Wednesday, 9 June 2010

Annual Utility Bills: No Incentive to Be Economical

It has been a while since I have moaned about UK utility companies, but then I received my water bill.  In the old days, i.e. before the 1990s, you paid a flat rate for water consumption based on the size of the house.  This meant that large families packed into small houses benefited and single old people tended to lose out.  Then with the privatisation of water companies in 1989 many of the numerous water companies began to compel tenants and new owners of houses to have water meters fitted.  They generally set the tariffs far too high and in the early 1990s there was a rocketing in the number of people having their water cut off, mainly these families who had benefited under the flat rate system, many had to wash at relatives' houses and there was a disproportionate impact on the hygeine of children.  The regulator set up in 1989, OFWAT, the coloquial name for what since 2006 has been Water Services Regulation Authority, reined in these extremes, and to a great extent most of us have become used to water metering. In many areas, like where I currently live, rather than water supply and sewage being handled by the same body they are now covered by two different companies.  Where I used to live there was one company for both and the sewage charge was 10% of the water charge.  Where I am now the sewage charge was initially set at 108% of the water charge and now that I have been here more than a year it has fallen to 95% of the water charge.  Basically I am paying for all water I use, twice, even if I tip the water on to the grass or down someone else's drain.

The difference between water meters and gas and electricity meters is that as a consumer you cannot read a water meter yourself.  Recently combined the charge for my gas and electricity was raised by £25 per month, and I received a statement that my consumption of both had risen.  I accepted, given the snowy winter that consumption of gas had gone up but given that we had switched off one of the two refrigerators we had in the house, I found it difficult to accept that we had been using more electricity.  I contacted the supplier and sent in my own readings.  The revised bill showed a fall of £25 per month over what I had been paying for both fuels combined last year, so about £50 less per month than I would have been charged if I had not challenged the bill, so saving up to £600 per year.  It turned out that because we had moved from a set pattern of heating during the winter and only switched it on and off when we felt cold, our consumption of gas had actually fallen, despite the snow, and our electricity consumption was down by about 20%.

We are very frugal in our house and do not flush the toilet until it smells unpleasant, two people usually use the same bath water and most of the time we shower.  We now wear our clothing for many days or even weeks to reduce the amount of clothes washing we do.  We no longer grow vegetables so do not water the garden any longer.  We probably do not smell as nice as we once did, but it keeps water consumption down.  You can imagine my surprise when I found my water bill was more than trebling from £3 per month in 2009/10 to £10 per month in 2010/11.  There is no way that we are using three times as much water as last year.  However, unlike with the gas and electricity I cannot see the water meter (it is buried under the concrete at the front of the house) and am reliant on whatever figures the water company sends.

A major part of the problem is that you are not actually charged on the amount of water, gas or electricity you have used, you get charge for an estimate of what you will use in the year coming. If you do not stay in a property then you gain no benefit from being economical with any of your utilities as they will not see your lower consumption of the resource until after you have left, so you might as well be profligate with your water, gas and electricity because no matter what you do you are going to get charged for it.  This greedy approach from utility companies works against any 'green' steps we might take to reduce our carbon dioxide 'footprint' or use less water.  They give no incentive for you to be frugal, in fact the complete opposite.  As frugal consumers, we lose out.

As you can see from the examples above, the charges the utility companies demand often seem to be conjured out of the air rather than based on real consumption levels.  A few years back I rented a five bedroomed-house with a woman and her infant son.  Previously seven adults had lived in the house.  When we received the water bill, the company felt it necessary to tell us that our consumption was 'excessive' and that we should use less water.  We asked how as three people, one only a child, we were using more than seven adults had done.  I accept those seven adults may have been smelly but as I have shown, we are very economical in our consumption.  It seems this time the figure has been conjured out of the air.  I could accept a small increase due to investment or repair costs, but a 230% increase seems mad.  Naturally I have challenged the water company, but not having my own figures I am unable to base my challenge on measurable figures.

Generally at the end of the year we find we are in credit to all the utility companies, including the telephone companies.  Until we move out of the house we do not receive this money back and usually it is rolled on into the next year.  All the time the company is holding our money not for anything we have actually bought for them, simply on the basis of what they say we will use in the future.  It gains interest (however small at the moment) while it sits in their accounts and we are deprived of that money ourselves.  I certainly advise everyone to challenge their utility supplier.  Privatisation was supposed to create a competitive market in utilities but in fact has simply created a cartelised one in which the deal for the average consumer is very poor.  For now, however, the companies do seem to yield if you challenge them, and like me, by simply emailing them you could save yourself £600 or maybe more, per year.  What needs to happen though, and is very unlikely to do so given the new government, is utility companies be compelled to have charging systems that in fact encourage frugal consumption, rather than as at present have systems that encourage not to give any thought to how much you use because you know you are stuck paying the same rate whatever you do.

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