WATER rates in the North-East can now be changed outside of a five-yearly price review, in exceptional circumstances.

Northumbrian Water has agreed to a condition to be inserted into its licence, following a proposal from regulator Ofwat.

The new rules mean that the company can raise its prices if it is hit by a natural disaster, for example.

It would also allow customers to enjoy the benefits of any unexpected windfall through lower prices, although water chiefs say this is unlikely.

In both cases, the effect could have to be equivalent to at least 20 per cent of the company's previous year's turnover.

At present, Northumbrian Water's prices are set every five years by Ofwat and the next review, to set prices starting in 2005, will begin next year.

Northumbrian Water's head of corporate affairs, Andrew Panting, said: "We'll work out all of the different things we're going to have to invest money in, in terms of improvements.

"We are also required to do some customer consultation to find out if there's anything they want that they're not currently getting.

"We'll then produce a plan and submit it to Ofwat and they decide how much we're going to be allowed to increase charges by."

It is possible for the company to apply for a one-off adjustment in the five-year period