21 June 2001
Leading water companies are urging Michael Meacher, minister for the environment, to revise the sector's supply regulation system to ensure long-term sustainability.
Severn Trent Water argues that the current system, in which water regulator Ofwat revises prices every five years, is incompatible with suppliers' long-term planning strategies. Price cuts in the last contract round cut the group's pre-tax profits by a quarter in the past year.
Severn Trent, Anglian Water, United Utilities, Thames Water and Kelda (formerly Yorkshire Water) have written to the environment minister calling for an extension to 25 years of the 10-year notice period imposed on water licences.
The suppliers argue that potential investors are attracted by longer periods, reducing long-term debt and subsequently preventing water bills from rising.
"With the new cabinet in office, we need to start working on this immediately to ensure sustainability," a Severn Trent spokeswoman said. "What is needed is a long-term vision for water supply."