Water dilemma: Meters can lower your bills, but it's not for everyone

Many homeowners are now wise to the notion of switching energy supplier, but when it comes to water, shopping around for a better deal isn't an option.

Consumers face an average water and sewerage bill of ?342 a year after this year's price hikes of an average 4.1 per cent. What's more, things are set to get worse after water companies in England and Wales announced proposed bill increases last month. These proposals are used by Ofwat, the regulator, to determine prices for the next five years, and among the proposals were increases of almost 30 per cent above inflation.

What can consumers do to cut costs? "If you want to save money on your water bill you currently only have one option: to install a water meter," says Will Marples, home utilities expert at comparison site uSwitch.com. As things stand, only 35 per cent of households are using a water meter and could be missing out on savings of up to ?125 a year.

With an unmetered home, the water bill is based on the rateable value of the home and does not take into account the water used. The rateable value can vary widely, which means that both heavy and light users will be charged at the same rate. When a water meter is in place, however, the bills are based on actual consumption and give consumers the opportunity to control usage and cut their bills.

Households across the UK can get a water meter free. However, while installation is usually free in England and Wales, north of the border customers are expected to pay. Charges depend on how much work is required. If it is deemed impractical or too expensive – for example, for households with shared pipes in a block of flats – the company may refuse to install a meter.

If this happens, consumers have another alternative: they can apply for what is called an "assessed charge". This means that the water company will bill households based on an estimation of likely water usage. This is determined by a number of variables, such as the number of occupants and type of property, but it will differ from one company to the next so consumers should always check.

Water meters are not for everyone. Experts say that as a rough rule of thumb, if there are more rooms than people in a household a meter should reduce the water bill. However, any savings are reliant on usage and for anyone likely to have high water consumption, a meter could prove more expensive. "If you use a lot of water – perhaps you have a large family and are always running washing machines, dishwashers and baths – then sticking to paying a flat rate would be better for you," says Mr Marples.

There is also a lot to be said for the ease of a flat rate. If the saving from using a water meter is only minimal, some consumers may prefer the security of budgeting for a fixed bill.

Another potential problem with water meters is that any leaks could result in a significantly higher bill than normal. However, consumers are entitled to a leakage allowance, meaning that the water company will not charge for water lost through the leak. Both the Consumer Council for Water (CCW) and uSwitch offer online calculators based on water habits that can assess how much can be saved by installing a meter. Consumers can also contact their water company for a calculation of potential savings. Consumers are allowed to revert back to unmetered billing if they find they are not saving money, but this must be done within 12 months of switching.

However, not all households will have a choice about whether to install a meter. The water company for Folkestone and Dover has been granted water scarcity status, which means it can force customers to install water meters.

Tony Smith, the chief executive of the CCW, says: "We support more metering in areas where the water supply might be under pressure in the future, as long as there is a safety net in place to help protect those who might see their bills go up if they are forced to have a meter."