Ofwat, the regulatory body in charge of water has promised that the price of water will drop by between £15 to £25 a year between the years of 2020 and 2025.faucet
The regulator is to conduct a review into water companies’ pricing with a large focus on protecting customers who fall into arrears on their water bills.
“The next decade will see profound changes in customers’ expectations and we are pushing the water sector to be at the very forefront of that,” said Ofwat chief executive, Cathryn Ross.
“The methodology we’ve published today outlines how we will use our price review to get the very best for customers, through higher quality of service and support for those who need it most, all with scope for lower bills,” she added.
Ms Ross conceded that the targets set for the water companies would be “tough” to meet, but she was left with “no doubt that the sector can step up and meet the challenges we’ve laid before them today”.
Michael Roberts, Chief Executive of Water UK, said Ofwat’s review would be “tougher for some companies than others”.
However, he added: “The industry has a strong track record in providing customers with a world class product and service.
“We’ve cut bills, increased help for the less well-off, and reduced leakage by a third, and we are committed to achieving even more for customers in the future.”
The regulatory body have also said that they will be taking an active part in working alongside water companies to help them provider a higher level of services. The price review will also, for the first time explicitly set out guidelines for helping vulnerable customers with water companies being required to have plans in place to identify and assist anyone who is struggling financially.
Ofwat will also be prompting water provider to “develop smart solutions to address the pressures of a growing population and climate change”. The issue of leakage has also been brought up by the regulatory body and water companies have been told to address the issue which is responsible for as much 170 billion litres of wasted water every year.
The new regulations are thought to be particularly bad news for water suppliers across the country who are not about to meet the new and harder to hit performance targets said Rich Khaldi from PA consulting. Previously water providers were able to get back revenue allowances by hitting or exceeding their targets, but tighter regulations and higher benchmarks will make this far more difficult for companies to achieve.
“Companies are very unlikely to be able to offset lower returns overall with operational outperformance rewards unless they are already at or near the upper quartile,” he said.
All companies which provider water in the UK have been given a dealing of September next year to submit a business plan to outline how they plan to adhere to these new regulations.
