Water sector regulator Ofwat is calling the water companies in England and Wales to cut bills by an average of £50 and invest extra £6 million a day in services over next 5 years.
Water sector regulator Ofwat is calling the water companies in England and Wales to cut bills by an average of £50 and invest extra £6 million a day in services over next 5 years.
The call forms part of a major package of investment set out today by Ofwat intended to signal a new era for what the water sector delivers for customers and the environment.
The regulator says that falling financing costs and its insistence on more efficient business–as-usual from companies, mean that alongside better services and rising investment Ofwat expects water bills to fall by an average £50 before inflation.
Bill reductions for combined water and sewerage services range from £7 for Hafren Dyfrdwy to £110 for Northumbrian Water, in 2017-18 prices.
The proposals unveiled today by Ofwat also involve water companies investing an additional £6 million each and every day over the next five years – over and above investment to maintain existing assets - to improve the environment and services for customers, at the same time as cutting bills by £50.
The announcement is laid out in Ofwat’s price review draft determinations for 14 of the 17 water companies in England and Wales. Three water companies, Severn Trent, South West Water and United Utilities, have already been fast-tracked through this stage of the price review in recognition of their high-quality plans for the next five years.
In what Ofwat describes as “the most far-reaching price review the regulator has ever undertaken”, there are ambitious new targets to drive water companies to do even more for customers and the environment. These include:
- cutting pollution incidents by more than a third
- reducing supply interruptions by almost two-thirds
- helping 1.5 million customers who are struggling to pay, and;
- cutting leakage to save enough water equivalent to the needs of the population of Manchester, Leeds, Leicester and Cardiff.
The draft determinations provide more money for new and improved services with an additional £12 billion to be invested over and above business-as-usual costs and investments.
The extra funding is intended to improve services for future generations, including by building reservoirs, moving water to where it is needed most, and protecting the environment. The additional expenditure is the equivalent of £6 million every day for the next five years.
Ofwat Chief Executive, Rachel Fletcher, said:
“The package we are unveiling today signals a brighter future for customers, with better services, a healthier natural environment and lower bills.
“To get there we are calling for extra investment of £6 million each and every day to improve the environment and provide services for a growing population. At the same time we expect to see customers’ bills cut by an average of £50.
“These are seriously stretching goals for the sector, but we know they can be achieved. We have seen three water companies leading the way and we now want the rest to show the ambition and drive to deliver this new era for customers and the environment.”
The water companies now have a further opportunity to provide new evidence if they consider Ofwat’s draft determinations will prevent them from delivering for customers and the environment. The deadline for making representations on the draft determinations of the slow track and significant scrutiny water companies is 10am on 30 August 2019.
Ofwat said it will consider carefully the responses it receives from all stakeholders before making final determinations in December – the final determinations for all companies will be published on 11 December 2019. Water companies then have until 11 February 2020 to decide whether to accept their final determination or request an appeal to the Competition and Markets Authority.
Commenting in response to Ofwat’s draft decisions, Tony Smith, Chief Executive of the Consumer Council for Water, said:
“It’s good news that most customers will see their bills fall even after inflation and that Ofwat has responded positively to our long-standing challenge to be much tougher on companies’ financing costs and performance.”
“Not everyone will see their bills fall when you add inflation and customers need to be told how much Ofwat’s financial rewards for companies could hit them in the pocket. Only about half of the 3 million households who struggle to afford their water bills will receive financial assistance under these plans, so more companies should use their own profits to boost this support and not rely on the goodwill of other customers to fund these schemes.”
Click here to access more information about the determinations
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