Water
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11th December 2006

DEFER FLAWED WATER LEGISLATION: CONSUMERS DEMAND ANSWERS

The Consumer Council today criticised the Government for attempting to force its draft water legislation through the House of Lords despite a unique High Court Declaration or “judicial health warning”, repeated calls for deferment from the NI Assembly and others and heightened consumer fears about the stability of the new Go-Co following the Regulator’s recent announcement that the Water Service is “a hugely inefficient operation”. As a result, the Consumer Council is asking the Minister for straight answers to fundamental questions now.

Steve Costello, Chairman of the Consumer Council said:

“Consumers cannot have confidence in this draft water legislation which the High Court has deemed to have failed the elementary test of fairness as consumers' views were not conscientiously considered.  We need to get water reform right and that is why political, business and civic society are all asking for this draft legislation to be deferred.  This is a monumental £3 billion project with the average household here paying around £10,000 extra each for the next 20 years.

“It is unreasonable to ask consumers to accept draft legislation in the absence of a full and independent review of all elements of water reform as a whole including the licence, the Strategic Business Plan, the Governance Letter, the Asset Management Plan, the Estate Management Plan and the Treasury financial deal. In effect, consumers are being asked to buy a car without having the opportunity for their mechanic to guarantee its road-worthiness. 

“Consumers need to know what risks they may be facing come 2010 when the Government's price protection disappears.  In recent days the Regulator has stated publicly that the Water Service could be up to 50 per cent less efficient than Ofreg would regard as acceptable.  The Regulator also states that there is no handle on how much unused land Water Service has.  Consumers here lost £1 billion in the privatisation of electricity - are we about to repeat the mistakes of the past?  Consumers must have their questions answered before this flawed legislation goes any further to make sure we are not storing up future problems.

“We are today challenging Minister Cairns to put the draft Strategic Business Plan and its assumptions on the table for public scrutiny before he signs it off on behalf of consumers.  If he is confident that the new Go-Co is based on a stable, efficient, sustainable business and financial model from 2010 onwards then there should be no hesitation in its immediate publication.  We are putting key questions to the Minister that require straight answers at this crucial point to allow him to demonstrate that consumers are going to get a fair deal now and in the future.”

KEY QUESTIONS FOR THE MINISTER TO PUBLICLY ANSWER:

1. Will the draft Strategic Business Plan, and its underlying assumptions, be made available for public scrutiny before the Minister signs it off?

2. How much money will be collected from domestic consumers each year from 2007 to 2010?  How much is the total dividend going back to Treasury from here each year from 2007 to 2010?

3. Will the Go-Co be in a break-even position by 2010 when it becomes self-financing?  Will the Go-Co pay the dividend in full from 2007 to 2010?

4. What are the current inefficiencies within the Water Service, and what efficiency targets have been set for the new Go-Co up to 2010?

5. Why are NI customers having to pay a higher cost of capital at 5.8 per cent than any other UK water customer?

6. Who will pay for (a) infraction costs if the Go-Co fails to comply with EU Water and Sewerage Directives; (b) pension and redundancy costs; (c) bad debt above 5 per cent estimate before and after 2010?

7. Will the Minister commit to public consultation prior to any decision to change its public ownership whether or not devolution returns?

8. Will the Minister guarantee that the Experian database which labels people as “Rock Bottom” has been withdrawn from use by the Water Service/Crystal Alliance?  Can he guarantee that location does not and will not play a part in debt management and recovery?  Can he guarantee that a two-tier system of debt recovery will not be employed at anytime by the new Go-Co?

NOTES TO EDITORS:

  1. The Consumer Council will be in attendance at the House of Lords debate on the draft Water and Sewerage Services (NI) Order 2006 on Monday 11 December 2006 and will be available for interview.
  2. Consumer Council media contact: Susie Brown, telephone, 028 9067 4807 or e-mail, [email protected]or
  3. The Consumer Council is an independent consumer organisation, working to bring about change to benefit Northern Ireland's consumers. The Council campaigns for high standards of service and protection and a fair deal for all. It also carries out research, gives advice and publishes reports and other publications. It deals with individual complaints about electricity, natural gas, coal and passenger transport.
  4. For more information, visit our website at www.consumercouncil.org.uk
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