Ofwat has set out clear expectations for water companies to tell customers how money is spent, why bills are rising and what improvements the funding will deliver.
The requirements are contained in the regulator’s latest Information notice setting out its expectations, assurance and information requirements for water company charges for 2026-27.
Commenting on cmmunicating how the money is spent, Ofwat says:
“The Public Accounts Committee's 2025 report on water sector regulation concluded that water companies are implementing large increases to the bills charged to customers without explaining why, or how the money will be spent. It recommends that Ofwat sets clear expectations for companies to explain where customer money is spent, why bills are rising and what improvements in infrastructure the funding will deliver.”
Ofwat wants the information be set out in an appropriate level of detail, on web pages relating to bills which is accessible to all and readily found via a simple internet search, on individual customers' bills and in other communication relating to bills.
The water companies are required to explain:
- where customer money is spent;
- why bills are rising (relative to last year and before 1 April 2025); and
- what improvements in infrastructure the funding will deliver.
When a water company has significant changes in its charges and bills, Ofwat expects it to provide clear and transparent information to its customers on what is driving the changes
Where there are significant changes in household and wholesale charges relative to the previous year (defined in Ofwat’s charging rules as being of more than 5%), Ofwat sets out its requirement in precise detail. The companies must explain the key drivers of the significant changes, which could include:
- Inflation;
- Changes in allowed revenue from the price review;
- Rebalancing of charges between customer groups and the rationale for this;
- Changes in levels of consumption or customer numbers;
- Outperformance or underperformance payments (including changes caused by such payments in previous years that are no longer being applied);
- Any regulatory penalties or fines (including changes caused by any penalties or fines from previous years that are no longer being applied);
- Impacts of revenue over or under recovery in previous years; and
- Deferred revenue that was not collected by the company in previous years to manage bill increases that is now being recovered from customers.
- Where any customer requests all or part of information, the company must provide the information in an accessible form for the customer.
Click here to download the full Information Notice
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