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30 | OCTOBE 2020 | UTILITY WEEK Customers Analysis D espite Ofwat's push to lower water bills, millions of households still struggle to pay, a problem exacerbated by coronavirus-related financial difficulties. Individual companies offer social tariffs but until now there has not been a stand- ardised way of measuring water poverty. Eradicating water poverty by 2030 is one of five Public Interest Commitments pledged by the sector and co-ordinated by Water UK. As a step towards this, policy and economics group Cepa was commissioned to develop a metric for defining the term. Cepa produced a report to help compa- nies and stakeholders understand the issues involved in measuring water poverty. The complexity of some of the issues will require further work, which Water UK anticipates taking forward in the autumn. Andrew White, lead on water poverty at watchdog the CCW (formerly the Consumer Council for Water), believes a definition would focus the sector on the goal. CCW's annual Water Matters survey noted that one in eight customers did not find their water bills affordable, which White equates at around three million households, although that does not include those who may be experiencing hardship because of the pandemic. CCW published a report called Measuring Water Poverty Using a Bills to Income Met- ric sets out the findings from Cepa's work between January to March 2020. This initial project involved companies and stakeholders agreeing a high-level methodology for how a "bills to income" metric would be calculated and modelled and what the data require- ments would be. The metric takes account of societal fac- tors such as income and occupancy of a home as well as child care costs and whether to include disability allowance. It was impor- tant for the steering group to have a consist- ent approach that was transparent as well as something that would be considered fair both within the industry and to stakeholders. White says other considerations include regional differences – including demograph- ics, scale of wider poverty problems in an area and differing bills because of the varied costs of providing water services in different areas. "There are challenges around working to a common definition target, but it is neces- sary. If Water UK wants to move forward with meeting the commitments, then it's essential for companies to move forward with looking at practical aspects. We don't feel the practi- cal aspects should be a brake on the ambi- tions to eradicate water poverty." At present, social tariffs are available for anyone struggling with bills, but these are largely funded via customer bills so are lim- ited by willingness to pay, which determines how many customers can be supported. "Social tariffs have done a great deal and we have worked closely with companies to encourage the uptake of those and get sup- port out to customers who need it," White says. "However, CCW has drawn attention to the limitations of that system. Up to 1.5 million customers could be helped through the social tariff schemes but the scale of the problem is bigger than that." Many households have already been financially affected by coronavirus, and it is likely that many more will be as the govern- ment support schemes are withdrawn. To support more struggling households, CCW has been calling for water companies to bear a share of the responsibility and increase the scope of what social tariffs can do in terms of eradicating water poverty. "It's great that customers have been will- ing to fund social tariff schemes, but we also want to see water companies contrib- uting from profits. United Utilities, Welsh Water and Yorkshire Water already do this, and we are calling on other companies to follow suit." Another consideration is for government to review the funding approach to assess whether public funding could be brought forward to supplement the customer and water companies' contribution. CCW is pressing for the government to explore that as well as company contribu- tions. "Our research on customer willingness to contribute to social tariffs has shown bill- payers are more willing to do that if they can see the company is contributing also," White explains. Following the water poverty paper, a period of consultation will allow water com- panies to respond on how the approach would play out in their regions and what else requires consideration. A standardised way of assessing water poverty may not be fully adopted until the next regulatory cycle from 2025. White stresses that it is essential to move forward quickly because the definition will determine companies' future strategies in terms of helping customers and bringing down poverty numbers in a region. "Companies have their own individual schemes based on the funding available through customers so there is a postcode lot- tery of what companies can deliver. The sup- port can be different for different customers depending on where they live. We need to get past these before we can fully say water poverty has been eradicated." Ruth Williams, water correspondent Getting to grips with water poverty The water sector is grappling with the challenges of how to address vulnerability, starting with how water poverty is actually measured. Ruth Williams reports.