Ofwat draft decisions keep bills down

Posted: Thursday 16th October 2014

Draft proposals by Ofwat, published recently, mean average bills for water and wastewater customers would fall by around 5% in real terms between 2015 and 2020.

At the same time customers would see better levels of service. This would be supported by a substantial investment programme – worth more than £43 billion - or almost £2000 for every household in England and Wales. The benefits this investment would bring include a reduction in the time lost to supply interruptions (down 40% on average), cleaner water at more than 50 beaches, and more than 340 million litres a day saved by tackling leakage and promoting water efficiency – enough water saved to serve all of the homes in Birmingham, Liverpool and Leeds.

Ofwat has changed its approach to setting prices to put the onus on companies to take responsibility for understanding what their customers want and can afford. As a result, when companies submitted their plans to Ofwat in December, all but two were already proposing bills that were either held at, or below, inflation. Ofwat’s challenge has further reduced bills for all companies. For example, its scrutiny of companies’ financing costs would save customers more than £2 billion over the next five years.

Cathryn Ross, Chief Executive of Ofwat said:

“This is good news for customers – with bills held down and better service. Our challenge to companies has resulted in the sector’s biggest ever customer conversation. Delivering for customers rather than ticking regulatory boxes will drive what companies do over the next five years. Some will find this tough, but companies which really stretch themselves will reap the benefits of increased customer trust and confidence.”

Sonia Brown, Chief Regulation Officer said:

“Some companies provided excellent, customer-focused plans. Others did not include sufficient evidence to justify their plans, and so we stepped in to make sure customers get a fair deal. These are draft decisions and things could still change. Companies will be looking hard at where they need to submit new evidence and we will also continue to challenge hard to make sure that our final decisions result in the best possible deal for customers.”

There now follows a period of consultation when companies and other stakeholders can make representations. Final decisions will be published in December.

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