Charges Rebalance

How long will the 'bill freeze' last for?
We froze bills for 2019.

When did the rebalance happen?
The new charges were be effective from 1st Jan 2019, following approval by the States of Guernsey on the 28th November 2018.

Who was affected by the rebalance? 
Whilst water and wastewater charges changed, overall bills for the vast majority of customers were unaffected. The small number of customers affected were those who only receive a wastewater service, because they have their own private water supply and do not receive a mains water service. These customers did not benefit from our reduction in water charges, we wrote to these customers to explain what this meant for them.

Why did this happen?
We shared the savings made in 2017 with our customers by freezing their bills in 2019. Because bills stayed the same it was easier for customers to see that our rebalancing of water and wastewater charges did not increase their overall bill. So our bill freeze was a good opportunity to make these changes in the most transparent way possible.

Why were the charges not balanced in the first place?
Historically Guernsey Water has had a "save to spend" approach to capital investment, which required higher water bills to ensure that we could save up sufficient cash to be able to pay for big projects when needed. This is what led to the current imbalance. We now have a "user pays" approach with access to borrowing when we need to invest in big projects. This enables us to better manage customers' bills and ensure they reflect the cost of the services we provide.

Why did the rebalance need to happen? 

To be as fair as we can to all our customers, our water and wastewater charges shouldn't be too high and they shouldn't be too low, instead they should reflect the cost of providing these two services to our customers. 

Our previous charges meant that water customers were paying for more than just a water service, they were also subsidising the provision of our wastewater service. A small number of our customers only receive a wastewater service, because they have their own private water supply. The previous cross subsidy meant that all water bill payers were helping to pay for their wastewater service. 

None of these customers had chosen to do this, it was simply down to the way our charges were balanced. To remove this cross subsidy we needed to match our water and wastewater charges to the cost of providing each service. This means fairer charges for all our customers.

Why did it take Guernsey Water so long to work out there had been a significant imbalance between water and wastewater charges?
Since Guernsey Water took on wastewater services for the States we have been gathering data on how much it costs to provide this service. We also knew that in the first few years of running this service would cost more, as major investment would be needed in improving it. This meant that during these years the cost would be higher than in the future.

We always knew that there was an imbalance, but we now have a much better understanding of the actual size of the imbalance is and what we needed to do to address it.

Why have you made such significant investments in the wastewater service since you took it on for the States?
When Guernsey Water took on the island's wastewater service, our condition surveys showed that the infrastructure the service relies upon required major investment. Many of the sewage pumping stations were in a poor state of repair and long lengths of sewer were at risk of blockage or collapse. In addition, further major investment was needed at Belle Greve wastewater centre. There is an ongoing need to provide new sewers to extend the sewerage network and connect more properties to it. We also know that the capacity of some parts of the sewerage network needs increasing, to reduce the risk of sewer flooding and pollution from sewer overflows.

We have made great progress in addressing many of these issues, but there is much more to do and even when this is done, the simple fact is that operating and maintaining our wastewater systems will cost more than our customers currently pay in wastewater charges.

Did my bill go up?
For the majority of customers, no. However customers who only use the wastewater service did see an increase as they do not benefit from the water charge reduction.

What happens if the balance between your water and wastewater costs changes again in future? Will there be constant rebalancing?
No there will not be constant rebalancing.  However should the priorities of Guernsey Water change in the future it may be appropriate to revisit the balance of charges between water and wastewater.

Does this mean I have been overpaying for my water for all these years?
Historically Guernsey Water has had a "save to spend" approach to capital investment, which required higher water bills to ensure that we could save up sufficient cash to be able to pay for big projects when needed.  However, we now have a "user pays" approach with access to borrowing when we need to invest in big projects. This enables us to better manage customers' bills and ensure they reflect the cost of the services we provide.  

Why can't we just have one blanket charge?
Some customers don't receive a water service from us because they have their own private water supply. This means that we need separate water and wastewater charges.

I thought the wastewater charge was supposed to be temporary?
In 2011 two wastewater charges were introduced:

• A wastewater charge to deal with the ongoing costs of operating, maintaining and improving the island's wastewater system
• A temporary wastewater treatment investigation charge to fund our investigation into what was needed to return our islands wastewater safely to the environment.

The temporary charge was stopped after one year following completion of the investigation. As agreed by the States, a charge for the ongoing provision of our wastewater service remained in place.

Does this mean we will all be getting main drain connections?
This does not change our approach to connecting people to the main drain. We are due to recommence our sewerage network extension programme in 2022, although we are looking at whether we can bring this forward by a year or two. We are planning to connect another 1,500 properties to the public sewer, but it will take many years and significant investment to achieve this. By rebalancing our charges it will be customer's wastewater charges and not their water charges that pay for this, which is more appropriate.

Will you be continuing with the Network Extension Plan (NEP) as you are charging more for wastewater services?
We will be continuing with our sewerage network extension as planned. We are due to recommence our sewerage network extension programme in 2022, although we are looking at whether we can bring this forward a year or two. We are planning to connect another 1,500 properties to the public sewer, but it will take many years and significant investment to achieve this. By rebalancing our charges it will be customer's wastewater charges and not their water charges that pay for this, which is more appropriate.

Why are we paying a wastewater charge when we don't have any sewage treatment?
We have invested £35million in our Belle Greve wastewater centre to ensure that it returns our island's wastewater safely to the environment. At this centre sewage is treated to remove all non-biodegradable materials larger than 6mm, this adds up to 3 skips full of material every week! We also spend millions every year operating, maintaining and improving our 150km of sewers and 66 sewage pumping stations. All this adds up to a vital service for the public health of our island. Without the wastewater charge we would not be able to provide this service.

Is this money going to be put towards a sewage treatment works?
We have already invested £35million in our Belle Greve wastewater centre to ensure that it returns our island's wastewater safely to the environment. At this centre sewage is already treated to remove all non-biodegradable materials larger than 6mm, this adds up to 3 skips full of material every week!

I have a cesspit, does this mean I don't need to pay the wastewater charge?
No. Once your cesspit waste has been collected it is emptied into the sewerage system so you use both our cesspit emptying service and our wastewater service, this means you will continue to be charged for both. However, we recognise that this is less convenient for our customers, so we apply a substantial subsidy to our cesspit charges. This means that our customers pay less than half the actual cost of emptying their cesspit. 

Why am I being double charged as a cesspit user?
Once your cesspit waste has been collected it is emptied into the sewerage system so you use both our cesspit emptying service and our wastewater service, this means you will continue to be charged for both. However, we recognise that this is less convenient for our customers, so we apply a substantial subsidy to our cesspit charges. This means that our customers pay less than half the actual cost of emptying their cesspit.   

Why can't you base my wastewater charge on volume collected by the cesspit lorry?
The technology is not available to measure wastewater volume in the same way as we do with our water meters. Wastewater volume is much more difficult to measure because of the solid material that wastewater contains, which would block up the meters we use to measure drinking water usage. For metered customers we assume that 90% of the water they use is discharged to the sewer, whether this is directly discharged to the sewer or transferred to it using a cesspit lorry. This is because we allow 10% for activities like garden watering or car washing. The same approach is applied consistently by other water companies, although some currently charge at a higher percentage of 95%.

Does this mean we will all be getting main drain connections?
This does not change our approach to connecting people to the main drain. We are due to recommence our sewerage network extension programme in 2022, although we are looking at whether we can bring this forward by a year or two. We are planning to connect another 1,500 properties to the public sewer, but it will take many years and significant investment to achieve this. By rebalancing our charges it will be customer's wastewater charges and not their water charges that pay for this, which is more appropriate.