Returning ownership of Yorkshire Water to the people could be in the best interests of the consumer, explains Richard Emmott, head of communications at Kelda

RECENTLY, Kelda provided an opportunity for the people of Yorkshire to take ownership of Yorkshire Water and its vast land holdings.

Subject to the approval of water regulator, Ofwat, they could in effect own, forever, assets which are vital to the community.

These are considerable and comprise 141 reservoirs, 612 sewage works, 114 water-treatment works and thousands of kilometres of underground pipes. They form the most advanced water distribution network in the UK, into which more than £3 billion has been invested in the last ten years, improving the environment, safeguarding resources and ensuring the best possible service for customers.

Included in the proposal is some of the most spectacular scenery in the country, including Nidderdale, the Washburn Valley and much of the Pennine Moors from Skipton to the edge of Sheffield.

All owned forever for the benefit of the people of Yorkshire.

Under the proposal, the owner of these assets would be an independent mutual company, owned by all the customers of Yorkshire Water and charged with acting in the best interests of the whole community. In order to provide continuity and security of service, Kelda would initially contract with the mutual to operate the assets and provide services to customers. These contracts would, however, be put out to competitive tender within the next five years and the mutual will have the responsibility of ensuring the best possible value for money for customers.

Customers' prices will not change for the next five years as these have already been set by Ofwat.

We believe this would combine the best elements of public ownership with private sector efficiency. As Kelda is now rated as one of the most efficient operators in the water industry, this is a powerful combination.

We are proposing this because we think it is in the best interests of all parties - whether customers, shareholders, or the community. Our shareholders, 40,000 of whom live in Yorkshire, get a fair price for the assets in which they have invested over the last ten years. Our customers get the twin benefits of ownership and in the long term they stand to gain from the cheapest possible way of financing a water service. The community benefits from the protection of vital regional assets - in perpetuity.

This forever removes the tensions between the interest of shareholders and those of customers.

However, customers may have some questions on this proposal. First, water is and will remain a regulated industry - prices and investment levels are set by Ofwat. It is Ofwat which controls how much the water industry charges its customers. The Kelda proposals retain the price levels agreed with Ofwat in November 1999.

By removing shareholders from ownership, the new mutual will be able to finance its investment much more cheaply through debt. This does not mean that the mutual will be saddled with debt it cannot finance and that customers could then pick up the tab if something goes wrong. Customers who become members are in no way personally liable for the finances of the mutual.

If the proposal goes ahead, customers will receive their membership details with the next annual bills in January and February 2001. If they do not wish to become members they will have the right to opt out.

By becoming a "member" of Yorkshire Water, customers will have a real say in how the company is run. Members will elect two board members and will have an automatic right to attend annual meetings and will have regular opportunities to get information on the performance of the mutual and also to have their say. The board of the mutual will be strong and independent.

Recognising that the customer may have many further questions on the detail of this proposal, we have produced a guide which explains how this will work and how customers will benefit. This is available by calling 0845 124 2422.

Ofwat is currently running a public consultation on the proposal, to give customers the opportunity to have their say.

Details of this consultation are available from the Ofwat Customer Services Committee on 01325 469 777.

PICTURE: Yorkshire Water's treatment works at the east coast resort of Bridlington