Utilities

Provided by Credit Today

There is an interesting relationship between water and the expressions used when explaining the problems of debt. Down the drain; drowning in debt; turning off the tap; sink or swim; staying afloat; troubled waters; a wave of debt; awash with debt; coming up for air. The correlation between water and debt is even more pertinent when it comes to the practical business of providing people with a vital natural commodity. As such, Credit Today’s utilities supplement this year has a strong water theme running through it. We start, though, with an overview of the utilities sector, the debt levels and the happenings in the energy sector.

We also have a Q&A with Mike Tempest from Thames Water about his company’s novel “bill amnesty”. Our special report looks at the water sector and why large parts of the population choose not to pay their water bills. This saddles companies with escalating bad debt levels in the water sector estimated to range between £900m and £1.4bn.

This debt adds more pressure on the hefty cost of maintaining the expensive infrastructure related to water and sewage systems. The reservoirs. The treatment centres. The drains. There is also the backlog of antiquated systems which need upgrading (Thames Water estimates it will cost £4bn just to bring the pipe system in London up to scratch).

Clawing back unpaid bills has become important. Water companies had historically been quite robust in taking non-paying customers to court but – pardon the pun – the tide is turning. The water industry is legally obliged to provide customers with flowing water, even if the customers refuse to pay. Indeed, water companies are not even allowed to reduce the flow of water to indebted customers.

This has prompted creativity in debt recovery. The approach has been shifting, attempting to balance the need to pay off the debt with being socially responsible. Customer support schemes, water meters, social tariffs and even bill amnesties, as seen in the case of Thames Water, have all been deployed to help reduce the level of debt.

None of these are instant solutions per se. Tracking down water debt is a long process and it is becoming rarer for County Court Judgments to be issued. Water companies, instead, seem to have accepted that, at least in their sector, the debt problem is solved by a drip effect rather than a cascade.

Water may ultimately fall from the sky, but it is far from free.

  • Utilities overview

Whether it is bills, debts or the cost of transporting energy and water, the levels
are increasing

  • Waiving, not drowning

The water sector is one of the most restricted in terms of remedies against bad
debt, yet companies remain badly affected by non-payment

  • Thames Water’s amnesty

Thames Water’s audit and amnesty closes in March. Mike Tempest, customer
services director at Thames Water, discusses the issue

 

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