The Eastern Region Water Con

7/27/2019 The Eastern Region Water Con

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EXECUTIVE SUMMARY

For the last five years, water customers in the Eastern Region have beenvictims to the great water company rip off:

Directors pay and bonuses are UP. Water bills are UP. Water leakages remain TOO HIGH. Companies are alleged to be AVOIDING TAX.

In this report, Robert Halfon MP reveals that water companies have continued to payhuge bonuses to directors, but bills have continued to increase above inflation.

Anglian Water have seen theirprofits fall by 5%, increased the average waterbill by 15.5%, has a turnover of 1.4 billion and only paid 125 million in tax,but have increased directors salaries and bonuses by 45%.

Cambridge Water have increased pay outs to directors by 116%, but put upthe bills of hardworking families by 14%

Thames Water has increased the average bill by 33% and has put updirectors pay by 33%, despite asking for Government subsidy for theirThames super sewer project.

Customers are unable to choose who their water provider is, and so this problemurgently needs addressing.

Robert Halfon makes a series of recommendations in this report:

1. There should be an immediate inquiry by the EFRA Select Committee into the roleof OFWAT, how to increase transparency, and steps that can be taken to reducehow much water companies are charging the consumer.

2. OFWAT must impose tougher targets on water companies so that they areincentivised to reduce leakage, and they must be reviewed more regularly. Theremust be serious penalties for companies who breach these targets. Ofwat mustalso push for greater transparency.

3. A windfall tax must be imposed on water companies who consistently raise prices

above inflation, without water level leakage decreasing. The money raised mustgo back to consumers through lower prices.

4. Every customers bill must clearly state how much profit a company is making,how much they are reinvesting in infrastructure, the level of their water leakage,how much directors are paid, and what the average bill has increased by acrossthe period.

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INTRODUCTIONTHE PROBLEM.

Nationwide, water bills have increased by 12.5% in nominal terms since 20101, and since privatisation of the water

companies in 1989, water bills have increased by 50%.2

Of course, at the time, privatisation was essential. After

chronic underinvestment throughout the 1970s and 80s, which threatened to make water unsafe, it allowed

water companies to raise the 108 billion that they needed for reinvestment.3

However since then, prices are

continuing to rise, there have been allegations of water companies avoiding tax, and company directors are still

receiving big bonuses. This has led to strong public feeling, and they are demanding action. Not least can this be

seen in a recent change.org petition where 35,000 British people have signed demanding a parliamentary inquiry

into the water companies.4

This report has identified a number of areas where change needs to happen regarding affordability, leakage, pay

and tax affairs. Whilst some of this lies specifically outside of the regulators remit (for example, Ofwat has nopower over how much companies pay their directors), Ofwat still has an important role to play in this. It does

appear that since the arrival of Ofwats new chairman Jonson Cox 8 months ago things are changing, with Ofwat

saying that they want water companies to listen to their customers and come up with plans that show how they

will meet the challenges facing the sector, such as affordability and long-term sustainability. The changes we are

making to how we regulate will be good for customers, good for the environment and good for the economy.5

It is important that any future decisions they make considers the following:

Affordability

We know that water bills are continuing to increase at a time when peoples wages havent risen in real terms since2003.

6Of co ur se, there are some justifiable reasons for these increases, not least a need to invest in

infrastructure, but despite bills increasing in some areas above inflation, less water is being supplied and profits are

travelling straight to directors pockets.7

Customers were also forced to pay for unresolved leakages and flooded houses,

and as a result, in some areas, water bills have increased vastly.8

Leakage

This dossier has uncovered that a shocking total of 3.4 billion litres of water is leaking from the system every day,

almost a quarter of the initial supply9. Ofwat, the water regulator, despite beginning to make some encouraging

1Jonson Cox, Chairman of OFWAT: http://www.ofwat.gov.uk/mediacentre/speeches/prs_spe20130305jcrae.pdf

2http://www.parliament.uk/briefing-papers/SN06596

3George Turner, Money down the drain: getting a better deal for consumers from the water industry , Centreforum,

2013, p. 114

http://www.change.org/en-GB/petitions/end-the-great-water-rip-offAccessed 19 July 20135

Ofwat, July 20136

http://www.resolutionfoundation.org/publications/trends-wages-and-incomes-2003-2008/7

Affinity Water personal communication - 21 June 20138

Appendix 29

http://www.dailymail.co.uk/news/article-2141059/Hosepipe-ban-worst-drought-25-years--water-companies-told-new-crackdown-leaks-till-2015.html

3
http://www.ofwat.gov.uk/mediacentre/speeches/prs_spe20130305jcrae.pdfhttp://www.parliament.uk/briefing-papers/SN06596http://www.change.org/en-GB/petitions/end-the-great-water-rip-offhttp://www.change.org/en-GB/petitions/end-the-great-water-rip-offhttp://www.resolutionfoundation.org/publications/trends-wages-and-incomes-2003-2008/http://www.dailymail.co.uk/news/article-2141059/Hosepipe-ban-worst-drought-25-years--water-companies-told-new-crackdown-leaks-till-2015.htmlhttp://www.dailymail.co.uk/news/article-2141059/Hosepipe-ban-worst-drought-25-years--water-companies-told-new-crackdown-leaks-till-2015.htmlhttp://www.dailymail.co.uk/news/article-2141059/Hosepipe-ban-worst-drought-25-years--water-companies-told-new-crackdown-leaks-till-2015.htmlhttp://www.dailymail.co.uk/news/article-2141059/Hosepipe-ban-worst-drought-25-years--water-companies-told-new-crackdown-leaks-till-2015.htmlhttp://www.dailymail.co.uk/news/article-2141059/Hosepipe-ban-worst-drought-25-years--water-companies-told-new-crackdown-leaks-till-2015.htmlhttp://www.dailymail.co.uk/news/article-2141059/Hosepipe-ban-worst-drought-25-years--water-companies-told-new-crackdown-leaks-till-2015.htmlhttp://www.resolutionfoundation.org/publications/trends-wages-and-incomes-2003-2008/http://www.change.org/en-GB/petitions/end-the-great-water-rip-offhttp://www.parliament.uk/briefing-papers/SN06596http://www.ofwat.gov.uk/mediacentre/speeches/prs_spe20130305jcrae.pdf


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noises under their new chairman, Jonson Cox, has so far done little to incentivise companies to reduce leakages, by

keeping water leakage targets largely static.

Thames Water, which supplies Harlows sewage removal, leaks 646 million litres of water on a daily basis10

, and it

has been alleged that they are avoiding corporate tax.11

Affinity Waters central region supplies Harlows water

directly lost 173 million litres daily in 2012/201312 the most of any water only company according to the

Guardian13

. However Affinity Water contest these figures (please see Appendix 1). They only intend to reduce this by 20

million litres by 202014

.

The statistics for the East of England through Essex and

Suffolk Water, Anglian Water and Cambridge Water Plc as

a whole are equally as shocking. Although water leakage is

reducing, bills are soaring and directors wages continue to

increase.

Furthermore, Ofwat is failing to hold water companies to

account regarding leakage levels. Some companies have

consistently failed to meet their targets, and it has been

reported that more than half of the companies (11 out of

21) do not have to reduce leaks at all over the next three

years.15

Where water companies have taken action to

improve leakage levels, these are often modest. I am

pleased that Ofwat seems to recognise that change needs

to happen, and I hope that when the targets are reviewednext year, that they will become a lot tougher.

Directors Pay

At a time when people are struggling to afford their essentials, the issue of directors pay and bonuses for those in

the water industry has become a hot topic in the press. It is easy to see why: in 2012 alone, Thames Water directors

were paid an astonishing 2,681,000.16

More worryingly, Citizens are paying for the wages of directors even though

they fail to do their job properly an example being Anglian Water, whose profits fell by 5% since 2008, yet their

company directors wages have increased by an astonishing 45%. In fact, the situation has become so bad that Sir

Ian Byatt, a former head of Ofwat, has said that shareholder returns are so high that some companies can no longer

afford to fund vital projects.17

Millions of hardworking families across the country have to

pay for this through increased bills.

10http://www.thameswater.co.uk/tw/common/downloads/aboutus-financial/annual-performance-report-2012-13.pdf- p.22.

11http://news.sky.com/story/1101675/thames-water-avoids-paying-corporation-tax

12Affinity Water personal communication - 21 June 2013

13http://www.guardian.co.uk/news/datablog/2012/may/08/water-companies-leaks-target-drought

14

Affinity Water personal communication - 21 June 201315http://www.telegraph.co.uk/earth/drought/9250990/Half-of-water-companies-not-required-to-cut-leaks-figures-show.html

16Appendix 2

17http://www.independent.co.uk/news/uk/politics/water-companies-told-to-stop-siphoning-off-cash-to-foreign-

owners-8711796.html

4
http://www.thameswater.co.uk/tw/common/downloads/aboutus-financial/annual-performance-report-2012-13.pdfhttp://www.thameswater.co.uk/tw/common/downloads/aboutus-financial/annual-performance-report-2012-13.pdfhttp://news.sky.com/story/1101675/thames-water-avoids-paying-corporation-taxhttp://news.sky.com/story/1101675/thames-water-avoids-paying-corporation-taxhttp://www.guardian.co.uk/news/datablog/2012/may/08/water-companies-leaks-target-droughthttp://www.guardian.co.uk/news/datablog/2012/may/08/water-companies-leaks-target-droughthttp://www.telegraph.co.uk/earth/drought/9250990/Half-of-water-companies-not-required-to-cut-leaks-figures-show.htmlhttp://www.telegraph.co.uk/earth/drought/9250990/Half-of-water-companies-not-required-to-cut-leaks-figures-show.htmlhttp://www.independent.co.uk/news/uk/politics/water-companies-told-to-stop-siphoning-off-cash-to-foreign-http://www.independent.co.uk/news/uk/politics/water-companies-told-to-stop-siphoning-off-cash-to-foreign-http://www.independent.co.uk/news/uk/politics/water-companies-told-to-stop-siphoning-off-cash-to-foreign-http://www.telegraph.co.uk/earth/drought/9250990/Half-of-water-companies-not-required-to-cut-leaks-figures-show.htmlhttp://www.guardian.co.uk/news/datablog/2012/may/08/water-companies-leaks-target-droughthttp://news.sky.com/story/1101675/thames-water-avoids-paying-corporation-taxhttp://www.thameswater.co.uk/tw/common/downloads/aboutus-financial/annual-performance-report-2012-13.pdf


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Due to the nature of our water network, water companies have a monopoly over an essential resource and

customers cannot choose who their provider is (although the Water Bill that was presented to parliament following

the Queens Speech in 2013 will bring more choice and competition for business customers). It is Ofwat who is

given the task of keeping prices low by setting price limits, but unfortunately prices continue to go up, at a time

when customers income has been squeezed. As a regulated utility, there is no excuse for high bills, higher wages

and higher still levels of water leakage.

Tax Affairs

Like directors pay, another issue that has been constantly in the public eye is water companies tax affairs,

allegedly by using corporate borrowing as a way to avoid paying tax. This has had the unfortunate

consequence of weakening their credit worthiness. Although the companies involved have denied this,

claiming that it is specific Government incentives to encourage them to reinvest in infrastructure, there is

clearly a moral dilemma. Is it right that Anglian Water, whose turnover topped 1.4 billion, only pays tax of125 million?

18

Recent comments by the head of Ofwat are revealing. The new Chairman of Ofwat has emphasized that

customers should be mindful of customers perceptions of their financial affairs.19

It is worrying that it almost

seems to have become an accepted fact that companies can get away with such actions, particularly ones who

offer a vital public service that the customer has no choice but to access. It is now urgent that an inquiry takes

place to examine, and ultimately put a stop, to such practices.

WHAT THIS MEANS FOR HARLOW:

WATER SUPPLY

Harlow receives its water supplies from Affinity Water, formerly Veolia Water Central, a subdivision of Veolia, which

is the largest water-only supplier in the UK with over 3 million customers.

Since 2009 the average water bill from Affinity Water has increased by 16%, from 150 to 174 today (it is worth

noting that Affinity Water contests this please see Appendix 1).

18www.dailymail.co.uk/news/article-2350686/water-power-firms-avoid-1billion-tax-tory-mp-demands-rebate-hard-

pressed-customers.html19

http://www.telegraph.co.uk/finance/newsbysector/utilities/10109140/Water-giants-profits-and-tax-morally-

questionable-says-Ofwat-boss.html21

House of Commons Library personal communication - 24 June 2013

5
http://www.dailymail.co.uk/news/article-2350686/water-power-firms-avoid-1billion-tax-tory-mp-demands-rebate-hard-http://www.dailymail.co.uk/news/article-2350686/water-power-firms-avoid-1billion-tax-tory-mp-demands-rebate-hard-http://www.telegraph.co.uk/finance/newsbysector/utilities/10109140/Water-giants-profits-and-tax-morally-http://www.telegraph.co.uk/finance/newsbysector/utilities/10109140/Water-giants-profits-and-tax-morally-http://www.telegraph.co.uk/finance/newsbysector/utilities/10109140/Water-giants-profits-and-tax-morally-http://www.dailymail.co.uk/news/article-2350686/water-power-firms-avoid-1billion-tax-tory-mp-demands-rebate-hard-


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At the same time, the average leak in Affinity Water owned pipes is 173 million litres per day, enough to supply

21% of their customers.22

When questioned on this, they argued that whilst they have many future plans in place;

Approximately one third of total leakage is on the customer side of the stop tap, which is the customers

responsibility.23

While the data we have shows this is the highest leakage level for any water-only company in the country, Affinity

Water has sent the following information:

The point made about Affinity Water having the highest leakage level for any water only company ignores the fact that

it is the largest water only company. Comparisons are therefore meaningless and this is why Ofwat sets individual

targets, specific to the size of each company.

As regulator, Ofwat sets leakage reduction targets; these are set at a continuous rate. They were last set by Ofwat

in 2009, when they believed that this was the level that leaks could most efficiently be dealt with. For 2011,

Affinitys pre and post assessment of leakage targets differed by just 0.4 million litres per day. They stated:

We achieved the annual leakage target of 185 Ml/d. Our pre MLE assessment of total

leakage for JR11 was 181.8 Ml/d and the post MLE reported leakage is 181.4 Ml/d.24

Unfortunately, Ofwat will not review the target again until next year.

The overarching issue here is not high bills, but lenient leak reduction targets set by Ofwat, which does not

encourage water companies to reduce their leakage levels. Leakage targets are reviewed by Ofwat every five

years, and so there will be no shift until 2015. Surely, these figures should be reviewed more regularly,

potentially every two years. Furthermore, Ofwat has identified governance as a key issue in the water industry,

and have identified a need to look into water companies tax arrangements. I applaud the new leadership of

Ofwats tough words on this issue25

but we need to see action being taken.

WHAT THIS MEANS FOR HARLOW SEWAGE REMOVAL

Thames Water provides sewage removal for Harlow, and on examining the average sewage bill, an aggressively

steep increase of 33% since 2008 can be seen from 110 to 14726

. The total wages and bonuses package for

Directors has increased more than this by 32.43% over 4 years to 2,681,00027. Thames Water also tops Ofwatschart for worst customer service, has been at the forefront of allegations about tax avoidance in the media and

have asked for Government funding to support their building of a much needed super sewer in London.

It must be recognised that despite having one of the highest water leakage rates nationally, they have been

working to reduce it and are slowly achieving this. Since 2008 their leakage level has decreased by 9.40% from 713

to 646 million litres per day28

well below their leakage targets from Ofwat29

. Furthermore, remuneration

packages are now decreasing; they peaked in 2010 at 3,888,000, an increase of 67.44% in 2 years30

.



24https://www.affinitywater.co.uk/docs/june-return-2011.pdfp 12.

25http://www.telegraph.co.uk/finance/comment/10109033/Dichotomy-between-water-profits-and-prices-raises-

moral-questions.html
https://www.affinitywater.co.uk/docs/june-return-2011.pdfhttps://www.affinitywater.co.uk/docs/june-return-2011.pdfhttp://www.telegraph.co.uk/finance/comment/10109033/Dichotomy-between-water-profits-and-prices-raises-http://www.telegraph.co.uk/finance/comment/10109033/Dichotomy-between-water-profits-and-prices-raises-http://www.telegraph.co.uk/finance/comment/10109033/Dichotomy-between-water-profits-and-prices-raises-https://www.affinitywater.co.uk/docs/june-return-2011.pdf


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26https://www.ofwat.gov.uk/consumerissues/chargesbills/household/

27http://www.thameswater.co.uk/tw/common/downloads/aboutus-financial/annual-performance-report-2012-13.pdf


6
https://www.ofwat.gov.uk/consumerissues/chargesbills/household/https://www.ofwat.gov.uk/consumerissues/chargesbills/household/http://www.thameswater.co.uk/tw/common/downloads/aboutus-financial/annual-performance-report-2012-13.pdfhttp://www.thameswater.co.uk/tw/common/downloads/aboutus-financial/annual-performance-report-2012-13.pdfhttps://www.ofwat.gov.uk/consumerissues/chargesbills/household/https://www.ofwat.gov.uk/consumerissues/chargesbills/household/https://www.ofwat.gov.uk/consumerissues/chargesbills/household/http://www.thameswater.co.uk/tw/common/downloads/aboutus-financial/annual-performance-report-2012-13.pdfhttps://www.ofwat.gov.uk/consumerissues/chargesbills/household/


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In the past two years however, Ofwat has maintained their high leakage targets for Thames Water giving no

incentive for further reduction, and as a result in 2012-2013 leakage levels have risen by 9 million litres per day

again31

.

As with Affinity Water, it is Ofwats targets, which need to be examined here in relation to leakage levels, as

they appear weak and too lenient year on year. It is good that Ofwat recently conducted their Review of the

calculation of sustainable economic level of leakage and its integration with water resource management

planning, but we need action to be taken sooner.

WHAT IS THE SITUATION IN THE EAST OF ENGLAND WATER SUPPLY?

The East of England as a whole is supplied by several water companies; Thames and Affinity Water as discussed, as

well as Essex and Suffolk Water, Anglian Water and Cambridge Water Plc.

In terms of leakage levels, Essex and Suffolk, Anglian and Cambridge Water have made notable progress in

reducing their levels. Anglian Water has reduced leakage by 4.78% over 4 years32

, Cambridge Water by 10.79%33

and Essex and Suffolk by 13.25%34

. One could argue that perhaps this goes some way to explaining the 15% rise in

average water bills for Anglian and Cambridge Water customers, but it is difficult to see how it can account for the

37%35 rise in water bills for the Essex and Suffolk Water customer over 5 years.

It does seem that Cambridge Water is self-regulating their leakage levels and for this they should be praised. They

have not allowed levels to go above the unchanging target set by Ofwat and have decreased leakage by 10.8%

since 2008.36

The same cannot be said for Anglian, Essex and Suffolk Water. In 2010 and 2011 both companies respectively failed

their Ofwat targets, Anglian Water quite substantially so. But it should be acknowledged that both have managed

to significantly cut water leakage since then. Yet, what is most noticeable about this achievement is how inflexible

Ofwats water targets are they did not make the leakage target levels tighter at all; and in the case of Anglian

Water, they actually weakened their requirement.


30http://www.thameswater.co.uk/tw/common/downloads/aboutus-financial/annual-performance-report-2012-13.pdf

31See Appendix 2

32Anglian Water personal communication: 8

thJuly

33http://www.ofwat.gov.uk/regulating/reporting/ for separate annual reports to Ofwat

34Provided by response to written parliamentary question to DEFA: 9

thJuly

35Records from 2008 2013: https://www.ofwat.gov.uk/consumerissues/chargesbills/household/

36Appendix 4

7
https://www.ofwat.gov.uk/consumerissues/chargesbills/household/https://www.ofwat.gov.uk/consumerissues/chargesbills/household/http://www.thameswater.co.uk/tw/common/downloads/aboutus-financial/annual-performance-report-2012-13.pdfhttp://www.thameswater.co.uk/tw/common/downloads/aboutus-financial/annual-performance-report-2012-13.pdfhttp://www.ofwat.gov.uk/regulating/reporting/http://www.ofwat.gov.uk/regulating/reporting/http://www.ofwat.gov.uk/consumerissues/chargesbills/household/http://www.ofwat.gov.uk/consumerissues/chargesbills/household/http://www.ofwat.gov.uk/regulating/reporting/http://www.thameswater.co.uk/tw/common/downloads/aboutus-financial/annual-performance-report-2012-13.pdfhttps://www.ofwat.gov.uk/consumerissues/chargesbills/household/


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Little is being done to resolve these issues at corporate or regulatory level, with Ofwat setting relaxed leakage

reduction targets which are far above many companies actual leakage rates. Whilst penalties have been

implemented, this is only in the most severe cases and has not affected Affinity Water.

Indeed, the target for reducing leaks for Affinity Water is increasing each year at an even higher rate than the rise

in leakages. Ofwats targets for Thames Water have at least attempted to minimise leakage over the past 5 years,

and have encouraged Thames Water to do so. Ofwat have provided absolutely no incentive for Affinity Water to

reduce their leakage levels and they are consequentially increasing41

.

Water and sewage prices for the customer are soaring for the average consumer with an increase of 16% since

2008 for water and of 29% rise in the same period for sewage. These figures raise serious concerns for the

consumer and cannot be ignored.

Whilst of course a percentage of this price increases will be invested back into the company, one must still

question any increase in directors pay, such as Thames Waters huge 32.43% increase appear minimal.42

250

East of England Water and Sewage Prices

200Affinity Water

150

Thames Water

Anglian Water

100

50

Essex and

Suffolk Water

Cambridge

Water Plc

0

2008-2009 2009-2010 2010-2011 2011-2012 2012-2013 2013-2014

Most da mn ing perhaps is Essex and Suffolk Water, between 2008 and 2012 both bill prices and directors

remuneration increased by 34.8%

Add to this high profit (much of which is driven by cheap interest levels on corporate debt) and excessive bonuses

for the directors of both companies, and indeed across the sector, one is left asking what more should be done?

41See Appendixes 1 & 2

42 See Appendix 2

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The new Chairman of Ofwat has made some admirable recommendations that would hand back some of the

profit to the consumer, and I would hope that these can be examined further and taken up by more companies.

Another favourable idea has been put forward by Ian Byatt, who suggested that payments of dividends above

those assumed by Ofwat when setting price limits must be accompanied by reductions in customer bills.43

RECOMMENDATIONS TO GOVERNMENT

I have spoken to Ofwat, and I do recognise that they are trying to make changes. But we must go further, which iswhy I recommend that the Government do the following:

1. Ofwat should explore how they can encourage prices to be lower, and make this an explicit target at the

next price review

2. Customer bills should display on them clearly how much profit a company is making, what their leakage

levels are, how much the average bill has increased or decreased by, and how much they are paying

directors to increase transparency.

3. Ofwat should encourage companies to be more transparent when explaining price increases to customers,

showing exactly how much they are reinvesting in infrastructure

4. Inquiry into:

i. Water companies tax affairs, particularly those who are receiving Government investment for

infrastructure projects, e.g. Thames Water

ii. Weak leakage targets set by Ofwat, and whether more can be done so that they can be

reviewed more often

iii. Although Ofwat cannot set directors pay, look at how they can encourage it to be lower, e.g .

transparency

iv. Look at seeing if a mechanism can be created that will safeguard customers interests, and

may be able to return profits to the consumer, particularly when companies are offering big

returns to directors and shareholders.

v. Look at how water companies can become more transparent, for example by having

mandatory customer representation at board meetings

5. If Ofwat does not impose heavier penalties for companies who perform poorly and pay theirdirectors excessive wages, we recommend that the Government creates a Windfall Tax on suchwater companies, with profits going towards lowering prices for the consumer.

43Ian Byatt in CentreForum paper Money Down the Drain, by George Turner

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SOURCES AND APPENDICES

APPENDIX 1

Affinity Water (Veolia Central Water)

Total Directors Wages+ Bonus p/a

Price of averagewater bill/

Leakage level /millionsof litres per day

Leakage levelas set by Ofwat

2008 1,437,000 150 142 145

2009 1,205,000 155 142 140

2010 1,682,000 156 143 185

2011 2,005,000 169 181 :21% of total supply 185

2012 2,829,000 174 158 :19% of total supply 185

2013 - 174 173 :21% of total supply 185

Total increase 96.88% 16% 21.83% 27.56%

Source: House of Commons Library 21 June

NOTE: AFFINITY WATER CONTESTS ALL THE FIGURES ABOVE. They say the figures are (basedon data provided by Affinity Water on 19 July):

Year

Total

Directors

renumeration

Affinity Water Central

Region average household

bill[1}

Actual leakage Central Region

Ml/d Ofwat target Ml/d

2007/08 982,000 174 142 145

2008/09 752,000 173 142 145

2009/10 943,000 179 143 140

2010/11 477,000 176 181 (21% of total supply) 185

2011/12 530,000 176 158 (19% of total supply) 185

2012/13 442,000 173 178 * (22% of total supply) 185

However in an email dated 29 July, Affinity Water states that

Our bills have risen as indicated, but the rise is lower than the rate of inflation.

[1] Average household bills are based on data from audited annual returns. Figures are calculated based on

appointed turnover and households billed for water. All bills are shown in 2012/2013 prices with RPI

financial year average applied. Figure for 2012/13 is for Affinity Water Limited (all regions) following

unification of the company in 2012.

* Please note: this figure is different from the 173 million litres per day (Ml/d) previously advised and has

been adjusted to reflect the performance report for the year 2012-13.


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Total Directors Wages+ Bonus p/a Price of averagewater bill/ Leakage level /millionsof litres per day Leakage level targetas set by Ofwat2008 2,322,000 110 713 755

2009 2,128,000 115 698 715

2010 3,888,000 119 670 685

2011 3,227,000 118 665 674

2012 2,681,000 126 637 673

2013 - 147 646 673

Total increase 32.43% 33.63% -9.40% -10.86%

Total DirectorsWages + Bonus

Profit forfinancial year

Price of averagewater bill /

Leakage levelmillions of litres perday

Leakage level targetas set by Ofwat

2008 1,100,400.00 125.3 mil 161 68 66

2009 996,600,00 129.3 mil 168 67 66

2010 1,172,600.00 143.0 mil 183 67 - failed ofwat target 66

2011 1,370,700.00 152.7 mil 204 65 66

2012 1,483,800.00 143.1 mil 217 59 66

2013 - - 221 53 66

Total increase 34.84% 14.21% 37.27% -13.24% 0.00%

Total DirectorsWages + Bonus p/a

total statutoryprofit after tax


Leakage levelillions of litres perd


2008 1,450,000.00 311,700,000.00 168 209 210

2009 1,537,000.00 317,300,000.00 174 210 210

2010 1,986,000.00 345,100,000.00 168 210 212

2011 2,052,000.00 266,500,000.00 177 230 - failedofwat target

212

2012 2,107,000.00 260,400,000.00 189 199 211

2013 - 295,800,000.00 194 - 211

Total increase 45.31% -5.10% 15.48% -4.78 0.48%

APPENDIX 2

Thames Water

Source: E-mail from Thames Water, 18/19th July 2013

APPENDIX 3

Essex and Suffolk Water as Northumbrian Water

O

Source: Leakage figures confirmed by Parliamentary Written Question 9th

July 2013

APPENDIX 4

Anglian Water

Source: Leakage figures confirmed by Parliamentary Written Question 9th

July 2013

APPENDIX 5

Cambridge Water Plc


14/19

Total Directors Wages+ Bonus p/a


Leakage level/millions of litres per day


2008 192,000 114 13.9 - BBC 14

2009 215,000 116 14 14

2010 220,000 113 14.2 14

2011 228,000 118 13.7 14

2012 415,000 127 12.4 14

2013 520,000 130 12.4 14

Total increase

170.83%

14.04%

-10.79%

0.00%

Source: E-mail from Cambridge Water, 17th

July 2013

AFFINITY WATER PERSONAL COMMUNICATION 27 JUNE

Leakage data for Affinity Water Central region

Please note: approximately one third of total leakage is on the customer side of the stop tap, which is the

customers responsibility.

Year 2012-13Affinity Waters leakage level was around 173 million litres per day, approximately 6% below our leakage

target and the Ofwat permitted level.

This was about 21% of the 816 million litres of water supplied each day.

Year 2011-12

Affinity Waters leakage level was around 158 million litres per day, approximately 15% below the Ofwat

permitted level.


Year 2010/11Affinity Waters leakage level was around 181 million litres per day, approximately 2% below our leakage



Please note: there was a change in agreed change in methodology with Ofwat for calculating leakage

targets between these years (2010/11 and 2009/10) but the actual leakage was the same.

Year 2009/10

Affinity Waters leakage level was around 143 million litres per day, approximately 2% above our leakage



Year 2008/9

Affinity Waters (Central Region) leakage level was around 142 million litres per day, approximately 2%

below our leakage target and the Ofwat permitted level.


Affinity Water network investment

Between 2010 and 2015 Affinity Water will have spent over 370 million maintaining its network to

prevent failure and secure supply in its Central region. This is equivalent to over 74 million a year.

This 370 million expenditure on maintaining the network represents approximately 39% of total capitaland operational expenditure.

Options being put forward in the Draft Water Resources Management Plan include:

A drive to reduce leakage significantly, saving 20 million litres per day by 2020


15/19

Major capital investment in water resources, water treatment plants and the distribution network in thefive years 2015-2020

Compulsory metering of all Central Region domestic customers by 2020, following the successfulintroduction of compulsory metering in the companys Southeast Region

Water efficiency initiatives allowing customers to save money on both water and energy bills

Upgrades allowing the company to deal more effectively with droughts

Working more closely with other water companies to maximise the use of scarce water resources

13


16/19

Catchment management, working with community partners to reduce pollution.

Written Parl iamentary Question 9th

Ju ly 2013

15


17/19


18/19

Guardian: Levels of water leakage across the sector

http://www.guardian.co.uk/news/datablog/2012/may/08/water-companies-leaks-target-drought

Guardian: Water companies not required to cut leaks

http://www.guardian.co.uk/environment/2012/may/07/water-companies-cut-leaks-2015-drought

Guardian: Water companies pay little or no tax on huge profits

www.guardian.co.uk/business/2012/nov/10/water-companies/tax

House of Commons Library personal communication - 24 June 2013

Infracaptial: Consortium buys Veolia Water

http://www.infracapital.co.uk/infracapital/news/Veolia.jsp

Northumbrian Water Group: 2011 annual report

http://www.nwg.co.uk/NWG_AR11.pdf

Ofwat: Average household bills 200-13

https://www.ofwat.gov.uk/consumerissues/chargesbills/household/

Ofwat: Acquisition of Northumbrian Water

http://www.ofwat.gov.uk/industrystructure/ownership/pap_con20111111nesukwater.pdf?download=Downl

oad

Ofwat: Links to all reports

http://www.ofwat.gov.uk/regulating/reporting/

Ofwat 2008-09: performance of the water companies

http://www.ofwat.gov.uk/regulating/reporting/rpt_los_2008-09.pdf


http://www.ofwat.gov.uk/regulating/reporting/rpt_los_2009-10.pdf


http://www.ofwat.gov.uk/regulating/reporting/rpt_los2011-12addreliability#data

Ofwat: Performance of water companies in 2009 summary

http://www.ofwat.gov.uk/publications/los/rpt_los_2009-10

Ofwat: Water companies annual June returns, table 10 line 25 Total Leakage

http://www.ofwat.gov.uk/regulating/junereturn/

The Telegraph: Water companies not required to cut leaks

http://www.telegraph.co.uk/earth/drought/9250990/Half-of-water-companies-not-required-to-cut-leaks-

figures-show.html

The Telegraph: Water Giants Profits and Tax are Morally Reprehensible says Ofwat Boss

17
http://www.guardian.co.uk/news/datablog/2012/may/08/water-companies-leaks-target-droughthttp://www.guardian.co.uk/news/datablog/2012/may/08/water-companies-leaks-target-droughthttp://www.guardian.co.uk/environment/2012/may/07/water-companies-cut-leaks-2015-droughthttp://www.guardian.co.uk/environment/2012/may/07/water-companies-cut-leaks-2015-droughthttp://www.guardian.co.uk/business/2012/nov/10/water-companies/taxhttp://www.guardian.co.uk/business/2012/nov/10/water-companies/taxhttp://www.infracapital.co.uk/infracapital/news/Veolia.jsphttp://www.infracapital.co.uk/infracapital/news/Veolia.jsphttp://www.nwg.co.uk/NWG_AR11.pdfhttp://www.nwg.co.uk/NWG_AR11.pdfhttp://www.ofwat.gov.uk/consumerissues/chargesbills/household/http://www.ofwat.gov.uk/industrystructure/ownership/pap_con20111111nesukwater.pdf?download=Downloadhttp://www.ofwat.gov.uk/industrystructure/ownership/pap_con20111111nesukwater.pdf?download=Downloadhttp://www.ofwat.gov.uk/industrystructure/ownership/pap_con20111111nesukwater.pdf?download=Downloadhttp://www.ofwat.gov.uk/industrystructure/ownership/pap_con20111111nesukwater.pdf?download=Downloadhttp://www.ofwat.gov.uk/regulating/reporting/http://www.ofwat.gov.uk/regulating/reporting/http://www.ofwat.gov.uk/regulating/reporting/rpt_los_2008-09.pdfhttp://www.ofwat.gov.uk/regulating/reporting/rpt_los_2008-09.pdfhttp://www.ofwat.gov.uk/regulating/reporting/rpt_los_2009-10.pdfhttp://www.ofwat.gov.uk/regulating/reporting/rpt_los_2009-10.pdfhttp://www.ofwat.gov.uk/regulating/reporting/rpt_los2011-12addreliability#datahttp://www.ofwat.gov.uk/regulating/reporting/rpt_los2011-12addreliability#datahttp://www.ofwat.gov.uk/publications/los/rpt_los_2009-10http://www.ofwat.gov.uk/publications/los/rpt_los_2009-10http://www.ofwat.gov.uk/regulating/junereturn/http://www.ofwat.gov.uk/regulating/junereturn/http://www.telegraph.co.uk/earth/drought/9250990/Half-of-water-companies-not-required-to-cut-leaks-figures-show.htmlhttp://www.telegraph.co.uk/earth/drought/9250990/Half-of-water-companies-not-required-to-cut-leaks-figures-show.htmlhttp://www.telegraph.co.uk/earth/drought/9250990/Half-of-water-companies-not-required-to-cut-leaks-figures-show.htmlhttp://www.telegraph.co.uk/earth/drought/9250990/Half-of-water-companies-not-required-to-cut-leaks-figures-show.htmlhttp://www.telegraph.co.uk/earth/drought/9250990/Half-of-water-companies-not-required-to-cut-leaks-figures-show.htmlhttp://www.ofwat.gov.uk/regulating/junereturn/http://www.ofwat.gov.uk/publications/los/rpt_los_2009-10http://www.ofwat.gov.uk/regulating/reporting/rpt_los2011-12addreliability#datahttp://www.ofwat.gov.uk/regulating/reporting/rpt_los_2009-10.pdfhttp://www.ofwat.gov.uk/regulating/reporting/rpt_los_2008-09.pdfhttp://www.ofwat.gov.uk/regulating/reporting/http://www.ofwat.gov.uk/industrystructure/ownership/pap_con20111111nesukwater.pdf?download=Downloadhttp://www.ofwat.gov.uk/industrystructure/ownership/pap_con20111111nesukwater.pdf?download=Downloadhttp://www.ofwat.gov.uk/consumerissues/chargesbills/household/http://www.nwg.co.uk/NWG_AR11.pdfhttp://www.infracapital.co.uk/infracapital/news/Veolia.jsphttp://www.guardian.co.uk/business/2012/nov/10/water-companies/taxhttp://www.guardian.co.uk/environment/2012/may/07/water-companies-cut-leaks-2015-droughthttp://www.guardian.co.uk/news/datablog/2012/may/08/water-companies-leaks-target-drought


19/19

http://www.telegraph.co.uk/finance/newsbysector/utilities/10109140/Water-giants-profits-and-tax-morally-questionable-says-Ofwat-boss.html

Thames Water: Financial Report 2012-13

http://www.thameswater.co.uk/tw/common/downloads/aboutus-financial/annual-performance-report-2012-

13.pdf

Thames Water: links to performance records

https://www.thameswater.co.uk/about-us/13874.htm

World Bank: Rates of Inflation

http://data.worldbank.org/indicator/FP.CPI.TOTL.ZG

18
http://www.telegraph.co.uk/finance/newsbysector/utilities/10109140/Water-giants-profits-and-tax-morally-http://www.thameswater.co.uk/tw/common/downloads/aboutus-financial/annual-performance-report-2012-13.pdfhttp://www.thameswater.co.uk/tw/common/downloads/aboutus-financial/annual-performance-report-2012-13.pdfhttp://www.thameswater.co.uk/tw/common/downloads/aboutus-financial/annual-performance-report-2012-13.pdfhttp://www.thameswater.co.uk/tw/common/downloads/aboutus-financial/annual-performance-report-2012-13.pdfhttps://www.thameswater.co.uk/about-us/13874.htmhttps://www.thameswater.co.uk/about-us/13874.htmhttp://data.worldbank.org/indicator/FP.CPI.TOTL.ZGhttp://data.worldbank.org/indicator/FP.CPI.TOTL.ZGhttp://data.worldbank.org/indicator/FP.CPI.TOTL.ZGhttps://www.thameswater.co.uk/about-us/13874.htmhttp://www.thameswater.co.uk/tw/common/downloads/aboutus-financial/annual-performance-report-2012-13.pdfhttp://www.thameswater.co.uk/tw/common/downloads/aboutus-financial/annual-performance-report-2012-13.pdfhttp://www.telegraph.co.uk/finance/newsbysector/utilities/10109140/Water-giants-profits-and-tax-morally-

The Eastern Region Water Con

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