Surface water drainage charges: current position

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The current position

Some water and sewerage companies charge non-domestic customers for surface water drainage services, based on the site area of their premises.

United Utilities has started to introduce the charge this year and some customers, notably churches, are seeing increases in their bills. This has prompted stakeholders and customers, including churches, MPs and the media, to raise concerns and put queries to Ofwat.

The purpose of this note is to answer some of these queries. Find out more about the background to this situation.

We set out our view in the following three sections:

	Charging for surface water drainage by site area is the fairest method of charging
	Answers to frequent queries and comments from customers and stakeholders
	How affected customers can find help to reduce their surface water drainage charge

Background information on surface water drainage charges

Surface water drainage (SWD) charges are the charges paid by customers for taking away and treating the rain water that falls on a premises and drains into a public sewer.

There are four ways in which companies currently charge non-domestic properties for SWD:

as part of the volumetric charges based on measured water consumption;
as a set fee in the fixed standing charge which forms part of the sewerage bill;
by reference to the premises' rateable value (RV); or
through a charge related to the site area of the premises that drains into a public sewer.

In deciding how to charge for this service, water and sewerage companies must comply with their licences which say that their charges must not be unduly discriminatory or preferential. Charges that are broadly cost reflective, that is charges that reflect the costs of providing a particular service, are the fairest way to set prices. Charging for surface water drainage based on the site area of the premises meets this criterion, although water and sewerage companies are in principle free to choose how to structure their tariffs as long as they comply with the overarching requirements of their licences.

We held a review of SWD charges in 2003. In our conclusions in September 2003 (RD35/03, 'Surface water drainage – charging policy'), we said that the fairest method of charging should accurately reflect the costs of providing the SWD service.

We concluded that charging according to site area was the best method of charging for SWD. This is because it reflects the costs customers put on the system. We recommended that water companies consider introducing site area-based charging for SWD – particularly for non-domestic customers where the process is simpler to implement than for householders.

Charging by site area

Currently four out of the ten water and sewerage companies in England and Wales charge non-household customers by site area: Severn Trent, Yorkshire Water, Northumbrian Water and United Utilities.

Severn Trent introduced site area based charging for the majority of non domestic customers in 2000-01 and is now examining a timescale and process for moving the remaining customers in this category – mainly community premises, such as churches, schools and scout huts – to the new charging mechanism.

Yorkshire Water introduced site area charging for all non-domestic customers in 2001-02.

Northumbrian Water introduced a site area based charge in 2006-07 and phased it in over three years. It now charges all its non-domestic customers for surface water drainage by site area only.

United Utilities introduced site area charging for all new and substantially altered premises in 2007-08. It is starting to phase in site area charging for all other non-domestic premises over three years starting in 2008-09. This will be complete by 2010-11.

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