Water watchdog faces showdown over metering: Councils challenge compulsory installation in new homes

OFWAT, the water industry watchdog, faces a showdown with consumers over its policy of compulsory installation of meters in new houses. Local authorities are meeting today in Birmingham to agree legal instructions to fight compulsory metering in the courts.

Water companies have been told by Ofwat that they must provide all new houses with meters. However, many people in Birmingham and other towns and cities have found that their water bills doubled with meters.

The problem has become particularly awkward for local authorities when they refurbish existing council properties. Councils have had complaints from tenants who question the value of refurbishing their house or flat when it means that their water bills increase by pounds 200 a year or more.

So 20 local authorities, including Birmingham, Manchester, Liverpool and Leeds, are combining forces to question the legality of the present metering policy. They believe that the water companies are not entirely committed to metering, because it is proving to be more expensive than anticipated, and that pressure from Ofwat is forcing them into it.

Ofwat, which was created to regulate the water industry and to represent the consumer interest, is nevertheless a government body and is under pressure from the Department of the Environment to push metering.

Local authorities will argue in court that the placing of meters in new properties is contrary to the 1991 Water Industry Act. The Act requires that the existing method of charging, which is based on rates, must be replaced by 2000. It does not require that charges be based on meters.

However, it does preclude any undue discrimination between one water customer and another. Local authorities will argue that the installation of meters in new properties, as required by Ofwat policy, is discriminatory because families in new properties are charged twice as much for their water as families in nearby properties which are virtually identical.

Alan Booker, deputy director of Ofwat, said: 'As yet we have no legal definition of what is meant by undue discrimination. We take the view that if the water bill is in line with the costs of supplying the customer then there is no undue discrimination.'

The councils' legal assault on metering will also attack the use of 'pay- as-you-use' meters. People with these meters must pay to have an electronic key charged up. The key is inserted in a meter and the charge is used up with the supply of water. If someone runs out of money and does not charge the key the water is turned off.

Water companies argue that a person whose water is cut off in this way is cutting off the supply themselves. However, councils will argue that it is the water companies that are cutting off the supply and that they are not legally permitted to do this without applying first to the county court for repayment of debt - a complicated procedure which is too expensive for companies to do frequently.

These legal measures are certain to hold up plans to install new meters for many months but other moves, which could hold up metering for much longer, are also being considered.

Installation of meters has proved to be very expensive because 20 per cent of them fail within two years, according to the results of official trials undertaken on the Isle of Wight. Debris in the water causes the meter to stick and, in some cases, jam completely.

The legal moves, which are expected to begin in October, will put Ofwat in an embarrassing position. It will have difficulty insisting that water companies implement its metering policy if it is no longer perceived as representing a consensus of consumers. Ofwat defends metering by pointing out that many pensioners living alone will benefit and, it claims, few households will suffer real hardship.

Mr Booker said: 'Close to 60 per cent of people believe that water should be paid for by meters because metered charges are fairer. Only a third of those who say they are suffering hardship in paying water bills (about 3 per cent of households) actually pay more when they are metered.'