UK water metering: new tarif systems needed by Y2K

For over a century, water charges in the UK were based on a property’s rate able value – a valuation originally related to the rent that could be obtained for the use of the property. This rental link has long since been lost, but rateable values were used principally by town and county councils to raise local government finance. The water industry ’s original home was in local government, hence the dependence on the rateable value charging base.

RATEABLE VALUE CHARGING RETAINED

In 1996 the Secretary of State for the Environment stated that he was going to repeal the legislation which required the move away from rateable value (RV) based charging. As there was no generally acceptable unmetered alternative charging system, and the dynamic of the meter option scheme and the conversion of the housing stock through new property metering would not yield a fully metered alternative by 2000, it had become clear that the only answer was to retain RV based charging for a longer time.
The introduction of the meter option scheme in 1982 had implicitly judged paying by meter to be fairer than unmetered charging. This was not, however, a generally accepted principle. The critical mass of metered customers that has now been established, and the acceptance of optional metering across the political spectrum, probably means that metering will form some part of future charging. However, some re definition of how it is to be applied will probably be necessary if metering is to be a bigger player and comfortably accepted by all.
The issue of charging fairness needs to be supplemented by some other significant factor if change is to be made.
The key issue that is emerging is supply/demand balancing. There is common political cause in protecting the environment from over-abstraction of water, and in managing the required investment in new resources. The size of the future role for metering in water industry charging in the UK will probably depend on the contribution that metered charging can make to protecting the interests of all customers in having sufficient supplies available to meet their reasonable demands.

TARGETED METERING

Peak demands in summer for garden watering seem to be a common issue for resolution. These demands generate capacity requirements whose costs fall on the generality of customers under current charging structures. A charging structure which perhaps allows the garden waterers to pay a greater share of these costs, relieving others of some of this charging burden, could find favour. It would require metering, but perhaps it would be metering which was more targeted than at present.
It may also involve more sophisticated metering and tariffing than we currently employ. The costs of introducing targeted metering and smarter tariffs could be offset to some extent by the use of more detailed demand information in improving system design and management.
The new government has faced up to the problems of demand/supply balancing and charging for water, and will shortly make its views known on the way ahead. The time for discussion and action before the 2000 deadline is relatively short, and the prospect of some clarity is very welcome.