Water companies are supposed to charge households more if they use more than a recommended annual ration for washing, cooking, cleaning and garden maintenance.
People using high levels would be charged 160 per cent extra – down from £1.50 per 1,000 liters to £4 – while those who are careful could save money.
As a related measure, customers could be charged more in the summer, when supplies are scarce, to prevent them from consuming too much.
Separately, households can benefit from discounts if they have a water tank in the garden to water the plants or install a permeable car park on their property, rather than a conventional hard car park.
The schemes are being promoted by industry regulator Ofwat who says he wants water companies to be more “creative” in how they set charges to “help encourage customers to use water wisely”. wisely”.
Water companies should charge households more if they use more than a recommended annual ration for washing, cooking, cleaning and garden maintenance (stock image)
Affinity Water, which supplies water to 3.8 million people in the South East, will be the first to carry out differential pricing trials for 1,500 customers this year.
Under its program, customers will receive the first 30,000 liters of water they use for free, which is equivalent to about two months’ supply for a four-person household.
The next 250,000 liters will be charged at £1.50 per 1000 litres, while any household using more than 250,000 liters will be charged at £4 per 1000 litres, an increase of 166%.
The median consumption of its customers is 111,000 liters per year and Affinity estimates that at least two out of three would pay less. However, a household using 300,000 liters would see their annual bill increase by around a third and someone using 475,000 liters would pay double that.
The system is known as the Increasing Block Tariff (RBT) and has been used in some other countries to save water, including Australia, Spain, the United States and Portugal, as well as in some parts of Asia and South America.
National Pensioners Convention General Secretary Jan Shortt said: ‘This Ofwat proposal for water companies to be ‘creative’ with pricing looks quite complicated.
“We need more details, but it seems everyone is being treated as having the same lifestyle and needs.
“Older people have a totally different lifestyle from those who are working and healthy. Disabled or sick people often need access to water at different times of the day for their health care.
She added: “To be honest, another system that allows water companies to get more profit from their customers doesn’t make sense.”
“Maybe they should spend more of their profits on making sure sewage doesn’t leak and cause damage to the environment, not to mention leaky supply pipes, which increases costs for each user.”
Experts from the New Economics Foundation believe that this new way of charging for water also has advantages for low-income households – with low consumption – and have suggested that it could be extended to gas and electricity.
Its expert in this field, Chaitanya Kumar, said it was possible to set thresholds for water use so that most people benefit from lower bills, while only a small group of households with very high consumption would pay more.
He said: “We have considerable data to enable us to set fairly good thresholds for households beyond which higher tariffs kick in. There is no need for a nanny state to tell us how much to ration. “
Ofwat chief executive David Black insisted the new differential pricing is good for consumers and urged other water companies to follow Affinity’s lead.
He also clarified that one of the main objectives of the program is to reduce water consumption, saying: “Water resources are affected by climate change, which poses significant long-term challenges for the health of the river water and water security”.
“While pricing is just one approach, businesses should use all the tools at their disposal to support affordability, encourage us all to use water wisely, and reduce our impact on the environment.”
“We want to see more companies researching and implementing innovative solutions.” Affinity says a customer survey found that “just over half” think it would be a fairer way to pay for water.
Affinity Water’s head of financial support and service delivery, James Tipler, said: “We want to be affordable and fair for all of our 3.8 million customers in the South East of England. We want to get evidence of the impact of the rate trial on affordability for our customers by comparing our trial and control groups.
“By structuring the tariff in this way, we hope to see evidence that water bills become more affordable for more of our customers. We have estimated that at least two out of three households will pay less if consumption remains unchanged.
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