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Liz Cotton, Research Project Manager, Consumer Council for Water

Case Studies

Client Issue
Consumer Council for Water Social Tariffs and Cross Subsidies in the Water Industry
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The Consumer Council for Water (CCWater) represents the interests of water consumers. One of the key issues for consumers is to have fair, affordable charges. Water company tariffs include a number of inherent cross subsidies, that is, where a proportion of the bill goes to meet the cost of providing other services, or are averaged across the customer base. Bill payers in England also subsidise a social tariff – WaterSure - which was introduced by legislation in 2000. Companies operating in Wales provide similar help although this is not required by legislation.

Following the independent Walker Review of charging in December 2009 and the Floods and Water Management Bill that received Royal Assent in April 2010, it is anticipated that a number of additional cross subsidies and social tariffs could be introduced. Against this background, CCWater commissioned Creative Research to conduct a deliberative research study to build on previous work and enhance their understanding of customers’ views on the issues.

Four reconvened workshops were held involving some 67 participants selected to be broadly representative of water customers in England and Wales. The research explored awareness and understanding of, and attitudes towards, existing cross subsidies and social tariffs not just in relation to the water industry but across all sectors. Participants then went on to deliberate on three water industry specific issues:
· a cross subsidy aimed at community organisations to help cushion the switch to a site area based method of charging for rain water run-off which could result in a large increase in the bills of some community groups
· a social tariff aimed at people on very low incomes to help make their water bill more affordable
·  a cross subsidy to address what is known as the South West legacy which has resulted in bills is the South West region being, on average, 43% higher than the rest of England and Wales

Having considered and discussed the arguments both in relation to whether or not the additional cross subsidies and social tariffs should be introduced and the options for meeting the cost, there was support for all three issues to be tackled and the main reason underpinning this was a sense of fairness. Most participants were prepared to make a small contribution themselves via their water bills. However they also want to see contributions being made by other parties, in particular, the water companies and the Government.

By improving their understanding of peoples' views on these issues the findings will enable CCWater to better represent water customer interests.

Cross Subsidies and Social Tariffs (3653.158Kb)

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