§ Mr. Greg Knight
To ask the Secretary of State for the Environment what provision will be made for water metering in the limit on charges to apply to water undertakings under the model instrument of appointment.
§ Mr. Ridley
The abolition of the domestic rating system means that water undertakers will have to introduce alternative means of charging. This is quite independent of the privatisation of the industry. Although the Government regard metering as potentially the fairest method of charging, it will be up to each undertaker to decide how it wishes to charge.
Each undertaker will want to take into account its own local circumstances and information on practicality, costs and effects of alternatives, before deciding whether to introduce widespread metering. Those decisions will be crucially important to customers and should be made on the best available information, over the next three years as a result of the metering trials which the industry is carrying out with Government financial assistance.
The trials are making good progress. Some preliminary findings are set out in the first interim report, which I am today placing in the House of Commons Library. However, neither these findings nor other data that may become available over the next few months will provide sufficient information to allow for the cost of introducing widespread water metering in the initial charges limit to be assigned to each water undertaker on their appointment later this year. Therefore, I propose to amend the model instrument of appointments to provide for these initial charges limits to be adjusted subsequently by the Director General of Water Services in order to cover the reasonable cost of introducing widespread metering.
I propose that each adjustment should be subject to an average cash ceiling per installation, to promote economy in the development of metering solutions. In setting this ceiling the director general would be able to take into account information on the cost of installing meters in the trial area, and later from each undertaker's metering programme. There would also be provisions to ensure that the additional revenue raised would be put towards metering and no other purpose.
The detailed licence provisions will be discussed with the water industry.