A report from The Public Accounts Committee has criticised water watchdog Ofwat as too weak and said it should impose maximum fines on companies which fail to plug leaks.  It also urges the regulator to consider awarding customers compensation in cases of poor performance.

In its defence Ofwat insisted that where companies had not delivered, it had taken action on consumers’ behalf.  Ofwat was described as “weak… in using sanctions against companies that under-perform”.  However an Ofwat spokesman said: “Ofwat protects consumers by keeping prices down, driving improved service and where companies fail to deliver taking effective action.”

The example of Thames Water is very revealing.  Despite missing its leakage targets every year since 2000, the company was not penalised until 2005/06. Despite having new powers to impose a financial penalty,  Ofwat did not use them, accepting instead a legally binding undertaking to carry out the £150 million replacement of 230 miles of water mains.

Committee chairman Edward Leigh was particularly scathing: “Nowhere is [Ofwat’s] limp attitude towards the industry demonstrated more clearly than in the case of the serious wastage of water by Thames Water. Thames missed its annual leakage targets for six years in a row without so much as a slap on the wrist. In future, such a wanton waste of water by a company must be rewarded with the maximum possible fine.”

In April 2007 Ofwat proposed the first fine on a water company for “repeated and serious breaches” of licence conditions - the proposed penalty amounted to 0.7% of United Utilities’ annual turnover.

Are you happy with the service from your water supplier? If you’ve complained to the regulator, did you get a satisfactory outcome?  utellus…

Many Virgin Media customers woke up today to find that many Sky programmes were lost to them.  A disagreement over pricing has meant that Sky has withdrawn many of its basic channels, including the popular Sky One.  Both sides are blaming the other - Virgin talks of “bullying” and “arrogance”, whilst Sky have said that they would not continue to negotiate on price.

The main losers here are the customers, who are being used as pawns by two media giants.  Neither of the two media giants can hold their hands up and say that they have put customers first, and both will need to work hard to demonstrate that they value their customers. 

The media in the last week or so have been very focused on the actions (or potential actions) of various financial institutions.  It’s not surprising that they’re in the spotlights, given some of the huge profits that have been announced; utellus takes a look at some of the stories:

Some MBNA cardholders were sent a letter at the end of last month telling them that they risk being charged what the company calls a “credit balance service fee”.  A £10 charge will be made on accounts which have been unused for 12 months, according to the American-owned company.

Graham Beale, the Nationwide Building Society’s incoming chief executive, told the Daily Telegraph that charging a current account fee may be a “fairer proposition” than offering free banking.  Mr Beale added Nationwide would not act unilaterally by imposing a fee.

As we reported at the end of last year, First Direct said it would start charging some current account customers a monthly fee.

And last week we told you that Citibank had upgraded its current account customers to a fee-based account, requiring them to opt out rather than opt in to more services.

On a more positive note, Barclays appears committed to free banking and that it was “very unlikely” it would end.  Chief Executive John Varley said “Free banking is a very good thing. I am very determined that we should protect it.”

So what does this mean for us as consumers?  For the time being, there is choice in the market, so vote with your feet.  However a word of caution - some banks have been closing accounts of customers who challenge fees, even when the customer wins.  So it may be prudent to set up another account with a different provider in case you need to switch at short notice.

From 14 February new rules came into force which should ease the process of changing broadband suppliers.  The rules are designed to stop broadband firms levying charges on customers for switching, and to make the whole process easier.

Suppliers placing barriers in the way of customers looking to switch could face heavy fines from regulator Ofcom.  After 14 February all broadband suppliers must use the Mac system and supply these codes within five days of being asked for them.  Also broadband comanies can no longer charge for issuing a Mac code or impose any financial charge or penalty in the switching process.

utellus would love to hear of any suppliers breaching the new rules.

British Gas has announced that it will reduce its gas and electricity prices from March 2007, cutting gas prices by 17% and electricity by 11%.  According to the company this would see the average annual dual fuel bill fall by £167 to £953. Many commentators believe that other energy companies have been waiting to see British Gas’s move before also cutting their prices.

According to the BBC, British Gas has increased gas prices seven times and electricity tariffs six times since 2002, while it last cut prices in the spring of 2000.

Whilst a cut in prices is to be welcomed, wholesale gas prices have fallen by about 50%, so the company is passing on only part of its saving, leading to widespread criticism.  In the short term utellus would encourage consumers to continue searching for the best prices; in the longer term, however, we recognise that constant switching of suppliers carries its own costs and we hope that suppliers will aim to build long term relationships with their customers based around price and service.

British Airways has announced that an extra bag might cost passengers up to £240 for a return long-haul flight.  The new rules will come into force from 13th February, and will apply even if the combined weight of the luggage is below the allowance.

There are exceptions for sporting equipment and certain transatlantic flights, but the new policy is likely to cause surprise and confusion for many passengers.

utellus says that BA has learned from the experience of low-cost carriers. “Processing a bag through an airport costs money, regardless of its weight.  It would appear that BA is trying to encourage passengers to go for a single bag to reduce its handling costs.”

Some consumer groups, such as Help the Aged, have raised concerns that a policy which penalises more, smaller bags in favour of one, larger bag, will penalise those who are less able.