2 Compensation for sewer flooding
incidents
12. Water companies are required to provide effective
drainage of waste water from homes and properties. They recover
the costs through the sewerage component of the water and sewerage
bills they charge consumers. The sewerage element varies from
company to company, ranging from £95 to £225 per property
in 2003-04 depending on the company. It does not, however, vary
for consumers within each company's region.[19]
13. A small minority of consumers suffer from sewer
flooding. Since 1994, the number of sewer flooding incidents has
fluctuated between 5,000 and 7,000 per annum (Figure 2 above),
which represents less than 0.03% of the total number of properties
in England and Wales.[20]
14. Ofwat must strike a balance between the interests
of these two groups of consumers. It pointed out that sewer assets
effectively provide a public service. It is not, however, possible
to do all the capital works to remove properties from the risk
of sewer flooding at once. Water companies therefore prioritised
sewer flooding remedial works.[21]
15. In some cases, consumers suffer repeated incidents.
In one case, a consumer in the Thames Water region suffered numerous
incidents of external flooding. In response, he brought an action
against Thames Water on the grounds of nuisance, and that the
company had breached human rights legislation as regards respect
for family life and home and protection of property. The High
Court found in favour of Thames Water, arguing that Parliament
had (through the Water Industry Act 1991) established arrangements
to provide redress for customers, and had created Ofwat in order
to balance the interests of those customers affected by sewer
flooding, against those of all other customers. The High Court
judgement added, however, that the present modest compensation
arrangements were a matter of concern, and that Ofwat should reconsider
current compensation policy in the light of the case, even if
this meant a slight increase in the average water bill paid by
all consumers. This was because "if it was not practical
for reasons of expense to carry out remedial works for the time
being, then those who enjoy the benefit of effective drainage
should bear the cost of paying some compensation to those who
have to endure intolerable sewer flooding, internal or external".[22]
16. The statutory arrangements for compensating customers
who suffer sewer flooding are limited. The statutory Guaranteed
Standards Scheme (GSS) provides for payments to be made to customers
for service failures, including internal sewer flooding. It does
not cover external flooding. Under the scheme, customers receive
a rebate of their annual sewerage payment. The scheme is not supposed
to compensate customers for damage or losses incurred, and merely
reflects the service failure they have suffered. It does not vary
in proportion to the damage caused by sewer flooding or the severity
of the incident - in some cases victims may have to vacate their
property whilst it is properly cleaned and repaired.[23]
17. Companies can also make further compensation
or ad hoc payments to victims of flooding, and Ofwat and WaterVoice
(which represents the interests of consumers) encourage them to
do so. For example, some companies give a partial rebate for external
sewer flooding, and companies can also provide help with uninsured
losses. In 2002-03, companies made voluntary payments under circumstances
not covered by the GSS of just over £1.2 million.[24]
18. Ofwat expected householders to obtain insurance
that covered incidents such as sewer flooding. It also recognised
the need to protect the sewer-flooded consumer, who might not
be well off and might not be able to obtain full insurance cover,
and to ensure that poorer consumers were not driven further into
poverty by an event that was no fault of theirs. There was now
a general recognition among all parties, including Ofwat, the
water companies, consumer representatives and insurers, that customers
should not be out of pocket as a consequence of sewer flooding.[25]
19 Charges for water services can however vary where
consumers have elected to use a water meter, which charges them
for water actually used. Back
20
C&AG's Report, para 1.18 Back
21
Qq 28, 30 Back
22
Peter Marcic v Thames Water Utilities Limited (2002 EWCACiv 65)
Back
23
C&AG's Report, para 2.4 Back
24
ibid Back
25
Q 45 Back
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