BUSINESSES are being overcharged by almost £70m a year on their water bills, according to a Government report which is expected to prompt more calls for a shake-up at Scottish Water.
The findings, which are part of a widespread review of water charges in Scotland, show that in the next five years, business customers will be billed an extra £210m.
The consultation says there is "robust evidence" that Scottish Water has been cha
rging businesses to subsidise household bills by up to £69m a year and that the practice must stop.
Scottish Water's average household charges are at present lower than the average in England and Wales, and in 2010 are expected to be among the lowest in the UK.
The news comes just days after MSPs demanded Scottish Water be fined over the "profligate" waste of one billion litres of treated water a day. The state-owned organisation has spent more than £2bn of taxpayers' cash replacing leaking pipes, but every 24 hours, water treated at a cost of £190,000 continues to leak into the ground.
Last night one business group accused Scottish Water of effectively putting companies north of the border at a cost disadvantage to their English neighbours.
Niall Stuart, spokesman for the Scottish Council for Development and Industry, slammed the findings and called for changes to be implemented immediately to restore "competitiveness".
He said: "The over-payment runs into hundreds of millions of pounds, which is extremely unfair given that water charges are supposed to reflect cost.
"Effectively, business customers have been subsidising water services to households. Not only is this unfair, given that bills are supposed to reflect cost, it is also damaging economically. Higher overheads undoubtedly impact on business competitiveness, and it is vital that charges are adjusted so that prices are based upon up-to-date information on costs.
"Scottish businesses have been contributing 20% more to the country's water infrastructure costs than they should, putting them at a cost disadvantage compared to businesses south of the border."
The news comes just two months before the industry is part-privatised north of the border. From April 1, all businesses in Scotland will be able to buy their water competitively from a number of licensed suppliers and are no longer obliged to use Scottish Water. The new model is a world first and could form the template for a competitive water industry in other countries.
Scottish business customers can now choose between three suppliers – Satec, Aquavitae and Business Stream – with more expected to come on board over the next few months.
Scottish Water is being forced to phase out the cross subsidy by 2010 so there is parity between household and business bills. A spokesman for Business Stream said: "The commissioner and the Scottish Government are responsible for setting wholesale prices which we have to use as the platform when we set retail prices.
"This consultation process is ongoing and it's important to stress that Business Stream will be making its representations, looking to get a fair deal for commercial water customers in Scotland."
