Additional Water Bill Increases Allowed For 5 Water Wholesalers

Delivery of safe and reliable water and wastewater services is essential for life in the 21st century, with water underpinning all aspects of human activity, health and wellbeing, as well – of course – as supporting all life in the natural environment.

As such, it’s vital that service provision continues uninterrupted, with resilience built into the system to ensure that water quantity and water quality alike are protected, even in the face of growing pressures such as climate change, population growth, urbanisation and industrialisation.

To help facilitate this, industry regulator Ofwat sets the prices that water suppliers can charge with controls in place that limit this, as well as setting investment levels and service packages that customers receive.

PR24 Price Review.

The recently announced PR24 Price Review sets the price, investment and service package for the five years between 2025 and 2030.

In its final determination, Ofwat announced that average bills would climb by £31 per year for water and wastewater companies before inflation.

Allowance for total spending was 18 per cent higher than in draft decisions, reflecting new requirements and covering a greater level of investment in new infrastructure and resources, set at £44 billion.

Because of this higher level of investment and the increased costs associated with financing it, bills will inevitably have to rise.

For example, come 2030 Anglian Water customers will have seen bills increase by 29 per cent, Northumbrian Water by 21 per cent, Severn Trent by 47 per cent, South West Water by 23 per cent, Southern Water by 53 per cent, Thames Water by 35 per cent and United Utilities by 32 per cent.

At the time of publication, these increases naturally caused public outcry – not least because water companies have been drawing growing criticism for poor environmental performance (with sewage discharges reaching record highs over the last few years), because of a lack of investment in essential infrastructure and because of increasing shareholder bonuses and dividend payments being made regardless.

But with the Competition & Markets Authority (CMA) just announcing this month (October 9th) that provisional redeterminations on price controls for five water companies will see bills increase even more, it’s likely that public ill feeling will deepen even further over time.

Further bill hikes.

After PR24 was published, Anglian Water, Northumbrian Water, South East Water, Southern Water and Wessex Water argued that the decision left them unable to meet regulatory requirements.

All five then exercised their legal right to request redetermination of the decision by an independent group of experts within the CMA. This group has spent the last seven months scrutinising evidence from the suppliers, as well as Ofwat and more than 40 third parties.

In all, the five suppliers requested a total increase of £2.7 billion in customer bills, but the group has provisionally decided to allow 21 per cent of this… £556 million in revenue, additional funding that is expected to see a further average increase of three per cent in customer bills.

It’s expected that this additional funding will allow suppliers to meet new legal requirements and fund delivery in areas such as pollution reduction and supply resilience.

Chair of the independent group Kirstin Baker said: “We’ve found that water companies’ requests for significant bill increases, on top of those allowed by Ofwat, are largely unjustified.

“We understand the real pressure on household budgets and have worked to keep increases to a minimum, while still ensuring there is funding to deliver essential improvements at reasonable cost.”

How can businesses reduce their water bills?

Any business concerned about rising water bills can help reduce associated costs by having a water audit of their premises carried out.

This involves comparing water use (including volumes) with what you’re being charged for, with the aim being to identify discrepancies that might have led you to being overcharged.

Once you know how and where you’re using water, you’ll be better able to spot weak and vulnerable areas across your site, allowing you to introduce the most effective water-saving solutions to address specific issues and adjust these over time to account for the evolving needs of your business.

Measures you can implement include rainwater harvesting, greywater recycling and water leak detection and repair, among others.

If you’d like to find out more about any of these services, get in touch with the SwitchWaterSupplier.com team today to see how we can help.