THE unloved water industry seems determined to wring the last drop out of the consumers.

For despite facing the well-deserved sting of the government's planned windfall tax, the companies are evidently bent on keeping their excessive profits gusher going as long as possible.

Just as they are attempting to resist Chancellor Gordon Brown's grab, it is disclosed that this week that they will announce bigger profits than ever and increased pay-outs to shareholders. Forecasts are that the combined profits of the water companies will top £2billion and that dividends to investors will reach £1billion.

And the extent of the soaking of consumers is plain from the fact that the City expects the average increase in shareholders dividends to be near 16 per cent. That is way above the level for the Stock Market generally and much higher than the four to seven per cent level to which, last year Ofwat, the industry's regulator, said the pay-outs should be confined.

So much for the greedy water companies paying heed. And so much for regulation, which, ever since privatisation - handcuffed by the last government's blessing for the so-called K-factor of higher-than-inflation charges - has been forced to preside over consumers being made to pay through the nose for water.

That is how these bumper profits and dividends are generated. But is is only of partial comfort to their customers that the water companies are now facing a windfall tax from the new government as well as being threatened with stiff penalties over their wasteful leaks that let a third of supplies go down the drain.

For, at the end of the day, it is the customers who get landed with the bill for both. Rather than using the water companies' profits as a useful source of tax revenue, the government should be acting to cut the excess from them and the shareholder dividends with regulation that bites on behalf of the consumer - in the form of fair charges at last.

Converted for the new archive on 14 July 2000. Some images and formatting may have been lost in the conversion.