Consumption data
16. Consumption data underpin Ofwat's regulation
of security of supply and its setting of price limits. Accurate
and reliable consumption data are particularly important in areas
of the country where there is predicted housing growth, such as
the south east and east of England. But only 28% of households
are metered, and most of the consumption data rely on estimates
of unmetered water use meaning that they are unreliable.[23]
17. Estimates of water consumption vary widely between
water companies even within the same region (Figure 2).
Three Valleys Water estimates that each individual within the
region uses 177 litres of water per day, while nearby Tendring
Hundred estimates that its consumers use 124 litres of water per
day. Tendring Hundred has the highest proportion—64%—of
metered customers of any of the water companies. Furthermore,
Ofwat believes that, as one of the smallest companies, it may
have a closer relationship with its customers and therefore be
better able to promote water efficiency.[24]
18. The difference between estimated and measured
consumption also varies widely between companies. South East Water,
for example, estimates that unmetered customers use the same amount
of water as metered customers. By contrast, Sutton and East Surrey
Water estimates that unmetered customers use 32% more than those
with meters.[25]
19. Companies have different methods for estimating
consumption levels for the 72% of unmetered consumers.[26]
Independent reporters are responsible for ensuring data quality
but they do not assess whether a company's approach is comparable
to that of the other companies.
20. A study in 1999 by UKWIR found that 60% of the
variation in per capita consumption was due to socio-economic
and climate factors. Ofwat cannot explain the remaining 40% nor
has it commissioned any updates to the 1999 research.[27]
Consequently, it is not clear how much of this remaining variation
is due to differences in the methodologies used by companies for
calculating per capita consumption, or to the unreliability of
demographic data available.[28]
Figure 2: Average
household consumption for water companies in the South East 2005-06
Source: Ofwat, Security of Supply report 2005-6
Pricing information
21. All the water companies are monopolies in their
regions.[29] There is
therefore no market to determine the price that consumers are
willing to pay for a particular standard of service. Ofwat does
not know whether consumers will pay more for better service, for
example, to fund a new reservoir to reduce the probability of
hosepipe bans.
22. Prior to the last price control in 2004, Ofwat
co-ordinated two national surveys to establish the security of
supply level required by consumers. However, there has been little
co-ordinated research on how much consumers are willing to pay
for a particular level of security.[30]
18 C&AG's Report, para 2.1 Back
19
C&AG's Report, para 2.3, Q 6 Back
20
Q 81 Back
21
C&AG's Report, para 3.11 Back
22
Q 72 Back
23
Q 5 Back
24
Q 123 Back
25
Q 90 Back
26
Qq 85, 88 Back
27
Qq 1-2 Back
28
C&AG's Report, para 2.7; Q 5 Back
29
Qq 37-39, 48 Back
30
C&AG's Report, para 2.15 Back
