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Water UK fears environment needs may swallow maintenance spend

News

WATER COMPANIES last week expressed fears they would have to sacrifice maintenance spending to fund investment on meeting tougher environment standards over the next five years.

They fear their maintenance programmes will be squeezed if water regulator Ofwat rules against plans to increase spending to replace worn out sewers and treatment works this summer.

Ofwat will rule in August on water company spending plans worth a total of £22bn between 2005 and 2010.

Water companies last week sought to influence the ruling with the publication of business plans setting out their proposed budgets for the next five years.

They fear Ofwat will repeat the squeeze on maintenance budgets carried out in the last regulatory review five years ago.

'There are concerns that in this review, funding to meet maintenance needs will again get squeezed by investment requirements to meet statutory environmental drivers, ' said water company trade body Water UK.

'Water UK believes it is essential to preserve the value of huge investments undertaken in recent years so that those new works are properly maintained along with assets provided many years ago.'

The trade body pointed out that water company investment was currently running at 0.75% of annual asset replacement costs - a relatively low figure by the standards of other industries.

Ofwat director general Tom Fletcher indicated that he was likely to agree to the water company proposals, although he had not seen them in detail.

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