§ Mr. Beith
asked the Secretary of State for the Environment what is the calculation which determines that the contribution of the Newcastle and Gateshead water company to the national equalisation fund will be almost £500,000 in the current year; and what that amount represents in terms of the penny rate levied by the company.
§ Mr. Fox
Whether a water undertaker makes a payment to or receives a payment from the equalisation fund authorised under the Water Charges Equalisation Act 1977 depends upon its total qualifying financing costs per premise compared with the national average per premise. Financing costs are depreciation and interest charges relating to the assets for the unmeasured supply of water existing as at 31 March 1976 together with any adjustment for the costs of importing water incurred by the undertaker. Based on figures supplied by the Newcastle and Gateshead water company, the total qualifying financing cost under the 1980 order amounted to £1,104,000, made up of £870,000 for interest payments, £154,000 for depreciation and £80,000 for costs relating to imported water. This gave a unit cost per premise of £3.705. Since the national average unit cost per premise is £5.269 the payment required can be calculated by multiplying the difference of £1.564 by the number of premises supplied = (298,000). This amounts to £466,000 to which must be added £33,000 which represents the adjustments to the previous estimated figures which were supplied by the undertaker for the 1978 scheme year. These adjustments can only be carried out when final certified audited accounts are made available.
The total payment into the equalisation fund of £499,000 is the equivalent of an addition of 1.lp to the penny rate poundage charged by the undertaker for unmeasured supplies of water.