Southern Water’s boss has defended plans to increase customer bills by 85% despite recent problems.
Chief executive Lawrence Gosden was questioned by MPs on the Environment Committee on Tuesday about the increase.
Under proposals unveiled in December, Southern Water – which serves Hampshire, Isle of Wight, Kent and East and West Sussex – plans to increase bills by more than any other British water company over the next five years.
It comes after recent anger over a major water cut for customers just before Christmas, a record £90m fine in 2021 for dumping raw sewage into the sea and a £183,600 bonus for Mr Gosden.
He told the committee that the bill increase “simply relates to geography.”
He said the south-east of England was identified as water-scarce and highlighted its high population density.
This resulted in less rainfall per capita than Namibia, a largely desert country in southern Africa, he said.
“That means we have very big future investment plans for water resources…,” Mr Gosden told the committee.
“There are very large water resources [requirement] to protect this part of the country from climate change and that is in addition to a very important environmental improvement and investment program to redesign the sewerage systems.
“Effectively there is a double impact of investment in this part of the country due to the geography of the region.”
An outage in December left 58,000 Southern Water customers facing disruption [BBC]
Under Southern Water’s proposals, average household bills would rise from £420 to £768 a year.
The 85% increase over the next five years is more than 30% higher than water regulator Ofwat suggested in its own assessment.
The December announcement came during a major water outage in Hampshire, with 58,000 Southern Water customers experiencing disruptions.
Following the incident, which was blamed on problems at a water supply company, the water company said it would spend £9.7 million on compensation to customers.
‘Flat accounts’
Mr Godsen was called before MPs for the committee’s first evidence session on its water sector inquiry, which was launched last month ahead of Ofwat’s announcement on the price review.
As part of the panel, Mr Godsen was also asked about Macquarie – the company that owns an 87% stake in Southern Water.
He said the company has made one of “investments in Southern Water to enable the company to get back on track and deliver these massive infrastructure improvements”.
The Australian bank previously owned a majority stake in the controversial Thames Water, which it sold in 2017.
“If you look back, especially over the last 10 to 15 years, as is the same with Southern Water, the last ten years or fifteen years of fixed bills have certainly done damage [to Thames Water]” said Mr Godsen, who previously worked for Thames Water.
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