Water UK, the body which represents all the UK water companies, has said that water industry regulator Ofwat has set a “tough review” with today’s publication of Final Determinations for AMP6.

Commenting on Ofwat’s decisions for the water companies’ investment plans for 2015-20, Water UK said that under the Final Determinations, average water and waste water bills will come down by 5% in real terms over the next five years - a decrease in the average bill across England and Wales of £20 by 2020.

The organisation said water companies had listened hard to their customers and responded by putting in place plans that ensure bills remain affordable while continuing to invest billions each year to deliver the service improvements their customers want.

In 2015-2020, companies in England and Wales will increase their spending on a package of affordability measures (currently worth around £40 million) in addition to the social tariffs they provide for struggling customers.

Water UK pointed out that in order to keep customers' bills down in this period, the amount the companies provide to their debt and equity investors, whom the sector relies on to fund investment in high-quality services to customers, will be reduced.

However, the companies will still invest more than £44bn to deliver their customers' priorities, including tackling leakage, preventing supply interruptions and better sewage treatment to help keep rivers, coasts and beaches clean.

The UK water industry contributes at least £15bn to the UK economy each year. The investment over the next five years ensures water companies will continue to provide a wide range of jobs in every region and essential infrastructure to help spur growth.

Pamela Taylor, Chief Executive, Water UK, said:

"Companies have worked extremely hard to deliver falling bills for customers while continuing to invest billions to improve services even further.”

"Our members have done more than just talk about responding to a cost of living crisis, they have taken action to deliver help where customers really need it, by reducing their bills."

The PR14 price review involved the water industry's biggest-ever consultation, with more than 250,000 customers in England and Wales involved in setting their companies' priorities for the next five years.

Water UK said the regulator has set a tough review, which has challenged companies to balance a range of priorities including delivering environmental improvements while remaining financeable and keeping bills affordable. As part of the review, companies have also been required to set themselves more stretching targets and outcomes and greater penalties for poor performance.

Companies will now consider their Final Determinations carefully before deciding whether to accept them or to appeal to the Competition and Markets Authority.

CCW - Ofwat decisions a significant victory for customers - but bills still likely to rise

The Consumer Council for Water said the final decisions by Ofwat on what water companies can charge customers from 2015 to 2020 represent a significant victory for the voice of the customer.

However, the water watchdog  warned that customers need to be aware that water companies are allowed to add inflation to bills each year which means charges are still likely to rise from what they are now.

CCWater also expressed concern that it remains unclear what impact the Thames Tideway Tunnel will have on the bills of Thames Water customers. Although Thames Water’s average bill will fall by 5 per cent before inflation is added, this does not include the full cost of the Tunnel project which has yet to be finalised .

Tony Smith, chief executive of CCWater, said:

“One in five water customers already tell us their water bill is not affordable so the cost of the Tunnel may yet prove a tipping point for those already struggling to pay.”

Labour Party will act to reform water industry

Commenting on today’s Final Determinations, the Labour Party reiterated its intention to reform the UK water sector in the event of winning the upcoming General Election.

Maria Eagle MP, Shadow Secretary of State for the Environment, Food and Rural Affairs; said:

“For many people prices are still going to be rising faster than wages and that’s why one in five people are struggling with their water bills. Water companies are allowed to add inflation to these prices and for most people that will put their bills up. The truth is that the water industry isn’t working for consumers and David Cameron has done nothing to address it. It’s unacceptable that some companies paid no tax last year while millions of customers are struggling with the cost-of-living crisis.”

“It’s time for a new deal with the water companies and the next Labour Government will deliver it. We will reform the water industry, creating a national affordability scheme to support those customers who are struggling most with their bills. We’ll also give the regulator tough new powers to cut bills and ensure that water companies play by the rules and put consumers first.”