Water bills to be cut by £50 under plans outlined by industry watchdog
Ofwat said its latest price review is the ‘most far-reaching’ ever undertaken and will see an extra £12 billion invested.
Customers will see their water bills cut by £50 and firms must invest an extra £6 million every day over the next five years under plans unveiled by the water watchdog.
Ofwat said its latest five-year price review is the “most far-reaching” ever undertaken and will see £12 billion invested over and above the usual costs and business spend.
It said firms must provide better services and increased investment at the same time as cutting water bills by an average of £50 before inflation from 2020.
Other new targets set under the review include cutting pollution incidents by more than a third, reducing supply interruptions by almost two-thirds, helping 1.5 million customers who are struggling to pay and reducing leaks.
Ofwat said the review has been laid out for 14 of the 17 water firms across England and Wales, with three firms – Severn Trent, South West Water and United Utilities – having already seen their price plans for the next five years given the initial green light.
Ofwat chief executive Rachel Fletcher said: “The package we are unveiling today signals a brighter future for customers, with better services, a healthier natural environment and lower bills.”
She added: “These are seriously stretching goals for the sector, but we know they can be achieved.
“We have seen three water companies leading the way and we now want the rest to show the ambition and drive to deliver this new era for customers and the environment.”
Water companies will now respond to Ofwat’s proposed plans and the regulator will make a final decision in December.
Ofwat recently warned four water companies that it has “substantial concerns” over their business plans for the next five years.
The UK’s biggest supplier, Thames Water, alongside Anglian Water, Yorkshire Water and SES Water, have received letters from the watchdog calling on them to review their cost proposals.
It comes as the industry faces intense scrutiny, with Environment Secretary Michael Gove this week calling in water bosses for a meeting after their efforts to protect the environment were branded “simply unacceptable”.
The Environment Agency’s (EA) annual report into the environmental performance of water companies found serious pollution incidents in England increased last year, and most firms are set to fail to meet pollution targets for 2020.
Water firms also face the threat of potential re-nationalisation if Labour comes to power, with the party recently revealing plans to bring the industry under state ownership.
Labour wants to transfer the existing water and sewerage companies to new Regional Water Authorities.
The EA said Ofwat’s plans are “broadly” in line with its recommendations.
But deputy director for water Anne Dacey said: “We will review the finer detail before challenging the companies on any further changes needed.”
Tony Smith, chief executive of the Consumer Council for Water, cautioned the bill reductions may not benefit all customers, which range from cuts of £7 for Hafren Dyfrdwy to £110 for Northumbrian Water.
He said: “Not everyone will see their bills fall when you add inflation and customers need to be told how much Ofwat’s financial rewards for companies could hit them in the pocket.
“Only about half of the 3 million households who struggle to afford their water bills will receive financial assistance under these plans, so more companies should use their own profits to boost this support and not rely on the goodwill of other customers to fund these schemes.”
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