Select Committee on Environment, Transport and Regional Affairs Minutes of Evidence


Examination of witnesses (Questions 220-227)

TUESDAY 6 FEBRUARY 2001

MS PAMELA TAYLOR, MS JEANNE GOLAY AND MR MIKE POCOCK

Chairman

  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 water industry.

  222. But in almost all the other industries, gas and electricity, for example, they are metered supplies?
  (Ms Golay) Proposals that have been made—and, 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.

Mr Olner

  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 to have.

Chairman

  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 well enough.

  Chairman: On that note, thank you very much for your evidence.


 
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