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Unloved but worth holding

Alex Brummer

Tuesday, 30th September 2008

Consumers may be irritated by the performance of water utilities, says Alex Brummer, but their solidity and growth potential make them sound investments

A couple of years ago, while on holiday in Mallorca, I was disturbed to find that NatWest had decided that my credit risk was so great that no more euros would be allowed from the Spanish hole in the wall. When I contacted the bank, it was revealed that during our three-week absence from Blighty, the utility Thames Water had decided, without consultation, to remove more than £6,000 from my account by direct debit.

This might have seemed reasonable if I ran a car wash, a market garden or a brewery, but for your average suburban home in Richmond it seemed a trifle excessive. Had I been a pensioner or someone with a weak heart, receipt of the world’s largest private water bill might have been enough to send me to A&E. As a financial journalist, I was able to go straight to the top at Thames Water (then being sold by the German utility RWE) to uncover the source of the mystery bill – a leak between the road and our metered house – and the cash and my credit rating were restored.

As a consumer, it is difficult to have much sympathy with the British water industry. In a country where the rain never seems to stop, at the first sign of a heat wave we are asked not to flush the toilets and to drink bath water, or some other nonsense. To add insult to industry, we learn that the very same Thames Water, which is currently in overdrive replacing Victorian pipes across London, has an appalling leakage record. Meanwhile, a publicly quoted utility, Severn Trent, is ordered by its regulator Ofwat to pay a fine of £35.8 million for providing false returns for leakage to the authorities and offering poor customer service.

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