Summary of case
This dispute was referred to us for determination under sections 45 and 30A of the Water Industry Act 1991
The complainant disputed the amount Southern Water had charged them for providing a new water supply to a residential premises.
Summary of Ofwat’s final decision
The total of the application fee and overhead costs charged by Southern Water was higher than we would reasonably expect for this type of connection.
Our final determination directed Southern Water to refund the Complainant £745.24 (plus interest).
Wider lessons for companies and customers
- Ofwat uses the Hyder Report and the independent review of section 45 administration fee and overhead costs to inform our consideration of whether companies’ costs for providing a new water supply are reasonably incurred. The figures included in both of these reports are benchmarks, not suggested charges. The costs companies actually incur may reasonably be higher or lower than these benchmarks. Ofwat does not consider that companies should be charging the maximum costs for all of its connection works, as a blanket approach
- Ofwat assesses every case on its individual merit. Companies should be able to provide justification for the costs they have charged
- We do not find it reasonable for companies to charge multiple management and administration feeds, beyond that charged in the initial application fee.
Section 45 of the Water Industry Act 1991
Relevant Ofwat guidance
- Charging for new connections
- Water Services Regulation Authority (Ofwat) Comparative Study: Cost of new water supply connections work (Section 45 Water Industry Act 1991)
- Independent Review of Section 45 Connection Costs
22 September 2015
18 August 2016
Final determination of dispute determined under sections 45(6A) and 30A of the Water Industry Act 1991: vs Southern Water
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s45 Cost of making a connection of supply for domestic purposes