Following the publication of Ofwat’s draft decisions on business plans put forward by United Utilities, South West Water and Severn Trent, 7.9 million households in the North West, South West and Midlands could see their water bills fall by as much as £70 before inflation by 2025.
Owat has shared its initial view on what Severn Trent, United Utilities and South West Water should be allowed to charge their customers from 2020 to 2025, in return for a five-year package of investment in the essential services they provide.
The three companies are receiving their draft determinations ahead of the rest of the industry after being fast-tracked to the next stage of the price-setting process by the regulator, as a reward for submitting the strongest business plans.
The bill reductions in Ofwat’s early draft determinations - the differences between projected 2019-20 and 2024-25 bills in 2017-18 prices - are:
- Severn Trent Water - £16
- United Utilities - £49
- South West Water - £77
Ofwat’s draft decisions for 2020 to 2025 would also mean these three companies spending £1.2 billion on improving the environment to reduce pollution and clean 4,500km of rivers, and investing in infrastructure, such as £80 million to start improving the Haweswater aqueduct serving Manchester and the Pennines.
By 2025, the three companies would need to cut leakage by at least 15% and provide help for 300,000 customers struggling to pay.
By becoming more efficient and embracing innovation, Ofwat found these companies can continue to keep bills down while delivering the investment needed to make sure there is enough water for everyone.
Ofwat Senior Director, David Black said
“We’ve been very clear that we expect water companies to deliver for customers and the environment and that companies can secure both of these outcomes. Severn Trent, South West Water and United Utilities all stepped up to the mark with their plans.
Our draft decisions for these companies show that investment in service and infrastructure can go hand in hand with more affordable bills.”
Future milestones for the 2019 price review include:
- 18 July 2019: Ofwat will publish draft determinations for the remaining companies.
- 11 December 2019: Ofwat will publish final determinations for all companies.
- 1 April 2020: Ofwat’s determinations affect customers’ bills
Future prices and services must be acceptable to water customers - CCWater says Ofwat could go further
Responding to today’s announcement by the regulator over its draft price and service plans for three water companies, the Consumer Council for Water (CCWater) said that future prices and services must be acceptable to water customers.
Tony Smith, Chief Executive of the Consumer Council for Water, said:
“Customers should be the judge of whether these proposals are acceptable which is why we’ll be asking households to give us their verdict – if they don’t like what they see, we expect the regulator to make changes.”
“Our research suggests Ofwat could still go slightly further in reducing bills, without eating into the essential investment that every company in England and Wales has promised. Companies should also make clear what impact inflation and the regulatory rewards that customers pay for will have on their bills.”
The water watchdog – which represents all consumers in England and Wales – will now be carrying out research with customers of all three companies to see whether they think the regulator’s proposals are acceptable. CCWater will use the findings to influence Ofwat’s final decisions on company price limits, service commitments and investment in December 2019.