Examination of witnesses (Questions 220-227)|
TUESDAY 6 FEBRUARY 2001
220. But somebody would then have to compensate
North West Water for the fact that they were supplying the water,
and how would you have a charging regime? That is all I am asking.
(Ms Golay) That charging regime is, in effect, based
on a contract that, in this hypothetical case, would exist between
Thames Water and Manchester whereby Thames commissions North West
Water to deliver water through your tap but then collects the
money directly from you in one way or another. That sort of agreement
between Thames and North West Water, a common carriage arrangement,
is a big issue in the industry
221. I am not interested in it being a big issue;
I want to have the industry suggesting some solution. My water
supply is not metered so I do not understand how this would work.
(Ms Golay) It would work because it has worked in
other industries, and it probably would work differently in the
222. But in almost all the other industries,
gas and electricity, for example, they are metered supplies?
(Ms Golay) Proposals that have been madeand,
again, we have not got a particular view on them because we believe
it is going
223. No, but you have a view that you want this
in the legislation?
(Ms Golay) That is right.
224. How are we going to stop you, if you have
competition, cherry-picking? You are not going to be bothered
about a poor rural customer who is miles away from his supply.
You will want the big industrial cherries, will you not?
(Ms Golay) At the moment we supply everybody, so what
we are really talking about is how to stop new entrants, which
could include our members on somebody else's patch, cherry-picking.
I think that is a good question and, at the moment, there is nothing
to stop it happening, and that is another reason why we think
it should be dealt with.
225. But this is what happened in the telecoms
industry when it was privatised. They cherry-picked the city areas
and did not bother about supplying some of the rural areas.
(Ms Taylor) That is absolutely right and at the moment
we are supplying the people who will be very unattractive to supply
in the future, and that is a responsibility that we will continue
226. What about supply pipes? Do you think that
needs to be regulated in the industry.
(Mr Pocock) Customers find it difficult to understand
the ownership of a supply pipe. I am not sure of our view on regulation.
(Ms Golay) The ownership of supply pipes at the moment
rests with customers and there are proposals for that ownership
to pass to the water companies. This also ought to be discussed
because what happens is that some customers who have very expensive
pipes to maintain would thereby, if those became the property
of the companies, impose on other customers who might have done
better work the cost of the poor condition of their own pipes.
It is a bit like asking, "Should we rewire all the houses
at the cost of the generality of the customer base?
227. Except that you do not get leakage through
most wiring systems but you do through water pipes?
(Ms Golay) That is one reason why we were not particularly
happy with the guidance that the Director General issued on the
siting of the meters. We understood that the 1999 Act was designed,
in effect, to allow a certain amount of environmental protection
by encouraging customers to apply for a meter and, if they found
they did not like it, being able to return it a year later. The
most effective environment protection that derives from the installation
of a meter is that, if they are installed outside the house at
the junction of the customer-owned and the company-owned pipes,
then the customer himself becomes aware of the costs of those
leakages, and some of our members are still offering to repair
those leakages fully. In the name of reducing the cost of installing
those meters, however, it has been required of companies to install
the majority of meters inside the house, leaving this sometimes
large chunk of pipe belonging to the customer in effect incurring
leakages that are at the cost of the generality of the customer-base
instead of at the cost of the customer responsible for it, which
we do not think is right and we do not think it protects the environment
Chairman: On that note, thank you very much
for your evidence.