Ofwat is calling on water companies to trial creative and targeted ways in calculating customers’ charges to help make sure those who need support can get it.
In the midst of cost of living concerns, the regulator is pushing companies to think differently about how they work with customers and develop models of differentiation in how people pay. Currently, customers’ bills are set on a flat standard amount based on their type of property, or on flat rate based on their use as measured by a water meter.
Ofwat is calling on companies to look afresh at how bills are set and pilot new ways to help those who need it most, while also stepping up efforts to support customers to eliminate in-home leakage and reduce overall water use, thereby enabling lower bills for those with meters.
Some of the ideas the regulator is asking companies to consider could include seasonal charging to help lower water bills in the winter when energy costs are higher, or if bills might be reduced for homes with water butts and permeable driveways which can help to reduce risk of flooding and pollution to our rivers.
Similarly, customers who use a lot of water, for example those with swimming pools, hot tubs or large-scale sprinkler systems, could be charged a premium for very high use, particularly at times when water is scarce. These changes could also help to encourage water efficiency by reducing overall water use.
The regulator is encouraging ideas and new thinking, rather than prescribing any specific idea or approach. It is calling for water companies to show innovation and creativity, informed by analysis of data, to identify new ways of helping those in most need. Alongside the benefits for customers, new approaches on charging could also boost sustainability and moves to help save water.
Commenting on the plans, being issued today for consultation, David Black, Ofwat CEO, said:
“We are all very aware of the impact of the rising cost of living and we want to see the water sector become more active, assertive and inventive to support customers who are struggling to make ends meet.
“Now more than ever, it is time for water companies to show they get and can respond to the needs of their customers. Bills are a huge concern to customers, and we need to see radical fresh thinking from companies.”
In developing new ideas, the regulator is encouraging water companies to consider what it can learn from other sectors and other countries. Regardless of the form of the trials and pilots, Ofwat’s customer protections will remain in place including on the overall limits companies can charge.
Notes to editors:
- Please email consultation responses to [email protected]. The closing date for this consultation is 3 November 2022.
- Consultation landing page: Consultation on charging innovation to support affordability – Ofwat
- Consultation document: Consultation on charging innovation to support affordability
- Proposed charges scheme rules: Charges Scheme Rules from April 2023 consultation
- Statutory consultation document: Consultation to change Charges Scheme Rules April 2023