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False profi ts


In his letter (NCE last week) Jamie McEwan wondered what level of profits the water companies needed before any would be invested in the infrastructure.

It is that word 'profit' that is again causing confusion. Far from being the money left over when everything has been done, its principal purpose is to provide funds for improvements in the water infrastructure.

Of course, a part also provides a return to investors, but if there was no profit then there would be no improvements.

Water companies typically have to borrow very substantial sums every year to supplement the profit they reinvest and enable them to carry out even more improvements. This is not the public's perception.

It is a difficult balancing act for the water companies and Ofwat. How much should water charges to customers be increased to meet the onerous requirements of the EU and enable the existing infrastructure to be maintained to meet customer service standards?

There are no government grants - it all has to come from the customers' pockets.

Stuart Derwent (M), 19 Withdean Crescent, Brighton BN1 6WG

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