Why Scottish Water bills are kicking up a storm

A rise in Scottish Water bills at four times the current rate of price inflation takes some swallowing.

Alex Plant, the chief executive, points to Storm Eowyn to help explain the 9.9% rise, on top of the 8.8% increase last year.

More severe weather events are coming at us more frequently, he says, and it is the utility firm's job to be prepared.

When it fails to be ready, he's accountable, which he cites as one of the justifications for his pay, bonus and benefits, over his first nine months in the job, of nearly £500,000.

Unions see that differently, as "eye-watering", and are balloting on industrial action over their 3.4% pay offer.

Eowyn was not a severe rain event, so the worst Scottish Water faced was power cuts to its water treatment plants. The larger ones have back-up generators installed, and smaller ones have temporary power put in place when storms are forecast.

When there is a severe rain "event", Scottish Water has more work to do, as it found 15 months ago with Storm Babette leaving Brechin and its water treatment plant severely flooded.

Scottish Water, wholly owned by the Scottish government, has avoided the severe criticism and crisis surrounding several privately-owned English water companies, which were generous to shareholders while failing to invest adequately. Prices are expected to go up more sharply there.

However, the Scottish utility was found to lack the monitoring of sewer overflow that has appalled England, finding the vast majority of its water courses above acceptable pollution levels.

Last year, Scottish Water installed a thousand and this year, it aims to put in 700 more, promising transparency in what these monitors find.

Since last month, it has been possible to see the monitors updated hourly. At the time of writing, there have been prolonged overflows on identified river sites near Dunblane, Echt, Perth, Biggar, Coalburn and Linlithgow.

The current rate of improved resilience to water and sewerage was set by the Scottish water regulator for the period 2021 to 2027. When that started, there was more optimism that global average temperatures could be contained to 1.5C.

There's less of that now, which is likely to be reflected in a renewed assessment of the climate challenge facing Scotland, when the water company publishes its long-term projection of investment needs early next month. That includes heavy rain storms as well as long periods without rain.

For the control period 2021-27, Scottish Water has been allowed by its regulator to increase bills by the rate of Consumer Price Inflation plus 2%. Having held back increases in the earlier part of that period, it is now allowed to catch up.

The long-term forecast feeds into the 2027 to 2033 period, for which Scottish Water is preparing the case for continued investment, which will be put to its regulator in a year.

The regulator's job is to judge how much of that is reasonable, how much of it should be required, and how much more efficient the company should become.

Backing up the case for more investment is a new projection for Scotland's population, published on Tuesday. It is on course to rise by a further 300,000 by the decade to 2032, and by 400,000 by 2047.

That means more households requiring water and waste water treatment, while the population is gradually shifting from west to east. Glasgow and its suburbs continue to grow, but much of the growth in Scotland is in and around Edinburgh.

Scottish Water has been building a £35m water treatment plant at Winchburgh in West Lothian, where one of the country's largest housing developments is quadrupling the local population.

Alex Plant says this is using a new filtration technique and is "almost odour-free".

Edinburgh city itself relies on the Seafield water treatment works, not odour-free and run by a private company, currently Veolia, since the 1990s.

When that Private Finance Initiative comes to the contract, along with others run under the controversial contracts, there will be a new investment programme required, to upgrade Seafield and cope with the capital's growing strains.

One way of reducing the pressure on Scottish Water capacity is to reduce the use of water and its discharge into sewers. Alex Plant suggests Scots have a view that water is plentiful because so much of it falls from the sky.

But treating it for drinking quality is costly, and so is waste water. So there is a cost to Scots using 40% more water per head than people in Yorkshire.

Why? It looks like household monitors make the difference, and there's a pilot project currently in Dundee to find out more. These are not meters for billing purposes, but to show home-owners and the utility company how much is being used.

"When you monitor people's use, that has an effect, even if you don't charge by the meter," says Plant, suggesting it's a 'good citizen' effect.

"We need to have a conversation about what we want to do and how to do it. Let's think about piped drinking water as a precious resource, which we use as we need, and no more."