privatised British water

AliGorie · September 2017

https://www.ft.com/content/2beee56a-9616-11e7-b83c-9588e51488a0

Flink_Poyd · September 2017

Links to a paywall

ICBM · September 2017

Flink_Poyd said:

Links to a paywall

However, the headline reads "Water privatisation looks little more than an organised rip-off", which has always been my opinion on privatising public utilities, so I doubt I would be very surprised by the content.

Fretwired · September 2017

ICBM said:

Flink_Poyd said:

Links to a paywall

However, the headline reads "Water privatisation looks little more than an organised rip-off", which has always been my opinion on privatising public utilities, so I doubt I would be very surprised by the content.

How so? We have a competitive energy market which we wouldn't have had with a single public sector organisation. And I recall the endless strikes and studying for exams by candle light. My energy bills have come down.

As for water I doubt the government would have invested the money required to upgrade the infrastructure. And there in lies a problem - a lack of government strategy on power generation leaving the UK with limited excess capacity.

ESBlonde · September 2017

I seem to recall there are limitations on what water companies can do to cut off supply to households because water is a basic human need/right. I can't recall the details but I'm reasonable sure it was almost impossible to cut off the supply for unpaid bills if the premises are occupied dwellings. Lets hope some sanity is retained in the scrabble for profit and power. The chances of a lack of clean water grow each year as we use/waste more that the land/infrastructure provides.

ICBM · September 2017

Fretwired said:

How so? We have a competitive energy market

lol

We have a cartel with no true competition and in which a portion of the profits go to foreign companies, thus increasing the overall cost to the UK.

Fretwired · September 2017

ICBM said:

Fretwired said:

How so? We have a competitive energy market

lol

We have a cartel with no true competition and in which a portion of the profits go to foreign companies, thus increasing the overall cost to the UK.

You're with the wrong company mate. My energy costs have gone down in real terms. I'm with Utility Warehouse - they have millions of members and screw the best prices out of utility firms every year. If you are still with an energy provider then more fool you - you're being screwed.

exocet · September 2017

Fretwired said:

ICBM said:

Fretwired said:

How so? We have a competitive energy market

lol

We have a cartel with no true competition and in which a portion of the profits go to foreign companies, thus increasing the overall cost to the UK.

You're with the wrong company mate. My energy costs have gone down in real terms. I'm with Utility Warehouse - they have millions of members and screw the best prices out of utility firms every year. If you are still with an energy provider then more fool you - you're being screwed.

It's a difficult one for most people to understand - by that I mean understand whether privatisation of utility services along with their subsequent acquisition by foreign providers has been a good thing for the country?

I'd never try to defend the government ownership of power generation / distribution but I can't help but think that the UK is not best served by French and Germany companies now owning / operating the majority? Makes me wonder why the original privatised UK versions were not able to go overseas and monopolise in the same way before they were bought out. I also wonder why the U.K has refused to build storage for gas, instead allowing existing (insufficient storage) to fall into disuse leaving the U.K exposed to the "spot market" prices? Futures trading can only do so much to even out the fluctuations, physical storage does have its advantages. Surely this had resulted in higher gas prices to UK consumers ?

On water, there have been a few well documented cases that question the value for money offered by companies such as Thames (now owned by RWE Germany but I'm sure that Private Equity has been involved and has extracted hundreds of millions to payout those involved leaving the consumer to pay more for improvements than they would otherwise have done).

As I say, I'm not against privatisation but I can't help but think that the U.K as a whole has not benefited as much as it could have because of the way in which the new owners extracted more than would be considered "fair" or taken a short term view on investment programs.

Fretwired · September 2017

exocet said:

It's a difficult one for most people to understand - by that I mean understand whether privatisation of utility services along with their subsequent acquisition by foreign providers has been a good thing for the country?

I'd never try to defend the government ownership of power generation / distribution but I can't help but think that the UK is not best served by French and Germany companies now owning / operating the majority? Makes me wonder why the original privatised UK versions were not able to go overseas and monopolise in the same way before they were bought out. I also wonder why the U.K has refused to build storage for gas, instead allowing existing (insufficient storage) to fall into disuse leaving the U.K exposed to the "spot market" prices? Futures trading can only do so much to even out the fluctuations, physical storage does have its advantages. Surely this had resulted in higher gas prices to UK consumers ?

On water, there have been a few well documented cases that question the value for money offered by companies such as Thames (now owned by RWE Germany but I'm sure that Private Equity has been involved and has extracted hundreds of millions to payout those involved leaving the consumer to pay more for improvements than they would otherwise have done).

As I say, I'm not against privatisation but I can't help but think that the U.K as a whole has not benefited as much as it could have because of the way in which the new owners extracted more than would be considered "fair" or taken a short term view on investment programs.

I agree with the your comments about the problem with foreign ownership - the reason we can't dominate is France and Germany protect their industries. We don't. This needs to change. The Germans also decommissioned some old British power stations and shipped the turbines to Germany where, after a little refurb, they put them back into action. The Germans are also building some coal fired power stations so they are not reliant of Russian gas. The foreign companies also ship profits overseas.

Labour claim they want to nationalise them.

blobb · September 2017

Here's my take on it after 20 yrs designing and fixing sewage works and the occasional clean water foray...........

Privatisation of the water industry has been magnificent. The change from the old water authority days is phenomenal. We have invested billions into the infrastructure, our knowledge of the technologies and processes has taken a massive leap forward and the industry as a whole can be seen as truly world class. The value you get for the money it costs is brilliant. Your water has never been so clean and we have cleaned up massive stretches of industrially polluted waterways, to the point where we have had Coarse fishermen up in arms over it.

However......

A few years ago we had a new MD (I won't name the company, and I'm not saying the old one wasn't crooked..), he came to meet us and we showed the stuff we get up to. You know, blowing our own trumpet a little in case he was thinking of doing anything drastic. We did ok, plenty of good stuff, we felt we had given him a good insight into our value.

He said "you know what's wrong with this place?"

..."not enough businessmen".

From that point on, things changed. It was a common theme around all the companies (well, the Big 5 at least). Businessmen got involved. Resources have been slashed and the knowledge and experience is being lost due to the contract base being more obliged to take on massive responsibilities they can't possibly fulfill. A load of the expert client base has been TUPed across but they are stymied by the contractors drive to meet targets and deadlines at any cost. The quality of designs is becoming poor and it's only a matter of time before we start to see the effect.

Add to this the whole EU situation. Most of the continual improvement in the system is driven by European directives, which in turn justifies the funding requirements and hence the artificial competition.

UK pretty much accepts every EU directive on water (not like, ahem, Spain) because it drives the industry. Take it away or fail to implement a suitable replacement and the whole thing goes tit's up.

So it looks to me like there will be moves to change it in some way or other, EUexit makes this inevitable. When BT was sold off they were caught napping. The major Water Co's have been aware for a long time that someone might come along and tell them to sell of various parts of the business. Inset agreements were the first to come along, then selling digested sludge to farmers (rather than giving it away as a waste product). You get the idea.

Water industry is a safe bet during recession, which makes them attractive to (oversees) pension consortiums. Utility stocks rise when there is instability in the risky markets, which means they tend to lie dormant during investment bubbles. I can't see this staying the same in the future. Opening up the competition will create more money making opportunities for investment groups.

Problem is, and always has been, how to tackle the responsibility aspect. If you live in Anglian water territory but switch supplier to, say, Thames Water, it's still Anglian who provide the raw material. So how do you keep control of the requirement to provide 'wholesome' water? It's fine when talking about telephone cables, different matter with water. So they will start with industrial customers and gradually move into domestic.

ESBlonde said:

I seem to recall there are limitations on what water companies can do to cut off supply to households because water is a basic human need/right. I can't recall the details but I'm reasonable sure it was almost impossible to cut off the supply for unpaid bills if the premises are occupied dwellings.

yes. you can't be cut off from water supply. However, this in turn made water companies good at reclaiming debt without having to resort to loss of supply. Try it and find out.......

Generally though, the old water authority blood still runs deep and there is a certain honesty about water companies based on this. They really do want to provide a good value service. Expect all the old newspaper headlines about fat cat water bosses to re-emerge soon though to justify change. Then use the re-written EU water rules to suit the new vision of 'competitiveness' all to the delight of the city boys.

Personally, from a practitioner perspective, I can only see it going in one direction if that happens. One thing I have realised over the years is that you really only need to go to a certain point to provide clean water and good sanitation. These rules were established in the 1920's and we have been on a never ending path of improvement ever since. At some point you have to ask if it's all worth it. The amount of power and chemicals we use now to get an extra 10% performance is extreme. We can remove excess nutrients but what about farmers dumping fertiliser on their fields etc...? Housing estates spring up next to established sewage works (built, originally, out of town) so we then have odour complaints to deal with, which can necessitate a full and expensive change of process. The 5 year AMP cycle doesn't help either. Short term planning rules.

The Businessmen need it to change so they can profit maximise. Customers just need it to be as efficient and cost effective as possible. Two different drivers but I can guess which way it will go.

exocet · September 2017

Fretwired said:

exocet said:

It's a difficult one for most people to understand - by that I mean understand whether privatisation of utility services along with their subsequent acquisition by foreign providers has been a good thing for the country?

I'd never try to defend the government ownership of power generation / distribution but I can't help but think that the UK is not best served by French and Germany companies now owning / operating the majority? Makes me wonder why the original privatised UK versions were not able to go overseas and monopolise in the same way before they were bought out. I also wonder why the U.K has refused to build storage for gas, instead allowing existing (insufficient storage) to fall into disuse leaving the U.K exposed to the "spot market" prices? Futures trading can only do so much to even out the fluctuations, physical storage does have its advantages. Surely this had resulted in higher gas prices to UK consumers ?

On water, there have been a few well documented cases that question the value for money offered by companies such as Thames (now owned by RWE Germany but I'm sure that Private Equity has been involved and has extracted hundreds of millions to payout those involved leaving the consumer to pay more for improvements than they would otherwise have done).

As I say, I'm not against privatisation but I can't help but think that the U.K as a whole has not benefited as much as it could have because of the way in which the new owners extracted more than would be considered "fair" or taken a short term view on investment programs.

I agree with the your comments about the problem with foreign ownership - the reason we can't dominate is France and Germany protect their industries. We don't. This needs to change. The Germans also decommissioned some old British power stations and shipped the turbines to Germany where, after a little refurb, they put them back into action. The Germans are also building some coal fired power stations so they are not reliant of Russian gas. The foreign companies also ship profits overseas.

Labour claim they want to nationalise them.

The last thing I want to do is derail this thread and turn it into Brexit Thread 999, but the situation with the utilities is one of the reasons why I lack confidence in the ability of the UK to prosper in the "new world".

It appears to me that we are a very open economy which embraces foreign investment and fosters competition. However, we appear to play everything with a very "straight bat" and as a result I feel that we do get taken advantage of by foreign investors / pension funds / sovereign wealth funds etc.

From what I understand, Brexit is not about closing doors to foreign investment but I can't help but feel that we are not smart / ruthless enough to compete in open markets and win. The Finance and Banking sector is obviously the exception to this rule but elsewhere from technology to utilities and transport I feel that we have come off second best.

blobb · September 2017

On water, there have been a few well documented cases that question the value for money offered by companies such as Thames (now owned by RWE Germany but I'm sure that Private Equity has been involved and has extracted hundreds of millions to payout those involved leaving the consumer to pay more for improvements than they would otherwise have done).

Thames is owned by Kemble water holdings, a conglomerate of various investment groups. Austrailian pensions group Macquarie headed the group but sold it's stake recently. Kemble bought the company from RWE a few years back. RWE were asset strippers, Macquarie invested for the longer term.

https://corporate.thameswater.co.uk/About-us/Our-investors/Our-corporate-governance/Ownership-structure

hywelg · September 2017

There was a good prog on BBC R4 last week about Thames water and how the Australian company MacQuarry borrowed £2bn to buy it then before they sold it they shifted the debt onto Thames waters own books. Talk about underhand. Thames Water are now carrying £10bn in debt.

usedtobe · September 2017

ICBM said:

Fretwired said:

How so? We have a competitive energy market

lol

We have a cartel with no true competition and in which a portion of the profits go to foreign companies, thus increasing the overall cost to the UK.

Foreign nationalised companies, at that!

notanon · September 2017

hywelg said:

There was a good prog on BBC R4 last week about Thames water and how the Australian company MacQuarry borrowed £2bn to buy it then before they sold it they shifted the debt onto Thames waters own books. Talk about underhand. Thames Water are now carrying £10bn in debt.

A very very common trick.

Fretwired · September 2017

usedtobe said:

ICBM said:

Fretwired said:

How so? We have a competitive energy market

lol

We have a cartel with no true competition and in which a portion of the profits go to foreign companies, thus increasing the overall cost to the UK.

Foreign nationalised companies, at that!

You can shop around and get a good price. I cut my energy bill by 25% when I shifted. The phantom loller can laugh all he likes but there are discount groups which deliver great deals paid for by the mugs who don't switch and just moan.

notanon · September 2017

Fretwired said:

ICBM said:

Fretwired said:

How so? We have a competitive energy market

lol

We have a cartel with no true competition and in which a portion of the profits go to foreign companies, thus increasing the overall cost to the UK.

You're with the wrong company mate. My energy costs have gone down in real terms. I'm with Utility Warehouse - they have millions of members and screw the best prices out of utility firms every year. If you are still with an energy provider then more fool you - you're being screwed.

Just shaved a lot more than Utility Warehouse off our annual exodus from rip off merchants utility companies by using Avro via uswitch.com and ticking the "Include plans that require switching directly through the supplier". One thing that public ownership would do is to stop thousands of actuarial statisticians working to find the best way to relieve Joe Bloggs of dosh. That is a waste of resources IMO.

Not really an argument to say that prices have never been cheaper who knows what the prices would be? What would the average income be? . . . . Remember the average wage is 27K, I know lots of people on less than that, oh and forget pensions, sort that out yourself!

Fretwired · September 2017

notanon said:

Fretwired said:

ICBM said:

Fretwired said:

How so? We have a competitive energy market

lol

We have a cartel with no true competition and in which a portion of the profits go to foreign companies, thus increasing the overall cost to the UK.

You're with the wrong company mate. My energy costs have gone down in real terms. I'm with Utility Warehouse - they have millions of members and screw the best prices out of utility firms every year. If you are still with an energy provider then more fool you - you're being screwed.

Just shaved a lot more than Utility Warehouse off our annual exodus from rip off merchants utility companies by using Avro via uswitch.com and ticking the "Include plans that require switching directly through the supplier". One thing that public ownership would do is to stop thousands of actuarial statisticians working to find the best way to relieve Joe Bloggs of dosh. That is a waste of resources IMO.

Not really an argument to say that prices have never been cheaper who knows what the prices would be? What would the average income be? . . . . Remember the average wage is 27K, I know lots of people on less than that, oh and forget pensions, sort that out yourself!

But you've saved some dosh which proves my point. The mugs who can't be arsed to shop around are the ones being ripped off.

notanon · September 2017

http://www.thisismoney.co.uk/money/bills/article-1633409/Historic-inflation-calculator-value-money-changed-1900.html

and probably more fun:

https://www.hillarys.co.uk/back-in-my-day/

Fretwired · September 2017

notanon said:

and probably more fun:

https://www.hillarys.co.uk/back-in-my-day/

That's rubbish .. pumped in a year and the average house price was way out.

ICBM · September 2017

Fretwired said:

You can shop around and get a good price. I cut my energy bill by 25% when I shifted.

Well, good for you. You're missing the point though - the false competitive market (especially with partial foreign ownership) puts prices up for *everyone*. Just because you're paying less than some other people by using a billing company who buy the same energy from the same power stations via the same grid, doesn't mean we're not all paying more than we would be in a properly run nationalised system.

It's a closed system where capacity equals demand, there is one combined source and one delivery network, so there cannot be proper competition - and is a perfect example of the fundamental myth of privatisation. It is, basically, an organised rip-off.

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privatised British water

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