Since privatisation in 1989, water bills have risen above inflation by about 40% and the regulator has faced criticism for overestimating the costs incurred by water companies, which have been taken into account by Ofwat during its price reviews.
John Russell, Ofwat senior director for strategy and planning, said: “We’ve reached a milestone in our price review process. From now and until January 2019 we’ll pore over each and every business plan and we’ll be looking for evidence that they are robust, ambitious and, crucially, that they have been shaped by customers.”
Share ownership
Thames Water, the UK’s largest water company, said that while bills would be flat over the five-year period being reviewed it intended to invest some £2.1bn to “boost resilience and reduce leakage” after it was fined £120 million in June over leakage failures.
In the North West of England, customers of United Utilities are being promised a 10.5% reduction on average bills in real terms and 250,000 fewer households in water poverty by 2025.
Severn Trent said the 5% fall in real terms it was promising its 8.1 million customers was the largest in two decades. Its 200,000 customers at its Welsh operation Hafren Dyfrdwy Cyfyngedig, though, will incur bill rises of 2.2%, although it said these would still be the lowest in the Wales.
At South West Water, average customer bills are being forecast to fall by 11% and for 9% at its Bournemouth Water arm by 2025.
South West Water also sets out a “first of a kind” plan to offer customers a stake in the business from 2020 and the prospect of meetings where customers can cast votes.
Customers could be given an option, alongside bill reductions, rebates and reinvestment, to have shares in parent company Pennon or a stake in South West Water itself.
Ofwat has required companies to set out how much they intend to invest, what they will charge customers, how they will support vulnerable customers and how they will ensure their infrastructure is resilient for the long-term.
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