In this article the experts at Water Treatment Services explain how UK water companies calculate business water bills and sewerage charges. The article looks at the different approaches applied to domestic and non-domestic customers; along with small, medium and large water users. It considers the role of the UK’s water industry regulator Ofwat in keeping things fair, and concludes by reviewing the different types of charging tariffs used by water companies.
Business water bills and sewerage charges explained
In the UK all water companies have separate ways of charging non-household customers (businesses) for their water and sewerage services.
The charges are based on both the quantity of clean water used, and the amount of trade effluent or wastewater produced by the business.
How are business water bills calculated?
Non-domestic businesses which have a water meter installed will pay a standing charge depending on the size of the meter and a set charge per cubic metre of water used.
For most small organisations, the charge per unit of water used is the same as for domestic customers.
Businesses which do not have a water meter have their charges calculated in the same way as for domestic customers without a meter.
The standing charge for connection to the mains still applies, but the rest of the bill will be calculated depending on the rateable value of the property and is a fixed charge… this covers customer service and billing costs.
How are wastewater and sewerage charges calculated?
The money charged for sewerage services has to cover the treatment and collection of different types of wastewater including:
Water companies calculate the charges for trade effluent and foul sewage depending on both the volume produced, and the strength of the trade effluent.
Water companies around the UK have a range of approaches when calculating how to charge for highways and surface water drainage.
Businesses which can prove that they don’t produce any of these types of wastewater may be able to apply for a reduction in their water, wastewater and sewerage bills.
Are there any additional water charges?
In addition to quarterly or annual water bills, water companies may also charge additional amounts for connection or reconnection of supply.
Who is Ofwat and how do they regulate water bills?
Ofwat, the government body which regulates the water industry, limits the prices for smaller customers whether industrial or domestic.
Larger water users do not have their water bills limited in the same way, but Ofwat’s job is to still ensure that the prices charged are fair, and don’t discriminate against larger water users.
Most businesses have the option of switching water suppliers if there is competition in their area.
Water and sewerage charges are adjusted each year.
The level of change in the charges will depend on the policies of the water company you are dealing with.
Charges vary between water companies as each provider faces a different set challenges.
Ofwat checks that even though charges may be different that they are still fair.
There is lots of information on the Ofwat website about what has happened to water bills since the industry was privatised, how price limits are set and how company charges are regulated.
How are water bills calculated for large and medium sized users?
For most businesses which use more than a specified volume of water there is the option to ask for a larger or intermediate tariff, rather than just paying the standard rate.
A large use tariff again is composed of:
There is a range of tariff structures available, which may offer a lower rate for consumption over a set amount, or lowering a fixed charge.
Tariffs are also designed to try to encourage minimising water use.
Each water company does something different, so you should ask your water provider about their rates for larger users.
How do seasonal tariffs work?
Businesses which experience a great deal of seasonal fluctuation in the volume of water they use may wish to consider a seasonal tariff.
These seasonal tariffs charge more for a unit of water in the summer (when it’s dryer) than in the winter (when it’s wetter).
Companies may only qualify for this type of tariff if they already have a meter, and have it read regularly.
Are subscribed demand tariffs more cost effective for businesses?
This method of billing is ideal for businesses which can accurately predict how much water they will be using, even at peak times.
Taking advantage of this type of subscribed demand tariff means accurately forecasting peak demand before the start of your billing year.
A subscribed demand tariff is made up of:
What are interruptible tariffs?
If you’re prepared to take the risk of occasional interruption to your water supply, you might be able to secure a lower tariff in return.
Businesses opting for this type of tariff need a plan to manage interruptions to their water supply.
However, before you opt for this type of tariff water companies have a duty to make sure you can cope with supply interruption before signing you up.
In addition, they will have to carry out at least one test interruption each year to determine that your contingency plans are adequate.
Standby supplies and reserved capacity charges
Businesses which are lucky enough to have access to other sources of water from either a borehole or perhaps an on-site effluent treatment plant might only require to take water from the mains as a back-up option when there is a problem with their own supply.
Water companies charge for this sort of tariff using:
- A volume charge in pence per cubic metre depending on the amount of water reserved by customers over the year, or
- An individual capacity charge based on the maximum daily demand which you have specified.
In most cases, customers who only require stand-by water supplies have their own needs and usually have an individual set of charges and tariffs depending on their circumstances.
What are the charges for non-drinking water?
Water companies primarily provide potable water suitable for drinking to all domestic customers, whether they are using it for drinking, or having a shower.
Water which doesn’t come up to the standards needed for drinking water is called “non-potable”, and some water companies offer customers the option of taking this type of water too.
The ways of charging for non-potable water are the same as for drinking water, but the cost per cubic metre is generally lower.
This is usually because the water company is not incurring the cost of bringing water up to the higher standards required for drinking or potable quality.
Non-standard water charges
Some water companies will also include non-standard charges in their charging schemes, which cover other things which the company might provide, but which aren’t included in the standard tariffs.
Examples of non-standard water charges can include things like:
- Reconnection charges
- Charges for installing a water meter in a non-domestic property
- Testing of meters
- Installing hydrants
- Hire charges for standpipes
Ofwat don’t get involved with regulating these additional charges, but do keep an eye on what the water companies are charging to make sure they are fair.
If you experience problems and complain about charges levied, Ofwat may investigate and challenge the costs.
Sewerage costs are based on the cost of collecting and treating the amount of sewage which a business produces.
Water companies might charge for sewage based on estimates, or more accurate measurements.
Foul sewage charges
Any company which uses less than 50 megalitres of water a year (250 megalitres if you’re in Wales), you just pay the non-household standard rates for disposing of foul sewage.
Just as with water charges for smaller users, Ofwat caps and regulates these costs.
Most businesses have a water meter, and this is used by the water companies to estimate the amount of foul sewage you produce.
Foul sewage is worked out by looking at the amount of water used and adjusting it for the quantity of water which doesn’t return to the sewers.
Some water companies, including Thames Water and Southern Water charge higher rates for sewage standing charges.
This is because these companies add the surface water and highway drainage charges into their standing charges.
Calculating water bills for businesses without a meter
The same rules for sewage charges apply to both domestic and commercial customers who don’t have a meter.
The water companies will charge a standing fixed charge, plus an additional charge which is based on the rateable value of the property.
The rateable value of the property is calculated according to the 1973 Valuation Act.
Values are updated every year and all non-households in England and Wales are given a rateable value.
Foul sewage and large user tariffs
Large or intermediate users might be able to qualify for a separate tariff from their water company.
These large user tariffs are typically made up of:
The amount of sewage is calculated by looking at the total amount of water used, subtracting the volume of water which does not return to the sewer.
Water companies define a large or intermediate user if they are likely to go over a predefined threshold limit for water use.
Each water company sets their own levels for how they define a large user.
Water companies should also use the same rules when designing tariffs for foul sewage or trade effluent as they do when designing water tariffs.
Industrial wastewater and water re-use solutions
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