereby companies choose whether to offer a social tariff and set the criteria for eligibility”.

“The report by CCWater is further evidence that an increasing number of hard-pressed households are not finding their water bills affordable. Yet while water companies have been making huge amounts of money, David Cameron’s Water Bill has done nothing to tackle the cost-of-living crisis and keep water bills affordable,” she says.

The Conservatives say there is no need for the scheme because most companies already have social tariffs, but the political debate about water charges is gathering pace.

South West Water, which historically has the highest bills in the UK, was ranked bottom in terms of value for money for both sewerage and water supply by CCWater. However, the company is trying to reverse this. It was one of only three companies to propose further reductions to bills last month and was awarded enhanced status by Ofwat, alongside Affinity Water, for cuts of 7 per cent and 11 per cent, respectively.

Welsh Water has also got on board, having been approved by Ofwat for an early determination after proposing bill reductions.

Importantly, these companies have said they will lower bills by accepting a lower rate of return on capital, without cutting back on investment. This sounds promisingly like “bridging the gap” between maintaining service and reducing bills.

The customers have spoken. Water companies must focus on value for money. While some companies have listened and just might have found the magic formula, the final stages of PR14 present a pivotal opportunity for the rest of the industry to prove it’s listening too.