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Severn Trent, which supplies water to the flood-stricken towns of Gloucestershire, is on course to make profits of nearly £300 million this year. The company told investors in the City yesterday that there was no reason to change its outlook for its financial year to March 2008 despite the floods.
The company’s announcement came as thousands of homeowners faced up to another two weeks without being able to bathe, flush lavatories or wash their clothes.
The company has made £1.1 billion profits in the past five years and last year handed nearly £580 million to shareholders. More than two million homeowners across the Severn Trent region have seen their water and sewerage bills rise by more than double the rate of inflation this year to £279, an increase of 5.7 per cent or £15.
As some waters began to recede, Hilary Benn, the Environment Secretay, announced a further £10 million in emergency aid yesterday and added: “This emergency is still not over and the River Thames continues to cause concern.”
The Environment Agency said last night that 800 homes and businesses in Oxfordshire had been flooded, including 570 in Abingdon. In Berkshire, Surrey and the London boroughs of Sutton and Lewisham 93 properties have been hit by flooding.
Engineers assessing the damage to the Mythe water treatment centre at the confluence of the Severn and Avon believe that it will take at least another week, or possibly two, to restore supplies.
The plant, which supplies drinking water to 140,000 homes in Cheltenham, Gloucester and Tewkesbury, was submerged for 48 hours at the height of the flooding, contaminating storage tanks, damaging the pumps and wrecking electrical switch gear. A further 10,000 homes in Stroud were left without water when a reservoir supplied by the plant ran dry.
Supermarkets in Cheltenham and Gloucester ran out of essentials, including bread and milk, nappies and baby food, as people stockpiled supplies, expecting shortages. In Gloucester, many residents complained that every bowser they visited had already been drained. Children were blamed for deliberately opening the taps on several and letting them run dry.
Tim Brain, the Gloucestershire Chief Constable, gave warning that anyone caught vandalising the bowsers would be prosecuted. He said: “If people are calm and patient there is enough water for everyone’s daily needs. But that is not normal daily needs – I am just talking about drinking, cooking and basic sanitation.”
Nearly 900 water bowsers were on site or on their way to Gloucestershire last night and emergency services helped to distribute three million bottles of drinking water at the rate of 70 a second. Hundreds of shops, restaurants and other businesses have closed because they are unable to offer staff or customers basic toilet and washing facilities.
The Government has ordered power and water companies to make urgent flood risk assessments on key sites to ensure supplies of electricity and water in future incidents. A separate parliamentary inquiry is to investigate the handling of the floods and to see if improvements can be made to contingency plans. The assessments were ordered after it was disclosed that Walham electricity switching station in Gloucestershire – the focus of an operation, involving a 250-strong force of military personnel and fire-fighters, to save power for half a million homes – had been given a recent risk assessment that said it could withstand a flooding incident of an intensity expected once in every 1,000 years.
Most utility sites are assessed on a one in ten-year risk and so ministers and emergency planning chiefs fear that hundreds of key installations could be vulnerable to extreme flooding. This will also be a central focus for the independent review of the flooding incidents that hit the North East and Central England this summer.
Mr Benn and John Hutton, the Business Secretary, have decided that they cannot wait for the outcome of the official review and need information about key sites at high risk of flooding as soon as possible. As The Times reported yesterday, utility companies were asked seven years ago to make their key sites flood-proof or move them to higher ground.
Problems have occurred because electricity substations have been sited on flood plains next to power stations that needed water for cooling. These old stations also used coal, which was often transported to the site by barge.
Similarly, water treatment centres are near rivers because they need to abstract water and top up supplies.
Fola Ogunyoye, a technical adviser to the Chartered Institute of Water and Environmental Management, said the ideal solution would be to move key sites off flood plains or to raise existing structures. Equipment such as electric pumps and sockets could be raised and sites protected by a permanent or temporary flood wall.
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Perhaps some of the insurance companies who, one would hope, have a little leverage over Severn Trent may take proceedings against the shareholders of Severn Trent as a means of recouping their losses rather than increased premiums in subsequent years? If Severn Trent take a big hit in the courts then perhaps we shall see investment in infrastructure rather than throwing money at shareholders who frankly neither deserve nor warrant such hand outs? Whereas efficiency will always generate greater profit it is prudent always to spend a little extra on spreading the load across a greater infrastructure - how long is it going to take business and politics to see this? It is beneficial to both the shareholding and the consumer....
Chas, gloucester, glos
Maybe Mike D who is sitting in Leicester with, I assume, running water in a nice clean house would like to come to Gloucester and try living here.
Severn Trent CLOSED waterworks and concentrated their water treatment works that supplies water to over 300,000 people in one place. If Mythe fails for ANY reason - flooding, power failure, terrorist atttack etc. then they have NO fall back apart from a bowser system that does not work.
That is what is annoying people - not that Mythe flooded because that could be counted as an unseen event - but that Severn Trent have NO spare capacity and no proper contingency plans. They have LOTS of money to give away but apparently none to spend keeping any redundancy in their systems.
Kirsty S, Cheltenham,
Everybody effected by sewage damage should note that you can claim against the water companies for flood damage instead of your home insurance.
Why should you loose out due to consistantly short sighted bad planning by the water companies - who's interests rest with making profit over what is best for the community which they supply.
Don't expect a water company anywhere in the UK to do it's best against flooding - where I live, they wouldn't even open sluice gates to relieve flood risks! Reason: It would harm the fishing season and the Environment Agency's "Fair" rating they gave to the biological quality of the areas rivers! Result: SEVERE FLOODING.
The local pumping station to me was left full and dysfunctional without being emptied during the flood whilst telling consumers on the telephone enquiry lines that they were doing everything that they can!.... I don't think so!!! Watch how they will now ask the government for extra funding ????
Martin Sansone, Lincoln,
Actually Noah of Swindon - that's just the kind of pathetic attitude that allows situations like this to exist! Companies such as Trent Water and respective governing bodies are grossly negligent through cost-cutting and concentration on ever higher profits! And as long as the good old British public with their 'stiff upper lip' and gallant stoicism make excuses for this gross negligence - situations like this will just continue!! What about the thousands of people who - as well as living with flooded homes, and no running water - now no longer have an income? Have you given a donation to the Red Cross or anything more substantial than criticize we who are having to exist through this time? The louder the complaints - the more chance there is of more efficient services! And as Severn Trent deemed it necessary to advertise their grossly inflated profits of £300million today - obviously they are money-driven - so? - Hit them in their pockets with demands for compensation!
L C Gillatt, CHELTENHAM, UK
What would happen if everyone in Gloucestershire refused to pay our water rates, until Severn Trent can prove to us it will not happen again? What's the worse they could do, turn our water off for non payment.
One bowser for nearly 50+ houses, about one small bowser for about 150-200 people.
We've had no water in our bowser for over 24 hours now. To start off with, it was filled twice a day, and it was empty within an hour, now the new improved mini tanker idea is worse. A couple of bottles of water is only just enough for a small family to drink. But what about hygiene???
While driving around Gloucestershire today, while working, I've only seen one small tanker, in 9 hours!!!
Could Severn Trent do any worse... I doubt it!
I guess they will make a nice profit out of there rubbish collection side ( aka Biffa), with all the skips that the area will need.
Siran, Gloucester, Gloucestershire
These companies have only one aim - to make money, which is why privatising our infrastructure was always going to cause problems. Private companies will always take risks with business continuity planning and disaster recovery if it puts their profits at risk. The result is we have unacceptable single points of failure across our critical utilities. Worse still, the government was warned several years ago as a result of previous flooding.
Danny, Cheltenham, GLOS
Are the water companies to blame?
Is anyone to Blame?
As I understand it if we had drainage to protect from 100 year storms we would still of had problems.
Stephen A, needs to get real, and note that Severn Trent has one of the cheapest water charges, does he expect water older than 48 hours, normally, its stale.
That water works has never before had this problem, I hope he always gets thing right in his job, and can forsee all possible problems.
Mike D, Leicester, leicester
I'm of the opinion that the recent events around gloucestershire are not the fault of Severn Trent, how is it their fault that Mother Nature is stamping her authority. I currently pay rates, work all day Monday to Friday and live on my own and use far less water than a family of 4 but I do not expect anything by way of compensation for the freak events. In fact I think it is quite disgusting that in a time of crisis we all look immediately for financial compensation rather than helping each other and the company by being patient and considerate.
However given the profits they are making surely it would be wise to plough some of those profits back into the business - fixing leaking pipes, clearing silted drains, etc, etc.
I live in Quedgeley, Tesco's has had plenty of free bottled water, I've found bowsers with water for washing, etc, I have basically been inconvenienced for a couple of weeks - there are a great number of people that would rather be in my situation than theirs.
Steve, Quedgeley, Glos,
Why have a go at at water companies because they make a profit? They did not cause the floods. Tesco made over 2£Billion,do we blame them for obesity? In hindesite the water co's could have built the controls above water flood levels,which they probably will now do. It is easy to be wise after events. Did anyone notice that it started raining the day the latest potter book was released?
Flat Roofer, Llandrindod Wells, Radnor County
Severn Trent should indeed be made to rebate every single household that has lost its water suply in these floods. The £1.1 billion profit they have made in recent years is nothing short of obscene considereing the amount of water lost through leaks.
Nigel, Cheltenham, Gloucestershire
I am so glad that we are helping Severn Trent make its profits, after all, we are still paying them despite having no water.
Our bowser has been dry for over 24 hours now, and they are too small for the number of people they are meant to supply, even if all they are used for is drinking. It is not feasible to only have water for drinking purposes for 2 weeks, we need to flush toilets, wash up and wash some clothing at least, but Severn Trent are abandoning us.
Mrs Shaw, Bishops cleeve, UK
Companies like Severn Trent have one priority; to make a profit. Therefore they will, in spite of well-documented warnings, take risks with business continuity planning and disaster recovery planning before they will take risks with their profits. This is why we have some dangerous single points of failure in our national infrastructure.
The taxpayer is yet again going to have to pick up the tab for fundamental planning errors in the private industry.
Danny, Cheltenham, GLOS
Chris R says
"While not expecting that, I do hope the company plans to rebate us for the period without supply, and more?"
why?
In what sense is the company responsible for the failure of government and local authorities to put in place adequate flood management?
If anything, Severn Trent ought to be suing for the damage done to it's asets.......
Andy Dawson, Crowthorne, Berks, UK
Will £300 million pounds profit be enough to cover the Severn Trent directors and senior managems pension needs? That requirement needs to be addressed before the costs of flooding can be addressed. The Labour Party must be very proud of their water management systems!!!!!
Raymond, Belfast,
Well, what's wrong with Severn-Trent making a good profit? The population of Glostershire and especially round Tewkesbury are staunch Tories and repeatedly voted for the Thatcher government that privatised
their previously state-owned water-board. Theyve certainly never returned a Labour MP. So to the people of Tewkesbury I say "you voted for it!" I hope the water company screws you for every penny they can get out of your greedy tory-voting backsides.
Mike James, Tewkesbury,
Don't conflate massive natural disasters and water company profits... Journalists do it to make a headline, it's their job. People don't have to rise to the bait. There's a separate debate about whether utilities should be renationalised or how to control profits, but in this case Severn Trent got hit, like their customers, by something unforeseeable. It's just stupid to start whining about the company as if it ordered the rain and has deliberately made people's lives miserable. If you've been flooded, it's awful, but it's no-one's fault, okay?
Liz S, Conwy, Conwy
Last year just before I left to study in the USA, London had a hospipe ban, because according to Thames Water the water from the rain was the wrong type. Now a year on we a floods in their extreamities. I wonder if Thames Water are bringing out their buckets now?
Kamal Singhrao, Sonoma, (Brit Expat), California/USA
Severn Trent have closed down treatment plants and centralised all their water treatment for the area in 1 place. This was done purely to boost their profits by cutting their costs.
They have NO proper contingency plans in place. Residents in Cheltenham, Gloucester, Tewkesbury and now Stroud have been told that they will have no running water for 2 weeks.
Severn Trent have now gone crying to COBRA because their so called contingency plans don't work and they cannot keep the 900 bowsers they have in place topped up.
I invite the Board and Severn Trent the the major share holders to come to Cheltenham and live in the conditions their GREED has forced upon us.
Announcing these obscene profits at this time was extremely offensive and I hope the board of Directors are ashamed. But I guess we don't matter - all they care about is the money in their bank accounts.
Anyone know what 350,000 people moving their water supply to another company would do to ST's profits?
Steve A, Cheltenham,
Why on earth should the water company compensate people for events that are beyond its control? It's not as if they caused the floods is it? The pathethic first three comments on this page make me embarrased to be British. Rather than bleating for compensation why don't you get some self-respect, self-reliance & sort yourselves out?
Noah, Swindon,
What kind of adults are those children who opened the taps and drained the bowsers going to be?
The mentality is impossible to comprehend.
John Doe, London,
"Severn Trent, which supplies water to the flood-stricken towns of Gloucestershire" - er, no they don't. Not since Sunday here. Our water is now supplied out of the back of an estate car by the parish council.
Andrew Oakley, Alderton, Glos, GL20 8NX
It says a lot about how Severn Trent look on their customers if they can smugly announce such a thing when over 300,000 people have no running water and will have none for upto 3 weeks.
Severn Trent cut costs (and boosted profits) by centralising the water purification for a large area into one single site with NO proper backups. The reservoirs feeding the towns have less than 48 hours capacity and Severn Trent knew this but went ahead.
I cordially invite the Board of Directors of Severn Trent and their major shareholders to show solidarity by joining us as we wallow in sewage for two weeks - I can't offer you running water because I don't have any but I'm sure you wont mind.
I really hope you feel proud of the way you've treated your customers - you've put our bills up by more than inflation year on year and pocketed the cash.
Anyone know what effect on their profits loosing 100,000+ bill payers will have? We can easily move to another supplier
Stephen A, Cheltenham,
Would dredging silted up river beds be a step forward as a future prevention plan?
Gini, Worthing, W Sussex
Severn Trent are charging £279 p.a. for water a rise of 5.7%
Up here in lancashire where water is abundant I pay £416.80 p.a. through United Utility. If ST are making £300 million profit what on earth are UU making. The government say it is cheaper to live up north, what a load of tosh.
Joe, Rochdale, UK
So the shareholders have receieved £580 million in the last year and the water company expects to make £300 million profit this year, but the Government is only handing out £10 million to those affected.
Am I the only one who thinks that the Government works for the City and not for the people who elected it?
Bry Barnes, Somerset, Uk
A real St, Swithins!
40 days and nights of rain.
Standard myth and must be generations of experience but not mentioned.
A paper years ago, 1980, about the effects of the planets on Saturn rings showed a clear connection resonance. How far is the Earth's atmosphere adapted by these big planets but not settled theory. A Swithins resonance!
Dr MI Barton MA. MBA.PhD, Oxford, UK
i think the city can expect much reduced dividends next year ,those of us in the gloucester ,cheltenham area will expecting a big discount on our next bills for the farce we have witnessed in recent days
josh, gloucester,
This is a sick joke, surely?
Lisa , Cheltenham, Gloucestershire
Er, are those of us without water for anything up to two weeks due to receive any compensation from Severn Trent? I understand the shareholders expect dividends, but surely we too might expect some compensation for the disgusting state we have been left in? I have spent the afternoon taking water to people who have no cars and can't get to the distribution point because they are frail and elderly. My clothes stink, my hair stinks, and I have at least ten more days of this to look forward to.
"Severn Trent... is on course to make profits of nearly £300 million this year. The company told investors in the City yesterday that there was no reason to change its outlook for its financial year to March 2008 despite the floods."
That was insensitive to say the least. Luckily that works out as about £857 per person effected I think. :) While not expecting that, I do hope the company plans to rebate us for the period without supply, and more?
Chris R, Cheltenham, Gloucestershire